Santos to Defer FID on Barossa Gas Project, Slashes 2020 Budget
[Click image to enlarge]
Santos said that it will defer its final investment decision (FID) on the Barossa gas project offshore Australia and also cut its budget for this year owing to the prevailing low prices for oil and also the COVID-19 outbreak.
As part of the cost-cutting measures, the Australian oil and gas company announced a 38 percent or $327.8 million reduction in its 2020 capital expenditure. The company will also reduce its 2020 cash production costs by $29.8 million.
Its base business will see an $119.2 million reduction in its allocated budget for 2020, although the company plans to maintain production and safe operations.
The company said that it had deferred discretionary expenditure and exploration programs where appropriate.
The remaining $208.6 million reduction will be made in the company’s major growth capital expenditure, which reflect the re-phasing in expenditure for the Barossa and PNG LNG expansion projects.
Santos said that it is targeting a free cash flow breakeven oil price of $14.9 per barrel in 2020.
The company, while reporting its full year 2019 results, had announced about $864.1 million of capital expenditure for 2020, which includes nearly $298 million for its major growth projects and nearly $566.2 million for its base business.
Santos’ major growth projects for 2020 include the Barossa, Dorado and PNG LNG train 3 projects.
SANTOS CEO COMMENTS ON THE REVISED STRATEGY FOR 2020
Santos Managing Director and CEO Kevin Gallagher said: “The initiatives announced today demonstrate we are taking decisive action to ensure Santos is well-positioned in a lower oil price environment.”
“Whilst the current oil price dynamic is challenging, the eventual recovery will create opportunities for companies positioned to act on them. Our strategy to leverage existing assets and infrastructure remains unchanged and we expect to pursue these exciting opportunities when conditions permit.”
The company said that its previously announced $1.4 billion acquisition of ConocoPhillips’ northern Australia assets and operations is likely to be closed in the first half of this year, subject to third-party consents and receipt of regulatory approvals.
The acquisition will increase Santos’ stakes in the Barossa project and the Darwin LNG facility apart from other gains.
Source: NS Energy
To stop by Santos’ website, CLICK HERE
Be in-the-know when you’re on-the-go!
FREE eNews delivery service to your email twice-weekly. With a focus on lead-driven news, our news service will help you develop new business contacts on an on-going basis.
CLICK HERE to register your email address.
