Photo by: Bloomberg
PERTH (miningweekly.com) – Australian oil and gas giant Santos on Thursday announced that it would reduce its 2015 capital expenditure (capex) by some 25%, from the planned $2.7-billion to $2-billion.
Growth and sustaining capex for 2015 have been estimated at $1.4-billion and $600-million respectively, and Santos CEO and MD David Knox said that asset divestments remained under consideration as part of the company’s ongoing portfolio management.
Knox told shareholders that the capex cut-back did not prejudice the company’s longer-term growth options, but was simply a prudent reflection of the current environment.
“To be clear, the underlying performance of our business remains strong with production continuing to grow in the second half of the year,” Knox said.
Santos has maintained its 2015 production guidance of between 57-million and 64-million barrels of oil equivalent.
“The current volatile oil price means that Santos is focused on driving operational efficiencies, reducing costs, prudently managing capital and making sure our balance sheet remains strong, without making short-term reactive decisions that could damage the long-term interest of the company or the interest of shareholders,” Knox added.
He also noted that the company was currently in a robust funding position, with some $2-billion in cash and undrawn debt facilities at the end of November, adding that the company had no present need or intention to raise equity.
Santos in November flagged the potential for a European hybrid issue, but last week confirmed the deferral of the hybrid issue, citing the current market conditions following the Organisation for Petroleum Exporting Countries' announcement that it would maintain existing production levels.