July 21, 2020 Read More →

Santos takes A$1.13 billion writedown as pandemic oil and gas crisis hits

Australian Financial Review:

Write-downs by Santos of up to $US800 million (A$1.13 billion) have axed $US7 billion of asset value from ASX-listed oil and gas producers in nine days, underlining the heavy toll the COVID-19 pandemic is taking on one of the country’s biggest export industries.

The damage includes a fourth impairment on the value of Santos’ 30 per cent stake in the Gladstone LNG project in Queensland, which has never produced at full capacity.

The hefty reductions in book values of LNG assets on both sides of the country come on top of billions of dollars of write-downs also announced by multinationals such as Shell on their Australian portfolios.

They are being driven by moves by producers to slash assumptions for future oil and gas prices as the shock of the coronavirus crisis forces not just a rethink of the immediate softer market but of the longer-term prospects for energy demand.

Woodside Petroleum last week cut the carrying value of its producing LNG plants in Western Australia and its oil assets by more than $US5 billion before tax, and Origin Energy wrote down the value of its Queensland LNG project interest last week, by up to $770 million.

The impairments come as Santos is fighting to get planning approval for its $3.6 billion Narrabri coal seam gas project in northern NSW in the face of multiple interest groups worried about potential environmental harm and highlighting the risk of “stranded” investments if the world moves more rapidly away from fossil fuels.

[Angela Macdonald-Smith]

More: Santos takes $1.1b pandemic oil crisis hit 

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