Santos slashes spending plans
Energy company Santos plans to slash its capital expenditure by 25 per cent as the oil price slides to fresh five-year lows.
Santos chief executive David Knox said Santos’ projected capital expenditure for 2015 had been cut by $700 million to $2 billion.
He insisted the company was in strong financial shape and could meet its production forecasts for 2015.
Knox said the company’s underlying performance remained strong, with production rising in the second half.
He insisted Santos had no need, or plan, to raise equity, noting that it had $2 billion in cash on its books and undrawn debt facilities.
It was also on track to realise cash flow benefits from its growth investments and was continuing to consider possible asset divestments.
“The current volatile oil price means that Santos is focused on driving operational efficiency, 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 interests of the company or the interests of shareholders,” Knox said in a statement on Thursday.
Knox’s comments came after oil prices slipped to new five-year lows overnight.
West Texas Intermediate crude has fallen to nearly $US60 a barrel, 40 per cent below what it was just six months ago.
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The latest slide was driven by OPEC forecasting demand for the oil cartel’s crude would fall to an 12-year low of 28.92 million barrels a day in 2015.
The cartel has refused to cut back production despite suppliers in North America and elsewhere stepping up production.
Santos’s shares have been hammered by the sliding oil price, shedding more than a third of their value in less than three weeks.
The stock was 43 cents, or 5.6 per cent, lower at $7.20 at 1034 AEDT.
