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Financial summary

  • Production of 59.1 mmboe and sales revenue of $2.5 billion, in-line with forecast
  • EBITDAX of $1,733 million, in-line with market consensus
  • Net profit after tax of $441 million down 32%, negatively impacted by higher DD&A and one-off items
  • Final dividend of 20 cents per share, full year dividend unchanged at 40 cents per share
  • Strong 2007 reserves replacement ratio of 175% and 178% on a 1P and 2P basis respectively
  • Contingent resources increased 15% to 2.6 billion boe

Santos today reported earnings before interest, tax, depreciation, amortisation and exploration (EBITDAX) of $1,733 million and net profit after tax (NPAT) of $441 million for the year ended 31 December 2007.

The operating result, as measured by EBITDAX, was within analyst consensus expectations, and reflected a 3% decline in production volumes combined with an increase in the proportion of lower-margin gas produced.

Higher commodity prices were evident across Santos’ portfolio, with the average gas price increasing by 6% to $3.95 per gigajoule. A 19% increase in US dollar oil price was offset by the stronger Australian dollar exchange rate. In Australian dollar terms, the oil price of $92.10 was 3% above 2006.

The NPAT result was lower than analyst estimates due largely to increased depreciation and depletion expense as a result of higher future development costs which are being felt across the industry. In addition, costs associated with the Moonie to Brisbane pipeline incident ($26 million), an $8 million loss on embedded derivatives in sales contracts and a small increase in provisioning for the Sidoarjo mudflow incident ($8 million) had an impact.

For the fourth successive year, Santos increased its year end reserves position.

Commenting on the 2007 results, Santos’ Managing Director, Mr John Ellice-Flint said the Company’s operating performance was broadly in line with its sales and production guidance provided at this time last year.

“Santos’ operating performance in 2007 was sound, although the lower profit reflects industry cost pressures, which are impacting on operating expenses and expected future development costs.

“Historically, Santos’ focus has been on the domestic Australian market, where we are the largest gas producer. Looking forward, our strategy will leverage our portfolio to the much higher prices and volumes available for our resources in Asia,” he said.