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Underlying profit up 42% to $572 million for 2008

  • PETRONAS partnership leads to record $1.7 billion net profit
  • Good progress on LNG growth strategy
  • Strong balance sheet: $1.6 billion of cash and 10% gearing

Santos today announced a strong uplift in underlying net profit of 42% to $572 million after tax for the year ended 31 December 2008.

The solid financial results in 2008 were built on the strong performance of Santos’ base businesses in Australia and Indonesia. This has enabled Santos to continue to develop its LNG growth projects, strengthen its balance sheet and maintain the final dividend to shareholders, despite the impact of the global financial crisis.

The record net profit of $1.7 billion after tax included a $1.2 billion profit from the sale of a 40% interest in the Gladstone LNG project to Malaysian oil and gas major PETRONAS. The result also reflected higher oil and gas prices, offset by lower sales volumes and asset impairment charges.

Results Highlights

  • Sales revenue up 11% to a record $2.8 billion.
  • Underlying net profit after tax up 42% to $572 million.
  • Net profit after tax up 359% to a record $1.7 billion.
  • Operating cash flow up 21% to $1.5 billion.
  • Sale of a 40% interest in the integrated two-train Gladstone LNG (GLNG®) project to PETRONAS for US$2.5 billion.
  • Strong balance sheet: $1.6 billion of cash and gearing of 10%.
  • Asset impairment charges of $140 million after tax.
  • Final dividend of 20 cents per share fully franked.
  • 2008 dividends declared of 42 cents per share, up 5% from last year.

Sales revenue increased by 11% to a record $2.8 billion. Higher commodity prices were evident across the Santos portfolio, with average realised Australian dollar oil, condensate and natural gas prices increasing by 28%, 20% and 12% respectively. The weaker Australian dollar increased revenue by $64 million compared to last year.

Excluding the GLNG sale, earnings before interest, tax, depreciation, amortisation and exploration (EBITDAX) increased by 7% to $2.0 billion.

Production of 54.4 million barrels of oil equivalent was within the Company’s guidance range. Production was 8% lower than last year, primarily due to higher downtime from producing assets in Western Australia, including the impact of the Varanus Island incident on John Brookes production. This was partially offset by new production in Asia and higher production of coal seam gas.

Production costs increased in line with company guidance primarily due to Cooper gas and oil costs, Mutineer-Exeter workover costs, and costs from new sources of production including Oyong and Sangu.

Operating cash flow increased by 21% to $1.5 billion, primarily reflecting higher operating results and lower tax payments.