Santos sinks to loss as pandemic guts LNG sales

Santos, one of the nation's largest oil and gas producers, has sunk to a half-year loss of more than $400 million as the coronavirus crisis pummels energy demand and commodity prices around the world.

The half-year loss of $US289 million ($401 million) comes after Santos took a write-down of up to $1.1 billion from the value of its assets in July due to the severity of the pandemic's hit to crude oil and liquefied natural gas (LNG), one of the nation's most valuable exports.

Australia’s booming LNG industry has been stalled by a severe downturn in energy demand.Credit:Robert Shakespeare

Stripping out one-off costs, the company's underlying profit fell 48 per cent to $US212 million for the half-year to June 30.

Santos managing director Kevin Gallagher said the business had delivered record production volumes and strong free cash flow over the half-year, despite the significantly lower oil prices.

"These results again demonstrate the resilience of our cash-generative operating model in a lower oil price environment and strong operational performance across our diversified asset portfolio," he said.

The company said it would pay a US2.1¢ per share interim dividend, at the lower end of its payout range of 10-30 per cent of free cash flow. Citing economic uncertainty and the lower oil price environment, the board described the dividend level as "prudent" and said the level would be reviewed for the final dividend in February.

Australia's $50 billion-a-year LNG export industry has been hammered by this year's unprecedented downturn in global energy demand, which caused the benchmark Brent crude oil to crash from $US60 a barrel to below $US20 in April, as COVID-19 kept factories closed, planes grounded and cars parked in driveways.

Santos sells a greater proportion of LNG on long-term contracts to Asia and fewer cargoes on the spot market compared to some of its rivals, meaning it has been less exposed to the crash to rock-bottom LNG prices this year.

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