Santos will book non-cash impairments of up to $US800 million ($A1.1 billion), joining a number of global energy majors forced to write down assets after a coronavirus-induced slump in oil prices.
The oil and gas producer expects to record non-cash charges of between $US700 million ($A997 million) and $US800 million ($A1.1 billion)in its 2020 interim results.
Most of the impairment charges relate to Santos’ Gladstone Liquefied Natural Gas (LNG) project in its Cooper basin fields in Queensland, owing to a more than 10 per cent reduction in the company’s long-term oil price assumption.
Energy companies have been forced to write down assets or delay funding after crude prices collapsed this year owing to a breakdown in talks between Russia and Saudi Arabia and demand destruction caused by coronavirus-led restrictions.
Woodside Petroleum last week warned of a $US4.37 billion hit to its first-half results, following global oil majors BP and Royal Dutch Shell’s announcements of huge impairments on their assets.
Adelaide-based Santos said it had sufficient debt headroom and was not under threat at “current oil prices for a number of years”, adding that the impairments will have no impact on its reserves.
Santos is set to report its first-half results on August 20.