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Joanna Vaughan
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joanna.vaughan@santos.com
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Andrew Nairn
+61 8 8116 5314 / +61 (0) 437 166 497
andrew.nairn@santos.com
Santos Limited ABN 80 007 550 923
GPO Box 2455, Adelaide SA 5001
T +61 8 8116 5000 F +61 8 8116 5131
www.santos.com
ASX / Media Release
21 February 2018
Santos 2017 full-year results
New strategy delivers 433% increase in underlying profit to US$336 million
Full-year (US$ million) 2017 2016 Change
Product sales 3,107 2,594 20%
EBITDAX(1) 1,428 1,199 19%
Underlying profit(1) 336 63 433%
Net loss after tax (360) (1,047) 66%
Operating cash flow 1,248 840 49%
Free cash flow(1) 618 206 200%
Net debt 2,731 3,492 22%
Santos Managing Director and Chief Executive Officer Kevin Gallagher said the company’s full-year
results demonstrated a significant turnaround in business performance ahead of plan.
“We have removed substantial costs, reported a material increase in underlying profit, generated
significant free cash flow and reduced net debt.
“Strong operating performance across the core assets resulted in sales volumes above the upper
end of guidance and production toward the top end of guidance.
“Santos is now a stronger, more resilient company with the capacity to execute and bring on-line
growth opportunities across its core long-life natural gas assets,” Mr Gallagher said.
Excluding the net impairment taken at half-year and other significant items, the company recorded
an underlying profit of US$336 million, up 433% on the corresponding period.
Operating cash flow was up 49% to US$1.2 billion and free cash flow(1) up 200% to US$618 million.
Strong free cash flows reduced net debt to US$2.7 billion at the end of 2017.
Consistent with the company’s focus on debt reduction, the Board has determined not to pay a final
dividend. In light of the substantial turnaround in the underlying business, should market conditions
remain supportive and the company achieve its debt reduction target ahead of plan, the Board will
consider capital management strategies to return value to shareholders.
(1) EBITDAX (earnings before interest, tax, depreciation, depletion, exploration, evaluation and impairment), underlying profit and free cash flow (operating cash flows
less investing cash flows net of acquisitions and disposals) are non-IFRS measures that are presented to provide an understanding of the performance of Santos’
operations. Underlying profit excludes the impacts of asset acquisitions, disposals and impairments, as well as items that are subject to significant variability from
one period to the next, including the effects of fair value adjustments and fluctuations in exchange rates. The non-IFRS financial information is unaudited however
the numbers have been extracted from the audited financial statements. A reconciliation between net loss after tax and underlying profit is provided in the Appendix
of the 2017 full-year results presentation released to ASX on 21 February 2018.
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The 2017 full-year result includes the previously announced net impairment charge of US$689 million
after tax taken in the first half against the GLNG (US$867 million) and AAL assets (US$149 million),
partially offset by a positive net write-back to the Cooper Basin of US$336 million. Additional
impairment charges of US$14 million after tax were recorded against other assets in the second half.
Retired Santos Chairman Peter Coates AO said: “The announcement of the financial results for 2017
marks my hand-over to Keith Spence as Chairman of Santos.
“In my nine years as a Director and nearly seven years as Chairman, Santos has undergone an
incredible degree of change and many challenges.
“The Board, working closely with Kevin Gallagher and his largely new senior executive team have
made lasting changes to the way Santos works over the past two years, creating a materially lower
cost structure for the entire business. The productivity improvements have opened up new
opportunities for growth in the Cooper Basin, NSW and Queensland.
“We have also continued the process of board renewal with six new directors appointed over the
past three years and our new Chairman identified. The final step in this corporate overhaul is my
hand-over to Keith who has formally assumed the role of Santos Chairman.
“The Company is again in good shape and enjoys good prospects. I wish shareholders, Directors,
the management team and all employees every success from here,” Mr Coates said.
Outlook
Mr Gallagher said Santos’ new operating model has set a disciplined framework to drive shareholder
value.
“In 2018, we will increasingly focus on growth as we progress significant opportunities like Barossa
backfill of Darwin LNG, appraisal drilling in PNG, seek new market opportunities around our WA gas
assets, and ramp-up activity in the Cooper Basin and GLNG.
“Santos is also on track to supply about 70 petajoules of gas into the east coast domestic market
this year, which is 11 per cent of the ACCC’s expected demand for 2018.
“Santos has been a reliable and competitive domestic gas supplier on the east coast for nearly 50
years and will continue to be a significant market participant offering supply reliability and
competitive prices and terms over the coming years,” Mr Gallagher said.
All guidance for 2018 is maintained.
Ends.
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