Australian gas firm, Santos, has reduced its 2015 capital spend by 25%, while the company’s coalbed methane (CBM) to LNG export facility at Gladstone remains on track to begin shipping gas to overseas markets in 2015.
The firm’s capital expenditure is now projected at AUS$2 billion – down from a previous guidance of AUS$2.7 billion.
Making the announcement, Santos Managing Director & CEO, David Knox, reaffirmed the strength of Santos’ financial position, notwithstanding the substantial fall in the oil price and the company’s share price in recent weeks.
“We remain on track to realise the cash flow benefits in 2015 and 2016 from our growth investments in recent years,” Knox said.
The company’s LNG export facility at Gladstone will take gas piped from coal seams elsewhere in Australia and convert it into LNG for shipments to overseas markets – which, according to analysts, are most likely to be the Chinese and southeast Asian markets.
The CBM-LNG export plant is making good progress, however, and remains on track to begin shipments of LNG next year.
“The GLNG project is 90% complete and remains on track for first LNG in the second half of 2015. First commissioning gas is expected to be introduced to the LNG plant before the end of 2014. Offtake agreements are in place with large, well-capitalised buyers,” Knox said.
Santos also dismissed the idea that the recent reduction in credit rating by credit agency Standard & Poor’s would have any substantial effect on the company.
In a statement, Santos said “While Standard & Poor’s has reduced its rating of Santos’ senior debt this week, the revised BBB rating is the same as the current rating for Origin Energy, Amcor, AGL Energy, Crown Resorts and Boral. S&P in their announcement noted Santos’ track record of a conservative funding approach, favourable debt maturity profile and adequate liquidity.”
The company said it was committed to restoring value for shareholders. Despite “volatile” prices in the market place, the company said it would focus on driving operational efficiency, reducing costs, prudently managing capital and “making sure our balance sheet remains strong.”
Written by Sam Dodson
Image courtesy of BG Group.
Read the article online at: https://www.worldcoal.com/cbm/11122014/santos-reduces-capital-spend-in-2015-cbm165/