Santos impairs everything but the big one

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From the SMH:

Santos says it expects to write $1.6 billion off the value of its assets when it announces full-year results on February 20.

“The impairment charge reflects the lower oil price environment” and relates to the “historical book value of the company’s assets”, the company said in an announcement to the ASX this morning.

There is no impairment of GLNG, the company said, “which is on track for first LNG in the second half of 2015, within budget”.

Santos will now assume brent oil prices of $US55/barrel this year, $US70/bbl in 2017, $US90/bbl in 2018 and $US90/bbl from then on.

Very amusing. It should read $55, 60, 60, 60. The big, fat GLNG writedowns will have to wait for a new day, and new management. In the meantime a white elephant balance sheet can act as a nice overhang for shareholders.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.