Santos earnings hit by carbon tax

Santos earnings were squeezed by the cost of the carbon tax, which helped to push its tax bill higher during the half.
Nanjing Night Net

The total tax bill rose to $192 million from $180 million a year earlier, it said, with the income tax component rising to $156 million from $136 million. Separately, Santos said it paid $36 million in to carbon-related costs.

Declines in output, offset by a rise in product prices saw Santos post a slightly higher June half net profit of $271 million, up from $262 million a year earlier. Revenue rose to $1.53 billion from $1.49 billion.

Output for the half declined 4 per cent to 24.5 million barrels of oil equivalent, which is forecast to recover slightly during the second half to 52-55 million for the full year.

The underlying net profit for the half declined to $251 million from $283 million. A steady interim dividend of 15 cents a share has been declared.

The group’s Queensland gas export project is 60 per cent completed, it said, with the capital cost estimated at $US18,5 billion.

‘’Operating cashflow will more than double’’ over the next three years, the group’s chief financial officer, Andrew Seaton, told analysts when discussing the results.

The company will consider either higher dividends or buy-backs once the PNG gas export project is commissioned.

The first gas for this project is to begin flowing in a matter of weeks, with commissioning due to commence during the final quarter of 2013, with the first gas to flow to customers from 2014.

Santos has a 13.5 per cent equity in this project, along with a 30 per cent share of one of the three Queensland export gas projects.The Queensland project is to be commissioned in 2015.

Santos also said the  slowing in resource sector spending has led to a hefty reduction in costs, averaging 15 per cent, and ranging as high as 30 per cent for some big ticket items.

It said it was seeing increased ‘‘competitive tension’’ between bidders, and it was also increasingly willing to dump long term suppliers ‘‘if they are not coming across on costs’’, the chief executive, David Knox said.

This story Administrator ready to work first appeared on Nanjing Night Net.

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