Santos has posted a giant $935 million loss on falling oil prices

Aerial view of Santos GLNG’s LNG plant under construction at Curtis Island, Gladstone

Energy producer Santos is cutting capital spending and slashing costs after posting a loss of $935 million for the full year as falling oil prices bite into the business.

The loss came after the previously announced writedowns of $1.563 billion.

Capital expenditure in 2015 is forecast at $2 billion, 44% lower than 2014. And Santos expects to cut production costs per barrel by 10%.

However, the full-year underlying profit is up 6% to $533 million, sales revenue is up 12% to $4 billion and production is 6% higher at 54.1 mmboe (Million Barrels of Oil Equivalent).

Oil prices have halved to about $US50 a barrel over the last 12 months but Santos is estimating a recovery to $US90 by 2019.

CEO David Knox said the company made significant progress in 2014 despite the loss.

He says the results reflect many achievements including the start-up of PNG LNG ahead of schedule and the start of commissioning the GLNG project in Queensland. The GLNG project is more than 90% complete and remains on track for first LNG in the second half of 2015.

“Santos also delivered its highest production in five years, record sales revenue and strong operating cash flow,” Knox said.

The final dividend has been maintained at 15 cents fully franked. This brings the full-year dividend to 35 cents, up 5 cents on the prior year.

Santos shares were down more than 3% to $7.98.

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