Santos just manages to keep its nose above water as profits get crushed

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Santos saw its net profit drop 82% to $37 million for the half year as falling global oil prices sucked revenue from the energy company’s business.

The result was below analyst forecasts. Most had been expecting around $60 million.

The oil and gas producer managed to get just $US60 per barrel in the six months to June compared to $US115 in the previous first half, a 47% fall.

Santos has been cutting costs and increasing volumes, trying to catch falling commodity prices.

Production grew 13%, capital expenditure dropped by 55% below 2014 levels and production costs per barrel fell by 11% to $A13.70 per barrel of oil equivalent.

“We have been and continue to take appropriate steps to reduce costs further,” CEO David Knox said.

The company has been working with suppliers and contractors and is on track to deliver the 2015 target of $180 million in savings.

“Tightly managing costs will continue to be a key focus as we work through the current oil price environment,” Knox said.

“We have again delivered strong operational performance including higher production and sales volumes thanks to good performance from our LNG assets and stronger Cooper Basin gas production.”

The $US18.5 billion Queensland GLNG project is on track to deliver its first LNG around the end of the third quarter.

A full franked interim dividend of 15 cents was declared.

Santos shares fell than 7% yesterday to $5.61. Here’s a summary of the half year results:

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