Gas giant's Curtis Island venture takes $1 billion hit
GAS giant Santos has slashed $1.1 billion from the value of its Gladstone Liquefied Natural Gas project on Curtis Island as it continues to deal with low oil prices.
The write-down of GLNG was announced yesterday and will be reflected in Santos's half-yearly results this month.
It follows Origin Energy's decision last week to write down $1.2 billion from the value of its Australia Pacific LNG project.
"Santos has lowered its Brent oil price forecasts to US$50/bbl in 2017, US$55/bbl in 2018, US$60/bbl in 2019, US$65/bbl in 2020, US$70/bbl in 2021 and US$70/bbl (real 2017) from 2022," Santos said.
"As a result of the changes in assumptions, Santos expects to recognise an impairment of GLNG of approximately US$870 million (AU$1.1b) after tax, predominantly due to lower oil prices."
It is the third write-down of the GLNG venture, in which Santos has a 37.5% stake, after a $565million write down in February 2016, and $1.5billion in August last year.
A write-down is a reduction in value of an asset.
The Institute for Energy Economics and Financial Analysis slammed the gas giant for its third write- down yesterday, saying
the company "continued to lose money for its shareholders".
"Earlier in the year, IEEFA predicted that Santos had overvalued its Gladstone LNG asset by US$1billion asset," gas analyst Bruce Robertson said.
"It would appear that investors in Origin and Santos can look forward to further material write- downs in Santos's GLNG venture and in Origin's APLNG joint venture," Mr Robertson said.
Meanwhile Santos announced this week further investments into the domestic market from the GLNG venture.
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