GLADSTONE PRODUCES FIRST GAS BUT COSTS SANTOS $1 BILLION

SANTOS' (ASX: STO) Gladstone liquid natural gas plant has cost the company US$1.05 billion, just months after it made its first shipment of gas.

The energy company reported its first-half results today, announcing a $1.1 billion net loss, largely led by the GLNG write-off, but also affected by low oil and gas prices, which pushed the company to an underlying net loss of US$5 million after tax.

The positive impact of a 32 per cent increase in sales volumes was more than offset by lower oil and oil-linked LNG prices, as a result sales revenue decreased by 6 per cent to US$1.2 billion.

The average realised oil price fell 29 per cent to US$42.79 per barrel, while the average LNG price was 42 per cent lower at US$5.70/mmbtu.

Managing director and CEO, Kevin Gallagher, who started with the company in February, says, Santos' goal is a breakeven point of between US$35-$40 per barrel.

"We have made good progress in the first half towards this goal and are forecasting a free cash flow breakeven oil price of US$43.50 per barrel for 2016, down from US$47 per barrel," he says.

If Santos can achieve those breakeven prices, it bodes well for the rest of the year, as the WTI Crude Oil price has improved to US$46.79 per barrel today.