Santos profit slumps 82pc on oil price drop, CEO to leave

PHOTO: Santos has a big investment in a large Gladstone LNG plant. 

Santos has seen its half-year profit slump 82 per cent to $37 million, driven by a near halving in oil prices over the past year, and announced its long-serving chief executive David Knox will leave the company.

The company said that, in light of "continuing pressure" on its share price - which is at a 12-year low and close to its lowest price this century - and approaches from other parties about purchasing some of its assets, Santos will undertake a strategic review.

Its chairman Peter Coates will upgrade his role to that of executive chairman and take responsibility for conducting that review.

"No options will be ruled out from consideration, but neither is any particular option a preferred course at this time," Mr Coates said in a statement.

Meanwhile, current managing director and chief executive David Knox will step down as soon as his replacement is found.

"After seven years as CEO and with the commencement of production at the company's GLNG project now imminent, the board and David have agreed that it is an appropriate time to institute a succession of leadership," said Mr Coates in a statement.

However, neither move has assuaged panicked investors, who have again sold off Santos shares heavily amid another general slide in energy stocks - the company's shares touched a low of $5.18 at one point this morning, the lowest since 2000, and were still 5.4 per cent down at $5.31 by 10:28am (AEST).

The Adelaide-based oil and gas producer revealed a 15 per cent fall in revenue as the average price it got for oil fell from $US115 a barrel a year ago to just $US60 in the most recent half-year.

Oil prices have fallen even further since June 30, with West Texas crude clinging just above $US40 a barrel and the Brent price down at $US45 a barrel.

Santos chief financial officer (CFO) David Seaton told analysts that the company expects to free cash flow positive (earning more than it has to spend on investment and maintenance) in 2016, provided oil prices bounce back to $US45-50 a barrel and the Australian dollar stays roughly where it is or falls further.