Santos slashes spending

Santos will slash its projected 2015 spending by a quarter in the wake of falling oil prices.

The energy company will reduce its capex from its previous guidance of $2.7 billion down to $2 billion.

This year the company has forecast spending of around $3.5 billion, which was down from the 2013 spending levels of $4.1 billion.

Santos CEO David Knox stated that "the current volatile oil price means that Santos is focused on driving operational efficiency, reducing costs, managing capital, and making sure our balance sheet remains strong".

Despite the cutting of its expenditure, Knox reaffirmed the company's financial positions, stating: "We remain on track to realise the cash flow benefits in 2015 and 2016 from our growth investments in recent years".

"The PNG LNG project is producing at full capacity; the GLNG project is 90 per cent complete and remains on track for first LNG in the second half of 2015. First commissioning gas is expected to be introduced to the LNG plant before the end of 2014. Offtake agreements are in place with large, well-capitalised buyers."

The decision to pare back spending comes as Standard & Poor's reduced Santos' senior debt rating this week from BBB+ to BBB, putting it at the same level as Origin Energy, AGL, and Boral.

Knox added: "To be clear, the underlying performance of our business remains strong with production continuing to grow in the second half of the year."

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