The result follows a $541 million (US$388 million) net profit for the same period last year and comes despite a 4 per cent increase in production to a half-year record of 46.9 million barrels of oil equivalent.

Sales revenue was down 16 per cent compared to 2019 due to COVID-19, which caused the average realised oil price to fall 34 per cent to US$47.83/barrel and the average realised liquefied natural gas (LNG) price to drop 14 per cent to US$8. 57/ million British thermal units (mmBtu)

In a statement to the Australia Securities Exchange this morning, the Adelaide-based company attributed $943 million (US$677 million) decrease in net profit on last year to decreased gas and oil prices mainly resulting from the COVID-19 macroeconomic impacts.

It also cited an increase in the before tax impairment loss of $756 million posted in 2020, compared to the $38 million posted in 2019, as a contributing factor.

Santos Managing Director and Chief Executive Officer Kevin Gallagher said the first half of 2020 had delivered record production volumes and strong free cash flow, despite the significantly lower oil prices.

“COVID-19 and the low oil price has presented a challenging time over the past couple of months however our disciplined, low-cost operating model has allowed us to navigate these challenges while remaining well-positioned for growth on the other side,” he said.

“Our disciplined operating model enabled us to maintain activities key to sustaining strong operational performance and stable production across all of our core assets, and we are now targeting a free cash flow breakeven oil price of less than US$25 per barrel in 2020.

“Our balance sheet is strong with over US$3 billion in liquidity and we remain well-positioned to leverage our growth opportunities when business conditions improve.”

Santos finalised its acquisition of ConocoPhillips assets in northern Australia and Timor-Leste in May for a reduced up-front purchase price and is integrating the two businesses.

However, it also decided to defer a final investment decision on its Barossa project, offshore from Darwin, during the volatile six-month period.

Last month, Santos flagged impairments of $1.1 billion, mostly on its Queensland-based Gladstone LNG project, owing to a more than 10 per cent reduction in the company’s long-term oil price assumption.

“Santos remains confident that when prices and demand recover, our projects will be better placed than those in our competitor countries to leverage the opportunities that will inevitably re-emerge,” Gallagher said in a statement to the ASX this morning.

Santos shares were down almost 5 per cent to $5.59 at 11am following this morning’s announcement.

The company’s share price reached $9 on January 15, its highest level since 2014 but plummeted in February and March to a low of $2.75 on March 19 before recovering some ground in recent months.

Santos was ranked No.1 in InDaily’s SA Business Index annual listing of South Australia’s top 100 businesses in 2019.

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