The company’s overall after-tax net profit in the six months ended 30 June was $86.5 million, down from $135.6 million, chiefly due to the loss of production caused by the Moomba incident in January.

Santos revealed that net profit for the first half would have been around $62 million higher, or approximately $149 million, without loss of earnings from the incident. The estimated adverse impact of the fire on the company’s full-year 2004 after-tax profit, after insurance recoveries, remains around $25-30 million.

The lower first half result does not include any recovery of losses expected from insurance polices covering business interruption or property damage caused by the Moomba incident.

The result also includes one-off after-tax restructuring costs of $14 million, which are on track to deliver significant profit improvements from 2005.

However, Santos’ managing director John Ellice-Flint, said that the company would turn its fortunes around in 2005 with several key projects, especially production from the Bayu-Undan liquids project and development of the Mutineer-Exeter oil field.

Further projects, including development of the John Brookes and Casino gas fields, Bayu-Undan LNG project and Indonesian gas developments, would likely further supplement the production portfolio.

The impact of the Moomba incident, combined with declining field performance from producing fields in Western Australia and Victoria, resulted in Santos achieving total production of 21.2 million barrels of oil equivalent (mmboe) in the latest June half year compared with 26.8mmboe in the previous corresponding period. The Moomba incident resulted in the loss of 4.0mmboe compared with the 2003 first half.

Sales volume for the six months fell by 4.5mmboe from 26.5mmboe to 22.0mmboe, primarily reflecting lower gas volumes. Accordingly, revenue declined from $716.0 million to $590.5 million, partly offset by higher average oil and gas prices.

Additionally Santos will offer a Franked Unsecured Equity Listed Securities (FUELS) instrument and the redemption and buyback of its existing Reset Convertible Preference Shares (Resets).

The offer of FUELS is for $500 million while the redemption and buyback of Resets will be for all outstanding Resets with a total face value of $350 million.

Some of the proceeds from the issue of FUELS will be used to fund a redemption of Resets. The remaining funds will be used to partially fund Santos' growth development program.

Santos chairman Stephen Gerlach said the offer of FUELS and the redemption and buyback of Resets is consistent with the company’s commitment to capital management.