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17-335MR Santos writes down assets
ASIC notes the decision by Santos Limited (Santos) to write down the value of its oil and gas assets by US$764 million in its financial report for the half-year ended 30 June 2017.
ASIC had raised concerns that the discount rate used by Santos in supporting the value of its oil and gas assets in its financial report for the year ended 31 December 2016 was too low. In making the write down in the value of the assets at 30 June 2017, Santos applied a higher discount rate. Santos also referred to the impact of lower US$ oil and gas prices and to changes in industry regulation in Australia.
As outlined in ASIC media release 17-162MR ASIC calls on preparers to focus on the quality of financial report information, including the use of relevant supportable assumptions in impairment testing.