“I understand the mood of the meeting, I understand how people feel,” Coates said while answering a barrage of shareholder questions on why Santos didn’t react sooner to plummeting oil prices that led to it posting a $2.7 billion loss for 2015.

"We got it wrong, sure ... we can't control the oil price but we can control our business."

He later told journalists that “the key point is that I did promise shareholders at last year’s AGM that we would move from this difficult period as a leaner, more agile company and that it would be capable of operating sustainably at today’s oil prices,” Coates said.

“We’re well advanced in that transformation process, and you can see from today’s discussion internally [CEO] Kevin [Gallagher] is well underway with what he’s doing to get us there.

“2015 was a tough year, we recognise that, but it’s also important to point out how well the company performed operationally, with the highest production in seven years and our best ever safety performance.

“Unfortunately that good safety performance was overshadowed by the low oil price environment, but it is a credit to our employees that they remained focused during that period.

“Our strength is clearly our operational capacity. [Considering] that, along with our determination to drive costs down, the contribution Kevin will make to that equation, I think shareholders have good reason to be confident about the future.”

Gallagher said the company’s results were “disappointing”, and it showed the “stark reality that our business must be sustainable in a low oil price environment”

On that front, he sparked fresh speculation that asset sales were imminent when he said Santos’ operating model had to be free cash flow positive on a “portfolio level, somewhere between $35-40/barrel of oil equivalent”.

“There will be individual assets in that portfolio that will be lower than that in terms of free cash flow breakeven, and there will be some that will be higher than that,” he said.

“So when Peter refers to potentially reshaping the portfolio in the future, that would be trimming the portfolio to ensure we have the right mix of assets, the right ownership levels in the different assets to ensure we have a model that’s free cash flow breakeven somewhere between $35-40/bbl.”

However, he also flat-out dismissed rumours that Santos was looking to flog off its Cooper Basin assets, saying: “There is no active asset sales process in play at this point in time.”

Coates said the company would eventually look at asset sales down the track.

“Our focus for now is solely on consolidating and transforming into a low-cost producer,” Coates said.

Unconventionally speaking

Gallagher said his focus was on stabilising the business and developing the operating model so it is a “low-cost, high-reliability and high-performance organisation – and by doing that we will generate the cash from our business to reduce the debt”

“Ultimately that gives us optionality going into the future,” he added.

Speaking specifically to Santos’ Cooper Basin unconventional assets which include shale and tight gas, Coates said the company would look at “anywhere we think there are economic and attractive resources”

“If we can drive our costs down we open up all sorts of other opportunities,” Coates said.

“All of a sudden areas that were not viable at today’s operating costs may be viable at tomorrow’s operating costs.”

The Cooper Basin is believed to have more than 200 trillion cubic feet of unconventional resource, but is still very early-stage.

Virtually all unconventional drilling ended when Chevron Corporation quit the basin, pulling

out of a $349 million joint venture it inked with Beach Energy in 2013 after spending $US190 million in the first phase of work in the Nappamerri Trough.

JVs previously chasing unconventionals in the Cooper included Santos/Origin Energy/Beach, BG Group’s farm-in with Drillsearch, Strike Energy, and Senex Energy.

Regarding future opportunities, Gallagher said “the good thing is that the asset revue is well down the line, and as we do that, right across the board we can see growth opportunities in the future”

Independent analyst Peter Strachan told Energy News that shale gas was “problematic” in the Cooper Basin because it tends to be anywhere between 12-30% carbon dioxide, so costs are higher for processing and getting the gas to market.

Jobs

Santos has shed 825 jobs since oil prices starting falling mid-2014, and Gallagher said more losses would come.

“The reality is that as we drive efficiencies and costs out of our business there will undoubtedly be some job losses,” he said. “We’ve not put any targets on that. We just want to design a very efficient business.

“The most important thing is how we manage the communications to our staff during that process to ensure that as we take people out of the business, we manage to do that well.”