Santos has flagged writedowns and cuts to its oil and gas reserves as it joins the growing list of energy players hit by the slump in commodity prices.
As oil prices hover around a 12-year-low of $US29 a barrel, Santos on Friday said it will push ahead with its business review focusing on preserving cash.
Executive chairman Peter Coates is confident the company can ride out the oil price downturn.
"Santos is well placed to withstand an extended period of low oil prices, with $4.8 billion in cash and committed undrawn debt facilities, and no material debt maturities until 2019," he said in the company's fourth quarter production report.
Santos remained focused on cutting its capital expenditure and would build upon the significant improvements the company had made to its operating efficiency, Mr Coates said.
A Santos spokeswoman declined to elaborate on the possible size of the writedowns and reserve cuts, noting an update will be published with its 2015 financial results on February 19.
Capital expenditure in 2015 dropped 54 per cent from a year earlier to $1.66 billion, beating the company's guidance of $1.8 billion.
In November, Santos announced $3.5 billion of capital initiatives to strengthen the balance sheet and cut debt, plus the appointment of Kevin Gallagher as chief executive officer.
Lucinda Chan, division director at Macquarie Bank, said the bad news was widely expected following similar announcements from heavyweights Woodside Petroleum and BHP Billiton.
"I think everybody is probably of the view that hopefully they can navigate themselves out of the current environment somehow," Ms Chan said.
Santos shares soared by more than 10 per cent, driven mainly by a six per cent jump in crude oil prices overnight, said Toby Grimm, managed portfolio analyst at Baker Young Stockbrokers.
Santos is highly leveraged to oil price movements through its significant investment in the LNG project in Queensland, he added.
Santos shares gained 28 cents to $2.84, while the benchmark S&P/ASX 200 gained just more than one per cent.
Woodside Petroleum on Thursday flagged writedowns of up to $US1.2 billion ($A1.74 billion) after slashing its oil price forecasts.
Last week, mining giant BHP Billiton announced a $US7.2 billion ($A10.41 billion) writedown in the value of its US shale assets, as oil prices continued to tumble.
Santos on Friday said it produced 57.7 million barrels of oil equivalent (mmboe) during 2015, up seven per cent on the previous year, and the highest annual production since 2007.
The result was at the low end of the company's guidance range of 57-59 mmboe.
For the fourth quarter ended December 31, Santos produced 4.9 mmboe, down one per cent from the same period a year earlier.
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