SANTOS SAYS PROFITS HIT BY OIL PRICE FALL Leading Australian onshore oil and gas producer, Santos Ltd <STOS.S>, said its 1986 results were hit by sharp reductions in prices for crude oil, condensate and liquefied petroleum gas (LPG). The Cooper Basin producer earlier reported a fall in net profit to 88.67 mln dlrs from 144.04 mln in 1985. Santos chairman Sir Brian Massy-Greene said in a statement that increased production, particularly of oil and LPG, along with reduced operating costs and reduced or deferred oil exploration and development outlays, were helping Santos deal with an adverse business climate. Santos said it remained financially strong with an injection of 84 mln dlrs from the second instalment of a 1985 rights issue, and had cash reserves of 381.3 mln dlrs at the end of 1986 against 401.9 mln a year earlier. It said it had also made significant progress in repaying debts and at year end the ratio of debt to shareholders' funds had fallen to 1.01 from 1.54. Santos yesterday announced a 4.00 dlr a share takeover bid for the 96.93 pct it did not already hold in oil and gas company <TMOC Resources Ltd> -- valuing the target at 248.5 mln dlrs. Santos said 75 pct of its loans were U.S. Dollar denominated and significant currency purchases were made during the year to maintain that natural hedge. At year end it held 145 mln U.S. Dlrs, enough to meet all 1987 repayments. Santos said it had a successful gas exploration program, finding 172 billion cubic feet in South Australia, but oil exploration was less successful with 1.62 mln barrels added to reserves -- less than depletion during the year. Cooper Basin producers are committed to a two-year scheme to double gas exploration while Santos said its 1987 budget for oil exploration had been boosted 20 pct. Santos said the outlook for 1987 depended on prices and production volumes but with extra oil exploration and encouraging gas finds there were grounds for optimism. But it called on the goverment to continue fostering domestic producers through the Import Parity Price scheme. "It makes no sense to abandon this policy now when exploration is at its lowest level for many years and when Australia's oil self-sufficency is expected to decline rapidly," Massy-Green said.