Santos Limited's 2024 Annual Report reveals a 5% drop in production and a 9% fall in sales revenue, offset by progress in carbon capture and storage projects and emissions reductions. The company posted a net profit of $1.224 billion, down 14% from 2023.
- 5% decrease in production volume to 87.1 mmboe
- 9% decline in sales revenue to $5.4 billion
- Net profit of $1.224 billion, down 14% from 2023
- Successful start-up of Moomba CCS project storing 340,000 tonnes CO2e
- 26% reduction in Scope 1 and 2 emissions since 2019-20 baseline
Overview of Financial Performance
Santos Limited’s 2024 Annual Report details a challenging year marked by a 5% decline in production volume to 87.1 million barrels of oil equivalent (mmboe) and a 9% drop in sales revenue to US$5.4 billion. These decreases were primarily driven by lower realised prices for liquefied natural gas (LNG) and crude oil, alongside natural field declines in key regions such as Western Australia and Papua New Guinea.
Despite these headwinds, Santos delivered a net profit after tax of US$1.224 billion, a 14% decline compared to 2023, with underlying profit down 16% to US$1.201 billion. The company maintained a disciplined low-cost operating model, with production costs per barrel rising modestly by 3% to US$7.85.
Operational Highlights and Project Progress
Operationally, Santos achieved several significant milestones. The Moomba Carbon Capture and Storage (CCS) project successfully commenced operations in late 2024, injecting and permanently storing 340,000 tonnes of carbon dioxide equivalent (CO2e) by year-end. This project is a cornerstone of Santos’ decarbonisation strategy, with phase 1 designed to store up to 1.7 million tonnes of CO2e annually, positioning Santos as a leader in Australia’s journey to net-zero emissions.
Meanwhile, the Barossa Gas project in the Northern Territory reached 88% completion and remains on track for first gas in the third quarter of 2025. The Pikka phase 1 project in Alaska progressed to 74% completion, with first oil expected in mid-2026. These development projects are expected to increase Santos’ production by more than 30% by 2027 compared to 2024, which should lower unit production costs and support robust free cash flow generation.
Sustainability and Emissions Performance
Santos reported a 26% reduction in Scope 1 and 2 equity emissions since its 2019-20 baseline, achieving 84% of its 2030 target. The start-up of the Moomba CCS project contributed to a 14% reduction in equity emissions in the fourth quarter of 2024. Methane emissions intensity remained well below the Oil and Gas Climate Initiative (OGCI) target of 0.2%, with a 21% reduction following the CCS project’s commencement.
The company’s Climate Transition Action Plan (CTAP) continues to evolve, balancing emissions reduction with the delivery of critical fuels. Santos has set ambitious long-term targets, including net-zero Scope 1 emissions by 2040 and net-zero Scope 2 emissions by 2050, alongside a new carbon storage growth target to safely store approximately 14 million tonnes of third-party CO2e annually by 2040.
Financial Position and Capital Allocation
Santos ended 2024 with a strong balance sheet, net debt rising to US$4.9 billion and gearing at 23.9%, including leases. The company generated free cash flow of US$1.9 billion, enabling a total dividend payout of US$757 million to shareholders. Capital expenditure increased by 9% to US$2.9 billion, reflecting investment in both sustaining operations and growth projects, including decarbonisation initiatives.
The company’s capital allocation framework, effective from 2026, prioritises shareholder returns of at least 60% of all-in free cash flow once new production from Barossa and Pikka projects comes online. This disciplined approach aims to balance reinvestment, debt reduction, and returns amid the energy transition.
Governance, Risk Management and Remuneration
Santos maintains robust governance structures with the Board overseeing sustainability, climate strategy, and risk management. The company’s remuneration framework aligns executive incentives with strategic objectives, including a 17.5% weighting on climate-related targets in short-term incentives for 2024. The Managing Director and CEO’s realised remuneration reflected the company’s performance, with a 48% vesting of the 2021 Long-Term Incentive plan.
Risk management incorporates climate-related physical and transitional risks, with scenario analyses confirming the resilience of Santos’ portfolio under various energy transition pathways. The company continues to engage with investors and stakeholders to refine its climate strategy and disclosures.
Bottom Line?
As Santos advances its CCS projects and climate targets, the market will watch closely how these investments balance with production challenges and evolving energy demands.
Questions in the middle?
- How will Santos manage the commercial viability and regulatory risks of scaling its CCS projects?
- What impact will the delayed decarbonisation of energy grids have on Santos’ Scope 2 emissions targets?
- How will Santos’ LNG and oil production growth plans align with global energy transition scenarios and market demand?