Santos Accelerates Pikka Start-Up Amid Strong H1 Cash Flow and Dividend Boost

Strong Financial Performance Amid Market Volatility

Santos Limited has delivered a solid first half in 2025, reporting free cash flow from operations of US$1.1 billion, sales revenue of US$2.6 billion, and EBITDAX of US$1.8 billion. Net profit after tax stood at US$439 million, with an underlying profit of US$508 million, maintaining parity with the prior year despite ongoing commodity price headwinds.

The company’s disciplined low-cost operating model continues to underpin its resilience, with unit production costs improving to US$7.28 per barrel of oil equivalent (boe), excluding the recently ceased Bayu-Undan asset. Santos’ average realised LNG price remained strong at US$11.57 per million British thermal units (mmbtu), reflecting its strategic positioning close to Asian markets and a diversified contract portfolio.

Accelerated Project Timelines Signal Growth

Highlighting operational excellence, Santos announced the acceleration of first oil guidance for its Pikka phase 1 project in Alaska to the first quarter of 2026, ahead of the previous mid-2026 target. The project’s seawater treatment plant and production modules are now on location, with 21 wells already drilled, underscoring strong progress.

Meanwhile, the Barossa LNG project in the Northern Territory is more than 98% complete, with the Floating Production Storage and Offloading (FPSO) vessel rapidly approaching its ready-for-startup milestone. First gas from Barossa is expected imminently, promising a significant production boost.

Shareholder Returns and Capital Discipline

Reflecting confidence in its cash-generative base business and growth projects, Santos declared an interim dividend of 13.4 US cents per share, partially franked at 10%, totaling US$435 million. This dividend represents 40% of free cash flow from operations, consistent with the company’s dividend policy and an increase from the prior year.

The company maintains a strong balance sheet with gearing at 23.7% (20.5% excluding leases) and liquidity of US$3.9 billion. Capital expenditure remains disciplined, with sustaining capex guidance of approximately US$1.2–1.3 billion and major development capex around US$1.8 billion for 2025.

Decarbonisation and Operational Excellence

Santos continues to advance its decarbonisation agenda, with the Moomba Carbon Capture and Storage (CCS) project achieving over one million tonnes of CO2 injected since startup, contributing to a 26% reduction in emissions intensity compared to the 2019-20 baseline. The company targets a 30% absolute reduction in Scope 1 and 2 emissions by 2030.

Operational reliability remains high across Santos’ portfolio, with LNG plants maintaining uptime above 98%, and upstream facilities demonstrating strong performance despite challenges such as flooding in the Cooper Basin. The company’s self-execution model and disciplined cost management have driven ongoing efficiency gains and structural savings of US$150 million targeted over the next 18 months.

Outlook

With Barossa LNG and Pikka phase 1 expected to deliver a combined production increase of approximately 30% by 2027, Santos is well positioned to enhance shareholder returns. The company’s flexible LNG marketing portfolio, including a recent mid-term deal with QatarEnergy Trading LLC, supports strong realised prices and market adaptability.

As Santos navigates the evolving energy landscape, its focus on operational discipline, project execution, and sustainability initiatives will be critical to sustaining growth and value creation.