Santos’ H1 2025: 31% Profit Slide, 2% Volume Rise, and $5.76 Per Share Offer
Santos Limited reports a 31% drop in net profit for H1 2025 despite increased sales volumes and progress on key projects, while receiving a non-binding acquisition proposal from an Abu Dhabi-led consortium.
- 5% revenue decline to US$2.579 billion
- 31% net profit decrease to US$439 million
- Sales volumes up 2% to 47.2 million barrels of oil equivalent
- Barossa Gas project on track for Q3 2025 start-up
- Non-binding acquisition proposal at US$5.76 per share from Abu Dhabi consortium
Financial Performance and Market Context
Santos Limited has released its half-year financial results for the period ending 30 June 2025, revealing a mixed performance amid a challenging commodity price environment. Revenue declined by 5% to US$2.579 billion, while net profit attributable to shareholders fell sharply by 31% to US$439 million compared to the same period last year. Despite this, sales volumes edged up 2% to 47.2 million barrels of oil equivalent (mmboe), driven by increased production in Western Australia and Papua New Guinea (PNG), partially offset by flooding disruptions in the Cooper Basin.
The company declared an interim dividend of 13.4 US cents per share, signaling confidence in its cash flow generation despite the profit contraction. Underlying profit, which excludes impairments and hedging impacts, stood at US$508 million, down from US$654 million in H1 2024.
Operational Highlights and Project Developments
Santos continues to focus on operational excellence and project execution. The Barossa Gas project, a key offshore development designed to supply the Darwin LNG facility, is approximately 97% complete and remains on schedule for start-up in the third quarter of 2025. This project is notable for its net-zero reservoir emissions design, aligning with Australia's evolving climate policies.
Meanwhile, the Pikka phase 1 project in Alaska, in which Santos holds a 51% interest, has accelerated its first oil guidance to the first quarter of 2026. The project is about 91% complete, with pipeline installation and well drilling progressing in line with expectations. These developments are expected to underpin Santos’ medium-term production growth and shareholder returns.
On the decarbonisation front, Santos is advancing several carbon capture and storage (CCS) initiatives, including the Moomba CCS project, which has already stored over 1 million tonnes of CO2, and the Bayu-Undan CCS project in Timor-Leste and Northern Australia. The company is also progressing early-stage FEED for the Western Australian Reindeer CCS project, aimed at supporting industrial decarbonisation in the Pilbara region.
Regional Performance and Challenges
The Cooper Basin experienced a 12% drop in gas and ethane production due to flooding that shut in over 200 wells and several compressors. Recovery efforts are underway, with production expected to ramp up in the second half of 2025. Queensland and New South Wales operations saw a 21% EBITDAX decline, primarily due to lower realised prices despite steady production.
PNG operations delivered a 2% increase in EBITDAX, benefiting from improved compression reliability and the Angore field coming online late last year. Western Australia posted a 7% EBITDAX increase, supported by higher production volumes and lower costs following the cessation of late-life assets.
Acquisition Proposal and Market Implications
In a significant development, Santos disclosed receipt of a non-binding indicative proposal from a consortium led by XRG P.J/S/C., a subsidiary of the Abu Dhabi National Oil Company, alongside Abu Dhabi Development Holding Company and Carlyle. The proposal values Santos shares at US$5.76 each via a scheme of arrangement. While the offer is preliminary and subject to due diligence and regulatory approvals, it introduces a new dynamic for shareholders and the market.
The proposal comes at a time when Santos is navigating commodity price volatility, operational challenges, and regulatory uncertainties, including ongoing legal appeals related to the Narrabri Gas Project in New South Wales. The company’s strategic emphasis on decarbonisation and low-carbon energy solutions may also influence investor sentiment amid evolving energy transition trends.
Outlook and Guidance
Santos has maintained its sales volume guidance for 2025 at 92 to 99 mmboe, while production guidance has been updated slightly downward to 90 to 95 mmboe. Unit production cost guidance has been narrowed to US$7.00–7.40 per barrel of oil equivalent, reflecting disciplined cost management. Free cash flow improved, supported by lower capital expenditure and operational efficiencies, positioning the company to sustain shareholder returns and invest in growth projects.
Bottom Line?
As Santos advances key projects and navigates a complex market, the unfolding acquisition proposal adds a new layer of intrigue to its strategic trajectory.
Questions in the middle?
- Will the Abu Dhabi-led consortium formalize a binding offer, and how will Santos’ board respond?
- How will ongoing legal challenges around the Narrabri Gas Project affect Santos’ east coast operations?
- What impact will commodity price fluctuations have on Santos’ cash flow and project funding in the second half of 2025?
