Santos 1H26 Profit US$355m, Interim Dividend US 11.6c

Santos (ASX:STO) reported its half-year results for the six months to 30 June 2026, with all values presented in US dollars. First-half production was 45.6 mmboe, up 3 per cent on the prior corresponding period, and sales revenue was US$2.6 billion. Total revenue was US$2,698 million against US$2,659 million, and EBITDAX, a non-IFRS measure the company defines as earnings before interest, tax, depreciation, depletion, exploration and evaluation expensed, change in future restoration assumptions and impairment, was US$1,555 million against US$1,758 million. Net profit after tax was US$355 million, against US$439 million in the prior corresponding period, and underlying profit was US$397 million against US$508 million; the company notes that first-half 2026 underlying profit includes the impact of a change in methodology from 2P to 1P reserves effective 1 January 2026, and that higher depletion in the period reflects the same change. Free cash flow from operations, which the company defines as operating cash flows less investing cash flows net of acquisitions and disposals and growth development project capital expenditure, less lease liability payments, was US$378 million against US$1,086 million; free cash flow on the release's separate measure was negative US$119 million against positive US$256 million. Santos said the free cash flow from operations result reflects commissioning activities at Barossa and Pikka, the timing of cargo movements around 30 June and a Papua New Guinea under-lift position of around 1.3 million barrels of oil equivalent, impacts the company expects to unwind early in the second half. Realised LNG pricing was US$10.95 per mmBtu and realised crude pricing US$92 per barrel for the half, with unit production costs of US$7.53 per boe.

The Board resolved to pay an unfranked interim dividend of US 11.6 cents per share, totalling US$377 million. Gearing was 23.2 per cent excluding operating leases and 28.1 per cent including leases, total liquidity was US$3,774 million comprising US$1,129 million of cash and US$2,645 million of committed undrawn bank facilities, and total net debt was US$6,124 million, with no debt maturities until September 2027. On operations, Pikka achieved first oil in May and moved to continuous production in June, producing around 23,000 barrels a day gross at the end of the first half, with an inaugural cargo of 450,000 barrels lifted in August 2026 and a gross plateau rate of 80,000 barrels a day targeted late in the third quarter. Barossa delivered seven cargoes by the end of June and another five since 1 July, of which Santos loaded four in the first half and six year-to-date, is currently producing around 550 mmscf/d and is planned to increase to around 600 mmscf/d by the end of the quarter, while Darwin LNG delivered 100 per cent plant reliability in the first half. Santos took a final investment decision on the Moomba Central Optimisation project, which Chief Executive Officer Kevin Gallagher said targets more than US$600 million in capital and operating cost savings, stated net, over the life of Central Fields and up to US$3 a barrel reduction in Cooper Basin unit production costs, supported by a prepayment of around US$200 million under a gas sales agreement to supply 200 petajoules to the South Australian Strategic Gas Reserve from 2030 to 2040. A final investment decision on Papua LNG remains targeted for the fourth quarter of 2026, with at least 60 per cent targeted to be funded through project financing facilities. Full-year 2026 guidance is for production volumes of 99 to 105 mmboe, sales volumes of 102 to 108 mmboe, total capital expenditure of approximately US$1.95 to US$2.15 billion excluding capitalised interest, and unit production costs of US$6.95 to US$7.45 per boe, with second-half production expected to be around 20 to 30 per cent higher than the first half.