Australian oil and gas producer Santos (STO.AX) announced a 16% decline in annual profit on Wednesday, attributing the decrease to lower realized prices and a drop in production. The company also declared a reduced dividend, reflecting ongoing market challenges.
Key Highlights:
Profit and Dividend:
Underlying profit fell to $1.20 billion for the year ending December 31, down from $1.42 billion the previous year. This result missed the Visible Alpha consensus estimate of $1.32 billion.
Santos declared a final dividend of 10.3 cents per share, significantly lower than the 17.5 cents per share declared a year earlier.
Market Conditions:
Oil and gas prices have been volatile throughout the year, impacted by geopolitical issues and declining demand from China, Australia’s largest trading partner.
Average realized oil prices decreased by 3% to $84.76 per barrel, while liquefied natural gas (LNG) prices also fell by 3% to $12.31 per million British thermal units.
Production Challenges:
Santos experienced a 5% decline in annual production, primarily due to reduced gas output in Western Australia and lower volumes from the Bayu-Undan project as it nears the end of its operational life.
Future Projects:
The company reported that first gas from the $4.3 billion Barossa project is on track for the third quarter of this year, with the project currently 91% complete.
Additionally, Santos mentioned “strong progress” at its Pikka phase one project in Alaska, expecting first oil by mid-2026, with the possibility of an earlier start depending on weather and logistics.