Santos Limited

Santos reported first-half 2026 sales revenue of $2.6 billion, EBITDAX of $1.6 billion, and free cash flow from operations of $378 million. Unit production cost was $7.53 per barrel, first-half production was 45.6 million barrels of oil equivalent, up 3% year over year, and EBITDAX margin was 59%. Gearing was 28.1% including leases, or 23.2% excluding leases, and the company declared an interim dividend of USD 0.116 per share. Management said July started the second half with a much stronger performance and expects second-half production to be around 20% to 30% higher than the first half as Barossa and Pikka ramp toward plateau; Pikka initial production was around 23,000 barrels a day gross and is expected to ramp toward an 80,000 barrels a day gross plateau by the end of the quarter, while Barossa was producing around 550 million scuffs per day and expected to increase toward around 600 million scuffs per day by the end of the quarter.

Kevin Gallagher framed 2026 as a year of transition, with new production coming online while the base business keeps delivering. He emphasized that Santos is shifting from major project spending into production and cash generation, with Barossa and Pikka now becoming meaningful contributors. His tone was confident and disciplined, repeatedly stressing safety, capital discipline, and a strong second-half inflection in production and cash flow.

Lachlan Harris highlighted the first-half numbers: $2.6 billion of sales revenue, $1.6 billion of EBITDAX, $378 million of free cash flow from operations, and $7.53 per barrel unit production cost. He said realized LNG pricing was $10.95 per mmBtu and crude oil realized $92 a barrel, with a 59% EBITDAX margin. He also noted liquidity of $3.8 billion, net debt of approximately $6 billion, no debt maturities before September 2027, and gearing above the target range because of the Barossa FPSO liability and peak CapEx timing; he reiterated a $2.5 billion net debt reduction target by 2030 and said annual recurrent savings of $150 million remain on track by the end of 2026.

Analysts focused on Pikka ramp risk, Papua LNG progress, Bedout, and the balance sheet. Management said Pikka’s seawater treatment plant was in the final stage of commissioning and already operational, with water going into the pipeline, and that the production ramp should reach plateau by the end of the quarter. On Papua, Kevin Gallagher said the development forum had resumed after a short stall and that FID remains targeted for the second half of 2026 / fourth quarter this year; on the balance sheet and capital allocation, he said any new projects would still fit within the same framework, with no change to the 45-50 breakeven target or the 60% shareholder return policy.