Key Highlights

  • Production was 26.3 million barrels of oil equivalent in the September 2026 quarter, up about 14% on the prior quarter.
  • Sales Revenue was about US$2,006 million, up 49% on the prior quarter.
  • 2026 production guidance was narrowed to 99 to 102 million barrels of oil equivalent.
  • A decision on Papua LNG is planned for the fourth quarter.

How far has Santos Limited (ASX:STO) moved from building projects to producing from them, and what does that mean for its numbers? The latest evidence is the Quarterly Report for the three months to 30 September 2026, released on 22 October 2026. It shows production of 26.3 million barrels of oil equivalent (mmboe), a step up on the previous quarter, as Barossa gas and Alaska's Pikka oil project ramp up. At the same time, the company narrowed its 2026 production guidance, and a decision on Papua LNG is planned for the fourth quarter.

The central development: the September 2026 quarter

According to Santos's third-quarter report:

Production: 26.3 mmboe, up about 14% on the second quarter and 23% on the third quarter of 2025.

Sales revenue: about US$2,006 million, up 49% on the prior quarter.

Realised prices: LNG US$16.22 per million British thermal units (mmBtu), Crude Oil US$99.04 per barrel and condensate US$96.66 per barrel.

2026 guidance: production narrowed to 99 to 102 mmboe from 99 to 105 mmboe, with Capital Expenditure unchanged at about US$1.95 billion to US$2.15 billion, excluding capitalised interest.

Narrowing the range removes the top end of what the company previously said was possible, so the result is a modest trimming rather than a cut at the bottom. With 71.9 mmboe produced in nine months, the guidance implies roughly 27 to 30 mmboe in the fourth quarter. That calculation is mine and not a company forecast.

Business model and revenue drivers

Santos produces and sells natural gas, liquefied Natural Gas (LNG), crude oil and condensate from Assets in Australia, Papua New Guinea and the United States. Revenue depends on volumes and on prices, which for LNG are often linked to oil prices through contracts, and for oil are set by global markets. The quarter's realised prices were high, and prices can change quickly. Santos's Earnings and Cash Flow are therefore exposed to Commodity prices and geopolitical events.

Barossa and Pikka

Two projects explain the production growth.

Barossa (offshore Northern Territory): Barossa reached steady production in the third quarter. Feed gas to Darwin LNG hit a record peak of about 600 million standard cubic feet a day (mmscf/d), and Darwin LNG reliability was 98.5%. At the half-year, Barossa was still in commissioning and ramp-up at about 550 mmscf/d.

Pikka (Alaska): first oil came in May 2026, with continuous production from June and a first crude cargo lifted in August. Output ended September at about 69,000 barrels of oil per day (gross). Santos plans to hold near 70,000 barrels per day briefly for reservoir water injection before ramping to 80,000.

First-half financial position

Santos announced its half-year results on 19 August 2026: net profit after tax of US$355 million, Underlying Profit of US$397 million, sales revenue of US$2.6 billion, EBITDAX of US$1.6 billion and production of 45.6 mmboe, up 3%. Free cash flow from operations was US$378 million, held back by Barossa and Pikka commissioning, cargo timing and a Papua New Guinea under-lift that the company expected to unwind in the second half. The Interim Dividend was 11.6 US cents per share, unfranked, totalling US$377 million. Santos has a target to cut net Debt by US$2.5 billion by 2030. Santos expected second-half production to be roughly 20% to 30% higher than the first half.

Papua LNG and other projects

Santos signed a binding agreement to lift its interest in Papua LNG to 21% after the State back-in, subject to Final Investment Decision (FID) and regulatory approvals. FID is planned for the fourth quarter of 2026, and at the half-year the company said at least 60% of funding would come from project financing. A decision is not certain and the project would add substantial capital commitments. Other items include a final investment decision on Moomba Central Optimisation and the Moomba carbon capture and storage project, which had stored more than 2.5 million tonnes of carbon dioxide equivalent (gross) since start-up in September 2024.

Sector and competitive position

Santos is one of Australia's largest oil and gas producers, competing with other LNG exporters and domestic gas suppliers for customers and capital. Having completed two major projects in 2026, its challenge shifts to operational reliability and free cash flow.

Risks and upcoming developments

Commodity prices: realised prices are above recent norms and could change.

Ramp-up risk: Pikka's plateau and Barossa's steady operation need to be sustained.

Project and financing risk: Papua LNG involves large capital and approvals.

Geopolitical and regulatory risk: from Middle East tensions to environmental approvals.

Balance sheet: net debt reduction by 2030 depends on cash flow.

Upcoming items include the Papua LNG decision in the fourth quarter of 2026, Pikka reaching 80,000 barrels per day, and the full-year 2026 result.