Image source: © 2025 Krish Capital Pty. Ltd.

Highlights

  • Santos reported Q2 free cash flow of AUD 620 million and narrowed full-year production cost guidance to AUD 7.00–7.40 per boe.

  • Production reached 22.2 mmboe for the quarter, supported by improved output in PNG and Western Australia, with total sales volumes at 23.9 mmboe.

  • Major development projects remain on track, with Barossa LNG ~97% complete and first gas expected this quarter.

Santos Limited (ASX:STO) has announced its second-quarter operational and financial update, highlighting continued cash flow generation, development across its core assets, and steady progress in major development projects.

The company reported free cash flow from operations of approximately AUD 620 million for the second quarter and about AUD 1.1 billion for the first half of 2025. Quarterly production rose 1% to 22.2 million barrels of oil equivalent (mmboe), while sales volumes climbed 3% to 23.9 mmboe.

Santos narrowed its unit production cost guidance to AUD 7.00–7.40 per boe, citing the performance in the first half. It also remains on track to deliver structural savings of AUD 150 million annually over the next 18 months.

Operational Performance Highlights

In Papua New Guinea (PNG), LNG output remained high due to over 95% facility reliability. Santos-operated PNG gas facilities achieved 99% reliability for the quarter. In Western Australia, domestic gas production rose 15% over the previous quarter, aided by the successful John Brookes well intervention, consistent performance from Halyard-2, and 98% reliability at Varanus Island.

In Queensland, GLNG achieved record upstream production rates—110 terajoules (TJ) per day from the Scotia field and 215 TJ per day from the Roma field. These levels support Santos’ annual guidance of around 6 million tonnes of LNG from GLNG.

In the Cooper Basin, Santos completed and connected the Moomba South Granite Wash horizontal well, which is now producing 8 million standard cubic feet (mmscf) per day, in line with pre-drill estimates. Despite severe flooding—the worst since 1974—impacting over 200 wells, production recovery is underway and is expected to ramp up during the second half of the year.

CCS Milestone and Recognition

The Moomba Carbon Capture and Storage (CCS) project achieved a key milestone during the quarter with one million tonnes (gross) of CO₂ stored. The project continues to perform as expected. Santos also received the “Energy Technology Company of the Year” award for its CCS efforts at the 2025 APAC Energy Awards in Singapore.

A non-binding Memorandum of Understanding was signed with the South Australian Government to explore CO₂ import and pipeline infrastructure opportunities that support future CCS and low-carbon initiatives in the Cooper Basin.

Major Project Execution and Guidance Update

Major development capital expenditure for H1 2025 was AUD 650 million, at the lower end of the expected range. Barossa LNG is now approximately 97% complete, with the BW Opal FPSO successfully connected to the field's subsea infrastructure. Commissioning is proceeding on schedule, and first gas is expected later this quarter.

Meanwhile, the Pikka Phase 1 project in Alaska is 89% complete. Nineteen wells have been drilled, and the seawater treatment plant has completed mechanical fabrication and is en route to site. First oil remains on track for mid-2026.

Full-year production volume guidance has been revised to 90–95 mmboe (from 90–97 mmboe) to reflect the impact of Cooper Basin flooding. Sales volume guidance remains unchanged, though volumes are expected to land in the upper half of the range. Capital expenditure guidance for both sustaining and major development projects remains unchanged at AUD 1.2–1.3 billion each. Depreciation, depletion, and amortisation are forecast at around AUD 1.8 billion.