Santos Flags 10% Job Cuts as Free Cash Flow Hits $1.8B
Santos will cut around 10% of its workforce as it transitions major growth projects into steady-state operations, even as the company reported $1.8 billion in free cash flow and increased shareholder returns for 2025.
Santos Ltd posted annual production of 87.7 million barrels of oil equivalent (mmboe) and sales volumes of 93.5 mmboe, generating $4.9 billion in revenue. Underlying net profit after tax came in at $898 million.
Free cash flow from operations reached $1.8 billion, driven by what the company described as strong base business performance under its long-running low-cost operating model.
The Board declared a final dividend of US 10.3 cents per share, unfranked. Combined with the interim dividend of US 13.4 cents per share, total 2025 dividends reached US 23.7 cents per share, equivalent to $770 million in cash returns, or 43% of free cash flow.
Unit production costs fell to $6.78 per boe, excluding Bayu-Undan, marking the lowest level in a decade. Gearing stood at 21.5% excluding leases, or 26.9% including leases, with liquidity remaining strong.
As Barossa, Darwin LNG life extension and Pikka Phase 1 near full ramp-up, management said it is targeting a headcount reduction of around 10% to “rightsize” the business as major capital projects transition into the base portfolio.
CEO Kevin Gallagher said the results demonstrate the durability of the disciplined operating model introduced in 2016, which targets a sub-$35/bbl free cash flow break-even from operations. Santos has achieved that target every year since, despite inflationary pressures.
Barossa and Darwin LNG have been delivered within six months of the original schedule and within budget, with first cargo achieved in early 2026. In Alaska, Pikka Phase 1 remains on track for first oil late in the first quarter of 2026, with ramp-up to plateau production expected by the end of the second quarter.
Santos said Moomba CCS has stored more than 1.5 million tonnes of CO? equivalent since start-up and that the company has achieved its 2030 emissions reduction target of 30% five years ahead of schedule.
Looking ahead, 2026 guidance remains unchanged. The company expects production and sales volumes of 101–111 mmboe, capital expenditure of approximately $1.95–$2.15 billion, and unit production costs between $6.95 and $7.45 per boe.
With major projects moving into cash generation mode, Santos said it is targeting an all-in free cash flow break-even oil price of $45–50 per barrel through 2030 while maintaining a commitment to shareholder returns and balance sheet discipline.
By Charles Kennedy for Oilprice.com
Australian Court Dismisses Climate Case Against Santos
Santos Limited has secured a legal victory after the Full Federal Court of Australia dismissed a climate-related case challenging aspects of its past disclosures and ordered costs in the company’s favor.
The case, brought by the Australasian Centre for Corporate Responsibility (ACCR), targeted statements made in Santos’s 2020 Annual Report, 2021 Climate Change Report, and a 2020 Investor Day presentation. At issue were elements of the company’s 2040 Net Zero Roadmap and related climate commitments, with ACCR arguing that certain representations were misleading.
In its ruling, the Court dismissed the claims in full, marking a significant outcome in the evolving landscape of climate litigation against oil and gas producers in Australia.
The Federal Court’s decision effectively affirms Santos’s position that its climate-related disclosures met legal standards at the time they were made. The Court also awarded legal costs to Santos, underscoring the company’s successful defense.
Santos reiterated its commitment to “transparent, accurate and compliant reporting,” noting that its Climate Transition Action Plan has evolved since the initial publication of its 2040 Net Zero Roadmap. The company emphasized that it had consistently stated that its transition strategy would adapt in line with technological, market, and regulatory developments.
More than 85% of voted shares supported Santos’s Climate Transition Action Plan at its most recent Annual General Meeting, reflecting strong shareholder backing for its climate strategy in the advisory “Say on Climate” vote.
Central to Santos’s defense of its climate roadmap is the Moomba Carbon Capture and Storage (CCS) project in South Australia. The company had previously committed to developing the project and to working with governments to establish a carbon capture and storage regulatory framework.
Moomba CCS has been operational since September 2024 and is designed to inject up to 1.7 million tonnes per year of CO2 equivalent into depleted hydrocarbon reservoirs for permanent storage. Santos describes the facility as one of the largest and lowest-cost CCS projects globally.
The company has framed Moomba as tangible evidence that its earlier commitments have translated into operational emissions-reduction infrastructure, positioning CCS as a core pillar of its decarbonization strategy while maintaining hydrocarbon production.
The ruling comes amid intensifying scrutiny of ESG disclosures across the energy sector, particularly around net-zero claims and transition plans. Globally, activist investors and advocacy groups have increasingly turned to courts to challenge what they characterize as “greenwashing” in corporate climate strategies.
Australia has become a focal point for such litigation, with regulators and courts testing the boundaries of climate-related financial disclosures. For oil and gas producers, legal clarity around forward-looking statements and transition pathways is emerging as a material risk factor.
For Santos, the decision removes a legal overhang that had the potential to affect investor sentiment, particularly as the company continues to advance carbon management projects and LNG expansion plans. The endorsement of its Climate Transition Action Plan by shareholders, combined with the operational launch of Moomba CCS, strengthens its argument that its net-zero pathway is grounded in deployable technology rather than aspirational targets.
With climate accountability cases continuing to proliferate worldwide, the outcome of this case may serve as an important reference point for other energy companies facing similar legal scrutiny over climate disclosures.
By Charles Kennedy for Oilprice.com
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