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Santos reports record half-year production and sales volumes, strong free cash flow and underlying earnings, and higher interim dividend

Half-year (US$million)20212020Change
Production (mmboe)47.338.523%
Sales volume (mmboe)53.846.915%
Product sales revenue2,0401,66822%
Underlying profit[1]31721250%
Net profit/(loss) after tax354(289)222%
Free cash flow[1]57243133%
Interim dividend (UScps)5.52.1162%

Santos today announced its half-year results for 2021, reporting record production of 47.3 mmboe and record sales volumes of 53.8 mmboe, free cash flow of US$572 million and underlying profit of US$317 million. The results reflect higher oil prices compared to the corresponding period due to recovery in demand but were offset by lower average LNG prices due to lagged oil-linked pricing in long-term LNG offtake contracts.

The reported net profit after tax of US$354 million includes net gains on asset sales and is significantly higher than the corresponding period mainly due to impairments included in the previous half-year result.

The Board has resolved to pay an interim dividend of US5.5 cents per share fully-franked, 162 per cent higher than the previous interim dividend. The dividend equates to 20 per cent of first half free cash flow, in-line with the company’s sustainable dividend policy which targets a range of 10 per cent to 30 per cent payout of free cash flow.

Santos Managing Director and Chief Executive Officer Kevin Gallagher said Santos delivered record production and sales volumes in the first half of 2021, and strong free cash flow of US$572 million despite lower average LNG prices.

“These results again demonstrate the resilience of our cash-generative base business and strong operational performance across our diversified asset portfolio.

“Consistent application of our low-cost disciplined operating model continues to deliver cost reductions and efficiencies despite cost challenges across the industry and COVID-related cost impacts in the base business.

“We will remain disciplined and cost focused as we enter our next phase of growth and progress the proposed merger with Oil Search.

“The proposed merger is a compelling combination of two industry leaders to create an unrivalled regional champion of size and scale with a unique diversified portfolio of long-life, low-cost oil and gas assets.

“The merged company would have strong cash generation from a diverse range of assets which provides a strong platform for sustainable growth and continued shareholder returns.

“The merger would also build on our industry-leading approach to ESG through the combination of Santos’ net-zero 2040 pathway, including its sector-leading CCS projects, and Oil Search’s unique social programs in PNG, underpinned by a strong balance sheet to fund the transition to a lower-carbon future.

“I am pleased with the progress we are making on due diligence and look forward to the signing of a binding Merger Implementation Deed in the coming weeks.

“Since taking FID on Barossa in March, the project is off to a great start including the cutting of first steel for the FPSO turret, commencing manufacturing of subsea and export flowlines, and the assembly of subsea trees.  FPSO hull build and topsides fabrication is scheduled to commence in the third quarter. The project is on track for first gas in the first half of 2025.

“While Barossa FID is a visible benefit of the acquisition of the ConocoPhillips assets in Northern Australia and Timor-Leste, I am also pleased with the very strong result from the first infill well drilled at Bayu-Undan, with initial gas rate of 178 million standard cubic feet per day and liquids rate of 11,350 barrels per day. The infill campaign adds immediate value and extends the life of Bayu-Undan.

“We are extremely appreciative of the positive working relationship we have with the Timor-Leste regulator Autoridade Nacional do Petróleo e Minerais (ANPM) and the Timor-Leste Government, whose support enabled this late-life infill campaign.

“Our Moomba carbon capture and storage (CCS) project is FID ready, subject to eligibility for Australian Carbon Credit Units, which is expected in the fourth quarter. We are also assessing the feasibility of creating a CCS hub at Bayu-Undan with the capacity of approximately 10 million tonnes per annum of CO2 and providing a cost-effective solution for Barossa reservoir emissions as part of our roadmap to net-zero by 2040.

“We have also made significant progress on our exciting Dorado project with FEED entry on an integrated oil and gas project taken in June. We are targeting FID in mid-2022 on the first phase of liquids production, with FID on a second phase of gas development to backfill our Western Australia domestic gas infrastructure likely to occur in the second half of the decade.

“Our strongly cash-generative base business, diversified portfolio and disciplined approach to capital allocation means that we are well positioned to drive free cash flow and sustainable shareholder returns,” Mr Gallagher said.

Live webcast

A video presentation on the 2021 half-year results is available on Santos’ website. A live question and answer webcast for analysts and investors will be held today at 12:30pm AEST.

To access the live webcast, register on Santos’ website at


Watch the 2021 Half-year results video presentation


1 EBITDAX (earnings before interest, tax, depreciation, depletion, exploration, evaluation and impairment), underlying profit and free cash flow (operating cash flows less investing cash flows net of acquisitions and disposals) are non-IFRS measures that are presented to provide an understanding of the performance of Santos’ operations. Underlying profit excludes the impacts of asset acquisitions, disposals and impairments, hedging as well as items that are subject to significant variability from one period to the next. The non-IFRS financial information is unaudited however the numbers have been extracted from the financial statements which have been subject to review by the auditor. A reconciliation between net profit after tax and underlying profit is provided in the Appendix of the 2021 half-year results presentation released to ASX on 17 August 2021.