Record quarterly production, Barossa achieved steady production, Pikka online
- Record quarterly production of 26.3 mmboe for the third quarter, up almost 14 per cent on the prior quarter and 23 per cent on the prior corresponding period. Production year-to-date of 71.9 mmboe is almost 10 per cent higher than the prior corresponding period.
- Sales volumes of 26.4 mmboe for the third quarter, an increase of 11 per cent on the prior quarter.
- Barossa achieved steady production during the third quarter with Darwin LNG operating at 98.5 per cent reliability, with ten LNG cargoes and two condensate cargoes lifted.
- Pikka oil production briefly reached minimum expected plateau rate before the end of the third quarter. Production was temporarily curtailed on two occasions after a weather event affected the Seawater Treatment Plant, which was still in its start-up phase, and when the operator of the Kuparuk pipeline shutdown following a road accident that impacted the pipeline. Production is planned to be held at around 70,000 barrels per day for a short period of time to allow water injection to replenish reservoir voidage, as part of a disciplined reservoir management plan.
Record free cash flow from operations, continuing strong financial performance
- Record free cash flow from operations of ~$1,069 million for the third quarter, year-to-date free cash flow from operations ~$1,447 million, driven by record production.
- Free cash flow of ~$957 million for the third quarter, bringing year-to-date free cash flow to
~$839 million. - Sales revenue of ~$2,006 million for the third quarter, an increase of 49 per cent on the prior quarter and 78 per cent on the prior corresponding period.
Reliable operations across the base business
- Seawater injection commenced at Pikka during the third quarter and the first oil cargo was lifted in August. Five Pikka oil cargoes were lifted in the third quarter, two of which carried Santos equity volumes. Thirty-two development wells have been drilled to date.
- Barossa achieved steady production during the third quarter, with feed gas to Darwin LNG reaching a new record peak of approximately 600 mmscf per day. Darwin LNG reliability was 98.5 per cent for the third quarter.
- Early results from the Jibera South 1 appraisal well in the Beetaloo sub-basin show the shale layers running consistently across the area. All three main layers hold thick, gas-rich rock with the Velkerri C shales better than expected, and the A and B shales in-line with pre-drill expectations. This provides confidence for a ‘cube’ approach, developing all three layers simultaneously, which could help unlock more value from the Santos acreage. The pilot hole was drilled through to total depth early in the fourth quarter with drilling rates in-line with the best in the basin benchmarks.
- PNG LNG plant reliability of more than 98 per cent supported an annualised run rate of 8.7 Mtpa of LNG. Santos-operated PNG gas facilities contributed 16 per cent of PNG LNG feedstock.
- Construction commenced on the Agogo Production Facility tie-in project, with all major design and construction contracts awarded.
- GLNG upstream production remained stable at 697 TJ per day (gross), with 22 contracted LNG cargoes shipped. Arcadia delivered upstream facility reliability of more than 99.5 per cent.
- Varanus Island midstream facilities achieved reliability of 99.4 per cent during the third quarter and the Halyard 2 well continues to exceed expectations, producing approximately 85 TJ per day with zero water breakthrough.
- Moomba carbon capture and storage (CCS) has safely and permanently stored more than 2.5 million tonnes (gross) of CO2e since start up in September 2024, and the Moomba gas processing plant achieved reliability of more than 99 per cent for the third quarter.
Advancing disciplined development and commercial opportunities
- Santos executed a binding agreement to acquire an additional 3.3 per cent participating interest in the Papua LNG project from TotalEnergies, increasing Santos’ interest to 21 per cent (post State back-in). Completion is conditional on regulatory approvals and the Papua LNG project achieving FID, planned for the fourth quarter of 2026.
- The Tier 1 Benefit-Sharing Agreement with PNG landholders was signed in early October, marking a key milestone towards Papua LNG FID. The agreement follows the completion of Tier 1 negotiations under the PNG government-led Development Forum.
- A revised project agreement with the PNG government for the Papua LNG project was signed during the third quarter, establishing fiscal terms that support the project’s progression to FID.
- Following the end of the third quarter, operatorship of the upstream Papua LNG project was transferred from TotalEnergies to ExxonMobil, which now operates both the upstream and downstream components of the project.
- The GLNG joint venture partners entered into binding agreements to acquire the Greater Meridian coal seam gas (CSG) project in Queensland, with Santos acquiring a 30 per cent interest and becoming operator upon completion of the transaction (targeted for late 2026, subject to regulatory approvals).
- Santos completed the divestment of its interest in the Mahalo joint venture, receiving total initial proceeds of approximately A$32 million (US$23 million), with A$30 million in contingent cash payments payable upon gross production milestones for the Mahalo project, subject to its development, taking total consideration up to approximately A$62 million (US$44 million).
- Santos agreed key commercial terms with POSCO Steel Co., Ltd for a 10-year LNG supply arrangement, and entered into a non-binding Heads of Agreement with Western LNG to purchase approximately 1 Mtpa of LNG from the proposed Ksi Lisims LNG project in Canada.
Santos Managing Director and Chief Executive Officer Kevin Gallagher said the September quarter delivered the step-change in production and cash flow that Santos had been working towards, with record quarterly production and free cash flow from operations as Barossa achieved steady production and Pikka progressed its ramp up towards plateau production. In the third quarter, ~50 per cent of Santos’ free cash flow was generated from its international operations (in PNG and Alaska).
“Production of 26.3 mmboe was up almost 14 per cent on the June quarter and 23 per cent on the September quarter last year. That is the growth we said would follow as Barossa and Pikka came online. The inflection point is here, and I expect more to come in the fourth quarter as Barossa continues its journey to high reliability and Pikka gets a full quarter online,” Mr Gallagher said.
“Our base business also continued to perform, with reliability of more than 98 per cent at both PNG LNG and Darwin LNG, more than 99 per cent at Moomba and 100 per cent at GLNG’s Curtis Island facility. That reliability, together with our disciplined low-cost operating model, drove record free cash flow from operations of approximately $1,069 million and free cash flow of approximately $957 million.
“Pikka reached instantaneous production rates above 80,000 barrels of oil per day (gross) before the end of the third quarter, and production was 69,000 barrels of oil per day (gross) at the end of the quarter. Production was temporarily curtailed on two occasions following a weather event that affected the Seawater Treatment Plant, which was still in its start-up phase, and when the operator of the Kuparuk pipeline shut-in after a road accident impacted the pipeline. Import gas supply to Pikka was suspended during the required pipeline integrity checks, after which production resumed.
“Production is now planned to be curtailed for a short period of time while water injection replenishes reservoir voidage before ramping up to 80,000 barrels of oil per day (gross). This is a deliberate decision, and part of our disciplined approach to reservoir management.
“Production guidance for 2026 has been narrowed to 99 to 102 mmboe (previously 99 to 105 mmboe).
“Beyond the producing assets, we continued to pursue growth around our existing infrastructure with two binding agreements. We are increasing our interest in Papua LNG to 21 per cent (post State back-in), ahead of planned FID in the fourth quarter of 2026. With our GLNG partners, we are also acquiring the Greater Meridian CSG project, where we will become operator. Both agreements remain subject to regulatory approvals, while the Papua LNG acquisition is also conditional on FID.
“In the Beetaloo sub-basin, we spudded the Jibera South 1 appraisal well, a critical milestone as we work to prove the commerciality of this potential world-class gas resource. After the end of the quarter, in October, we drilled the pilot hole through the target shales to a total depth of 3,457 metres. Results for the Velkerri A and B shales were consistent with pre-drill expectations and the Velkerri C shales were better than prognosed, which increases our confidence in a multi-horizon development that multiplies our effective acreage resource potential. On-bottom drilling rates matched best-in-basin performance. Once wireline logging is complete, we will drill the 3,000-metre lateral production hole.
“With Barossa and Pikka online, we are a larger, more diversified, higher-margin business with a strong pipeline of backfill and growth options. Our focus now is running the business well: keeping Barossa and Pikka at steady production, progressing Papua LNG towards planned FID in the fourth quarter, and holding to our disciplined low-cost operating model.
“As part of our disciplined low-cost operating model we remain committed to our capital allocation framework, delivering disciplined growth within a $45–50 per barrel free cash flow breakeven, targeting less than $50 per barrel in 2026,” Mr Gallagher said.
This ASX announcement was approved and authorised for release by Kevin Gallagher, Managing Director and Chief Executive Officer.
