Santos Q2 Revenue Slightly Hit by Lower Oil Prices

Santos Ltd. on Thursday reported $1.29 billion in sales revenue for the second quarter, down one percent from the prior three-month period as weaker liquids prices offset higher sales volumes.

The Australian company produced 22.2 million barrels of oil equivalent (MMboe) in the April-June quarter, up one percent sequentially. Higher production in Western Australia was offset by flood impacts in the Cooper Basin.

“Over 200 wells and several upstream compressors were shut in. Production recovery is underway and is expected to continue ramping up as flood levels recede during the second half”, Santos said in its quarterly report.

A projected impact beyond the quarter from the flooding led to an adjustment in full-year production guidance from 90 MMboe-97 MMboe to 90-95 MMboe.

Moreover Timor-Leste’s Bayu-Undan ceased production in May 2025, the report said. The field had already stopped supplying natural gas to Darwin LNG late 2023 due to depletion but Santos said in 2024 Bayu-Undan would continue sending gas to Australia’s Northern Territory until the end of that year.

“Positive discussions with Timor-Leste and Australian governments are continuing to progress the proposed Bayu-Undan Carbon Capture and Storage project and look at opportunities to process third-party gas through Bayu-Undan infrastructure”, Santos said Thursday.

The output increase, as well as a timing impact from Pyrenees crude liftings in Western Australia, drove a three percent quarter-on-quarter increase in sales volumes to 23.9 MMboe, Santos said.

LNG sales totaled 1.27 million metric tons, down from 1.36 million metric tons in Q1. Santos’ LNG projects shipped 49 cargoes in Q2, of which four were equity-marketed from Papua New Guinea LNG.

Domestic gas sales rose from 45.8 petajoules in Q1 to 51.2 petajoules in Q2, driven by Western Australia.

Crude oil sales increased from 1.26 million barrels to 1.85 million barrels, but condensate sales dropped from 1.14 million barrels to 997,600 barrels. Sales of liquefied petroleum gas surged from 7,800 metric tons to 29,800 metric tons.

The increase in sales volumes was offset by lower liquids pricing, which was impacted by lower dated Brent and Platts MOPJ (Mean of Platts Japan) pricing. Realized crude prices averaged $71.17 a barrel, compared to $82.24 per barrel in Q1.

Higher oil-linked LNG prices were partially offset by lower realized prices from Japan Korea Marker-linked LNG sales.

The Barossa Gas Project, which involves developing the namesake gas field in Northern Territory waters to provide a new source for Darwin LNG, reached about 97 percent completion at the end of Q2 including the arrival of the BW Opal floating production, storage and offloading vessel.

“All scopes of work, including the Darwin LNG life extension activities, remain on track for first gas this quarter”, Santos said. “The Gas Export Pipeline and Darwin Pipeline Duplication to Darwin LNG are complete, tested and tied in, ready to receive gas from Barossa”.

In Alaska, Phase 1 of the Pikka oilfield development was around 89 percent complete. Startup is expected mid-2026 but Santos said, “An early start-up for the project remains possible, subject to a successful Mackenzie River lift of remaining processing modules from the Hay River Marine Terminal over the northern summer”.

Managing director and chief executive Kevin Gallagher commented, “Free cash flow of approximately $1.1 billion in the first half positions the company well as we near the start-up of our major development projects, Barossa and Pikka”.

“The business remains robust, with a free cash flow from operations breakeven oil price under $35 per barrel for 2025”, Gallagher added.

“We continue to see very strong demand and premia for high heating-value LNG from projects such as Barossa and PNG LNG, as well as for reliable regional supply”, Gallagher said.

On June 27 Santos said it had entered into a process and exclusivity deed with XRG PJSC, the global investment fund of Abu Dhabi National Oil Co., for its potential acquisition by a consortium comprising XRG, sovereign wealth fund Abu Dhabi Development Holding Co. and Washington, DC-based investor Carlyle Group.

Santos announced June 16 it had received a non-binding indicative proposal from the consortium. The offer of $5.76 per share comes about a year after Santos and compatriot Woodside Energy Group Ltd. ended merger talks.

The price would be adjusted for dividends paid before a final proposal comes into force. The price was increased from two confidential offers of $5.04 per share and later $5.42 per share in March, Santos said.

XRG earlier in June announced a goal of building a top-five integrated gas and LNG business with a capacity of 20-25 million metric tons a year by 2035.

Santos operates in Australia, Papua New Guinea, East Timor and the United States.

To contact the author, email jov.onsat@rigzone.com