Australian oil and gas company Santos posted first-half results showing underlying profit fell to $397 million compared with $508 million in the prior year, while net profit after tax declined to $355 million from $439 million. The decline was less pronounced than market expectations, as the company navigated the transition phase of bringing two major growth projects into commercial operation.
First-half production increased 3% year over year to 45.6 million barrels of oil equivalent, with product sales revenue rising slightly to $2.62 billion from $2.58 billion. However, EBITDAX declined to $1.56 billion from $1.76 billion, and free cash flow from operations fell significantly to $378 million from $1.09 billion, reflecting the capital intensity of ongoing commissioning activities at Barossa and Pikka. The company characterized 2026 as a transition year with production expected to accelerate substantially in the second half.
Barossa LNG was operating at approximately 550 million cubic feet per day and anticipated reaching roughly 600 million cubic feet per day by the end of the third quarter, with seven cargoes delivered by June and five additional cargoes shipped since July 1. In Alaska, the Pikka Phase 1 project achieved first oil in May and continuous production in June, with output at approximately 23,000 barrels per day gross at the end of the first half and expected to build toward a gross plateau of roughly 80,000 barrels per day in the third quarter.
Santos maintained its full-year production guidance of 99 million to 105 million barrels of oil equivalent and signaled stronger cash generation ahead, noting that peak capital spending on the two major projects has passed. The company ended June with $3.77 billion in liquidity and total net debt of $6.12 billion, with no debt maturities until September 2027. The board declared an interim dividend of 11.6 U.S. cents per share, totaling $377 million, while the company announced that Papua LNG remains on track for a final investment decision targeted for the fourth quarter.
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