Santos has reported a drop in net profit for the fiscal first half of 2026 to US$355 million (AU$501.33 million) from US$439 million in 2025 due to commissioning costs at its Barossa and DLNG projects.
First-half output reached 45.6 million barrels of oil equivalent (mmboe), representing a 3 per cent increase on the prior corresponding period. Product sales revenue rose to US$2.6 billion, while underlying profit stood at US$397 million.
The company characterised the six-month period as a pivotal transitional phase, driven by the commencement of major growth projects.
Operations at the Alaskan Pikka oil project achieved first oil in May and reached continuous production in June, culminating in the lifting of its inaugural crude cargo in August.
Concurrently, the offshore Barossa gas project progressed through commissioning, with current output sitting at roughly 550 million standard cubic feet per day.
Free cash flow from operations was US$378 million, temporarily weighed down by project commissioning, cargo movement timing, and a Papua New Guinea under-lift position. Santos management expects these factors to unwind rapidly over the second half.
Santos CEO Officer Kevin Gallagher said the group enters the second half in a commanding operational position.
“The first half marked an important step forward for Santos,” the CEO said.
“With the major development build and peak major project capex for Barossa and Pikka behind us, second-half production is expected to be around 20 to 30 per cent higher than the first half, supporting stronger free cash flow and returns for shareholders.”
Gallagher said the company’s Papua LNG project is a focus for the second half and is on track for a final investment decision for the fourth quarter.
“With liquidity of US$3.8 billion and no debt maturities before September 2027, the balance sheet is well positioned to fund disciplined, value-accretive production growth for the future and support our target to reduce net debt by US$2.5 billion by 2030,” Gallagher said.
The board declared an unfranked interim dividend of US 11.6 cents per share, returning US$377 million to shareholders.
