Santos delivers strong Q4 cash flow and production

The Santos Ltd (ASX: STO) share price is in focus after the energy producer reported fourth quarter free cash flow from operations of approximately $380 million, up 30% on the previous quarter, and full year sales revenue topping $4.9 billion.

What did Santos report?

• Fourth quarter free cash flow from operations: ~$380 million (up 30% quarter on quarter); full year: ~$1.8 billion
• Fourth quarter production: 22.3 mmboe (up 5% on previous quarter); full year: 87.7 mmboe
• Fourth quarter sales volumes: 24.8 mmboe (up 15% quarter on quarter); full year sales volumes: 93.5 mmboe
• Fourth quarter sales revenue: $1.23 billion (up 9% on previous quarter); full year: $4.94 billion
• Full year unit production cost: below $7 per boe (excluding Bayu Undan), within guidance
• Gearing: 26.8% (down 1.4% from end of prior quarter)

What else do investors need to know?

Santos reported strong operational momentum, with improved Cooper Basin production following post-flood recovery and the ramp-up of domestic gas in Western Australia after third quarter shutdowns. The company also received over 900,000 Australian Carbon Credit Units for its Moomba Carbon Capture and Storage project, reflecting strong compliance with emissions standards.

The Barossa LNG project reached a milestone, commencing LNG production, and its first cargo is now being loaded for delivery to Japan. Drilling in Alaska’s Pikka phase 1 project nears completion, positioning Santos for new oil volumes in early 2026.

Santos strengthened its balance sheet by raising $1 billion in new fixed-rate bonds, fully repaying legacy PNG LNG project finance, and divesting non-core assets. A favourable legal settlement also bolstered liquidity.

What did Santos management say?

Santos Managing Director and Chief Executive Officer Kevin Gallagher said:

The fourth quarter lifted free cash flow for the full year to approximately $1.8 billion, a strong result in a year of relatively soft commodity prices for the industry, which demonstrates the value of our focus on margin in our marketing and trading activities.
… Santos now has a strong platform for production growth with Barossa’s first LNG cargo currently loading at Darwin. … Once at full rates, Barossa LNG and Pikka phase 1 together are expected to lift Santos’ production by around 25 to 30 per cent by 2027 compared to 2024 levels.

What’s next for Santos?

Looking to 2026, Santos has issued production guidance of 101 to 111 mmboe, up from 2025’s level, and expects capital expenditure in the range of $1.95 to $2.15 billion. Increased LNG and oil volumes from Barossa and Pikka are expected to boost growth, alongside ongoing emissions reduction initiatives.

The company plans to continue disciplined capital allocation, maintaining a focus on cost and operational excellence. Several asset sales, a disciplined capital structure, and large-scale projects are expected to support shareholder returns.

Santos share price snapshot

Over the past 12 months, Santos shares have declined 15%, trailing the S&P/ASX 200 Index (ASX: XJO) which has risen 4% over the same period.

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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.