Buying Santos shares? Here’s how the company aims to cut spending and lift production

Santos Ltd (ASX: STO) shares are marching higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) energy stock closed yesterday trading for $7.94. In late morning trade on Tuesday, shares are changing hands for $8.03 each, up 1.1%.

For some context, the ASX 200 is down 0.4% at this same time.

Santos shares look to be catching some tailwinds, while the broader ASX 200 is facing headwinds, amid intraday news of limited new US and Israeli strikes against Iranian military assets. That news is already seeing global oil prices tick higher.

Separately, Santos is also holding its Investor Briefing Day in Sydney today.

Here’s what investors are tuning into.

Santos shares lift on strategic growth outlook

Santos led the briefing with a profile of its transformational tier-one assets.

The company noted that Barossa is online and currently producing at 75% of the project’s planned 2026 production rates. Santos is targeting plateau production at Barossa in mid-2026, citing unit production costs of less than $7 per barrel of oil equivalent (boe).

Turning to other growth assets expected to support Santos shares longer term, the company’s Pikka phase 1 in Alaska is also online. Management said Pikka is producing intermittently during the final commissioning activities, with “continuous production imminent”. Santos is targeting Pikka plateau production of around 80,000 barrels of oil per day (bopd) in Q3 2026. Unit production costs are expected to be less than $8/boe.

Citing its disciplined growth plans, the ASX 200 energy stock said its targeted free cash flow breakeven price stands between US$45 and US$50 per barrel.

By prioritising upstream investment in the Moomba Central fields over the broader Cooper Basin, the company aims to slash its cumulative capex by around $300 million from 2027 to 2030, with $150 million in savings annually thereafter.

What did management say?

Commenting on the tier-1 assets intended to support Santos shares longer-term, CEO Kevin Gallagher said:

The start-ups of Barossa and Pikka phase 1 are a defining moment for Santos. Production from these two major growth projects will now deliver a step-change in our free cash flow generation.

As for the impact of the ongoing Middle East conflict, Gallagher noted:

Current global instability has brought energy security sharply into focus. This has only reinforced the value of Santos’ diversified asset portfolio and geographic proximity to the fastest growing demand markets in the Asia Pacific.

Looking at what could impact Santos shares in the months ahead, Gallagher concluded:

Going forward, Santos will be laser focused on investment in major oil and LNG production across three regions as we develop tier-1 basins in Alaska and Papua New Guinea and fully appraise Australia’s Beetaloo and Bedout basins to provide scale, higher margins and leverage off existing advantaged infrastructure.

The post Buying Santos shares? Here’s how the company aims to cut spending and lift production appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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.