The Santos Ltd (ASX: STO) share price is pushing higher today.
Shares in the S&P/ASX 200 Index (ASX: XJO) energy stock closed yesterday trading for $7.85. In early morning trade on Thursday, shares are swapping hands for $7.94 apiece, up 1.1%.
For some context, the ASX 200 is up 1% at this same time.
The Santos share price should be catching some tailwinds today from another overnight rise in the oil price.
Amid ongoing fighting in and around Iran and new Yemeni Houthi attacks on oil tankers in the Red Sea, the Brent crude oil price is up 3.4% overnight to US$94.07 per barrel, according to Bloomberg data. That now sees the oil price up more than 31% since the beginning of July.
Here’s what else investors are mulling over today.
Santos share price stalls on cash flow stumble
Before market open this morning, Santos released its June quarter update (Q2 FY 2026).
The Santos share price is on the rise, with the company reporting a 6% quarter-on-quarter increase in sales revenue to $1.35 billion.
The revenue boost was fuelled in part by a 3% increase in Q2 production, which came out at 23.1 million barrels of oil equivalent (mmboe). That brings Santos’ H1 production to 45.6 mmboe.
And with management forecasting a 20% to 30% boost in H2 production levels, Santos narrowed its full-year FY 2026 production guidance to the range of 99 mmboe to 105 mmboe.
Santos also enjoyed a 4.9% quarter-on-quarter rise in its average realised LNG pricing, which increased to $11.21 per mmBtu.
However, investors look to have some concerns over the company’s cash flow.
Impacted by “challenges” during the final stages of commissioning and ramp up at the Barossa and Pikka projects, and the timing of cargo movements, free cash flow from operations in the first half of FY 2025 was lower than expected at $378 million.
Barossa and Pikka together recorded a combined free cash flow from operations loss of around $151 million for the first half.
The company said that higher realised LNG pricing, along with the expected production uplift, should improve free cash flow in the second half of 2026.
What did management say?
Commenting on the results that could be holding the Santos share price back from larger gains today, managing director Kevin Gallagher said:
Production increased towards the end of the second quarter as Barossa ramped up and Pikka came online, with Barossa now producing at 97% of planned rates. The challenges encountered during commissioning activities have essentially delayed our transition to a higher production, higher cash flow generating portfolio, until the second half of the yearâ¦
Gallagher added:
2026 was always going to be a transition year for Santos with two major development projects coming online and significant commissioning activities to be completed before establishing steady-state performance at both assets.
And for passive income investors awaiting the upcoming Santos dividend, Gallagher noted:
The board will consider the timing of expected cash flow over the full year in determining the amount of the interim dividend, with first-half free cash flow impacted by a number of timing items that are not reflective of the company’s underlying cash flow capacity.
The post Why is the Santos share price lifting off on Thursday? appeared first on The Motley Fool Australia.
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More reading
- Santos reports higher Q2 revenue as Barossa, Pikka ramp up
- 5 things to watch on the ASX 200 on Thursday
- The Santos share price is in the spotlight this week. Here’s why
- 5 things to watch on the ASX 200 on Wednesday
- 5 things to watch on the ASX 200 on Tuesday
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.