Australian oil and gas producer Santos reported first-half 2026 results that beat market expectations, with both its Barossa LNG project in northern Australia and the Pikka oil field in Alaska moving steadily toward plateau production.
The company said underlying profit came in at US$397 million, better than consensus estimates, while net profit after tax reached US$355 million. Sales revenue edged higher to US$2.62 billion as production climbed 3 percent year on year to 45.6 million barrels of oil equivalent.
Barossa LNG Approaches Full Capacity
Barossa, which feeds gas into the existing Darwin LNG terminal, was producing around 550 million standard cubic feet per day at the time of the results and is expected to reach roughly 600 mmscf/d by the end of the third quarter. Santos delivered seven Barossa LNG cargoes by the end of June and another five since July 1, with Darwin LNG maintaining 100 percent plant reliability through the half.
Unit production costs held steady at US$7.53 per barrel of oil equivalent, while realized LNG prices averaged US$10.95 per MMBtu. About 80 percent of the company contracted LNG portfolio is linked to Japan Crude Cocktail pricing with a roughly three-month lag, meaning stronger JCC rates through the second quarter should lift realized prices in the second half.
Pikka Delivers First Crude Cargo From Alaska
In Alaska, the Pikka Phase 1 project achieved first oil in May and continuous production in June. Output reached approximately 23,000 barrels per day gross by the end of the half, and Santos lifted the field first 450,000-barrel crude cargo in August. The company expects production to build toward a gross plateau of about 80,000 b/d late in the third quarter once the seawater treatment plant is fully commissioned.
The 51 percent-owned project, with Repsol holding the remainder, saw 31 development wells drilled, 28 stimulated, and 25 flowed back, all in line with pre-drill expectations. Santos described 2026 as a transition year as both major projects move through commissioning into steady-state output.
Second-Half Outlook and Cash Flow Rebound
Santos said second-half production is expected to be 20 to 30 percent higher than the first half, supported by the ramp at both Barossa and Pikka. Free cash flow from operations fell to US$378 million from US$1.09 billion a year earlier, but the company attributed the decline to commissioning costs, cargo timing around June 30, and a PNG LNG underlift position of about 1.3 million boe – effects it expects to reverse early in the second half.
| Metric | H1 2026 | H1 2025 |
|---|---|---|
| Production (mmboe) | 45.6 | 44.1 |
| Sales revenue ($bn) | 2.62 | 2.58 |
| Underlying profit ($m) | 397 | 508 |
| Free cash flow ($m) | 378 | 1,086 |
| Net profit after tax ($m) | 355 | 439 |
| Unit cost ($/boe) | 7.53 | 7.28 |
The company maintained full-year production guidance of 99 to 105 million boe and declared an interim dividend of US 11.6 cents per share, totaling US$377 million. Santos ended the half with US$3.77 billion in liquidity and no debt maturities before September 2027, while gearing stood at 23.2 percent excluding operating leases.
Peak major-project capital spending on Barossa and Pikka is now behind the company, positioning it for stronger cash generation as both assets reach plateau output. Santos also confirmed that Papua LNG remains on track for a final investment decision in the fourth quarter of 2026.
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