Shares in Santos Ltd (ASX: STO) are trading higher after the company announced a major boost to cash flows over the December quarter.
The Adelaide-based oil and gas company said in a statement on Thursday that cash flow for the quarter was about $380 million, which was up 30% on the prior quarter.
This also brought cash flow for the full year to about $1.8 billion.
Production for the fourth quarter was 22.3 million barrels of oil equivalent (mmboe), up 15% on the prior quarter, bringing the full-year result to 87.7 mmboe, near the upper end of guidance of 87-88 mmboe.
Sales revenue for the fourth quarter was $1.2 billion, up 9% on the prior quarter, bringing the full-year result to more than $4.9 billion.
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Solid result across the board
Santos Managing Director Kevin Gallagher said it was an operationally excellent result as well as being strong on the financial front.
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. The performance of the base business has been a real highlight in 2025 with strong production despite the impact of the biggest floods in the Cooper Basin since the 1970s. Santos now has a strong platform for production growth with Barossa's first LNG cargo currently loading at Darwin. We have taken a very considered approach to the final stages of commissioning to ensure offshore operations achieve a steady state, high level of reliability as quickly as possible once full production is achieved.
Mr Gallagher said Santos was also moving close to first production from the Pikka oil project in Alaska, "positioning the company to deliver sustainable returns to our shareholders and continue to reinvest in the business to grow production''.
Drilling at Pikka continues to perform strongly, with the 23rd well achieving the highest productivity so far, with an initial rate of approximately 8,000 barrels of oil per day. The 24th well was the second combination well, developing two downhole reservoir sections with one well. The drilling capability and innovation developed at Pikka will underpin our strategy for future developments. 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.
Mr Gallagher said the company had a cash flow breakeven target of $45-$50 per barrel of oil for the current year, which "will position Santos over the next few years to deliver sustainable results and provide strong returns for our shareholders''.
Santos' production guidance for 2026 is for 101-111 mmboe, a significant uplift from 2025.
Santos shares were 2.9% higher in early trade at $6.23.
The company was valued at $19.68 billion at the close of trade on Wednesday.
