Strong Financial and Operational Performance
Santos has reported a strong financial and operational performance for the third quarter of 2025, demonstrating resilience and growth amid fluctuating market conditions. The company generated approximately $300 million in free cash flow during the quarter, contributing to a cumulative year-to-date total of around $1.4 billion. This robust cash generation underlines Santos' commitment to operational excellence and its diversified portfolio strategy.
Production for the quarter reached 21.3 million barrels of oil equivalent (mmboe), bringing the total year-to-date production to 65.4 mmboe. Sales volumes were reported at 21.5 mmboe, reflecting a one percent increase compared to the previous year. Revenue for the quarter amounted to $1.1 billion, supporting a total of $3.7 billion in cumulative year-to-date revenue.
Santos' gearing ratio stood at 22.9 percent, excluding operating leases, which rose to 28.2 percent when including them. This increase in gearing is primarily attributed to the BW Opal Floating Production, Storage, and Offloading (FPSO) vessel reaching the Ready for Start-up (RFSU) stage in the third quarter and being added to the balance sheet. This development underscores the company's ongoing commitment to expand its production capabilities and enhance operational efficiency.
Operating Highlights
Santos' operational highlights for the quarter reflect strong performance across its various assets. The Papua New Guinea (PNG) LNG project achieved a run rate of 8.6 million tonnes per annum (Mtpa) during the quarter, driven by high facility reliability, exceeding 98 percent. Production from Santos-operated PNG gas facilities remained robust, with the Hides Central Processing Facility maintaining reliability over 99 percent.
In Western Australia, domestic gas production rose by 8 percent year-to-date compared to the prior year, supported by the successful Halyard-2 infill program and consistent reliability from the Varanus Island facility, which averaged 98 percent year-to-date. The Gladstone LNG (GLNG) project saw upstream gas production averaging 711 terajoules (TJ) per day, up from 705 TJ per day in the previous quarter, and is on track to achieve full-year production of around 6 million tonnes of LNG.
Additionally, GLNG's Roma field recorded a milestone with over 220 TJ per day in daily production. The completion of the first well in a 32-well development program at Scotia, along with significant progress on the Fairview field, highlights Santos' commitment to maximizing production efficiency and reducing reliance on third-party gas supplies. The Cooper Basin also showed signs of recovery, with fifty wells and an upstream compressor successfully returned to service following recent flooding.
The Moomba Carbon Capture and Storage (CCS) phase 1 project is on track, having safely and permanently stored over 1.3 million tonnes (gross) of CO2 equivalent in its first operational year, marking a significant achievement in Santos' sustainability efforts.
Strategic Partnerships and Developments
Strategically, Santos has signed a mid-term LNG supply contract with QatarEnergy Trading LLC to deliver approximately 0.5 Mtpa over two years starting in 2026. This partnership highlights Santos' proactive approach to securing long-term contracts that enhance its market position.
Moreover, three Memoranda of Understanding (MOUs) were established with ENGIE, Orica, and the Narrabri Shire Council aimed at the potential long-term supply of gas from the Narrabri Gas Project. This project is crucial for addressing gas supply concerns on Australia's east coast, positioning Santos as a key player in domestic energy security.
The Barossa LNG project is advancing into its production operations phase, with the BW Opal FPSO successfully receiving its first gas and commencing production phase commissioning. The project is on track to ship its first LNG cargo in the fourth quarter of 2025, contributing significantly to Santos' production growth trajectory.
Additionally, the Darwin LNG facility achieved RFSU in August 2025, following a successful life extension project for Barossa LNG. The Northern Territory Environment Protection Authority has renewed the Environment Protection License for Darwin LNG, effective September 19, 2025, ensuring the facility's compliance with environmental standards.
Advancements in Pikka Phase 1
The Pikka phase 1 development is nearing completion, with over 95 percent of the project finished. By the end of the third quarter, twenty-two wells had been drilled and completed, including the longest well recorded for Santos at nearly 27,000 feet. This achievement not only sets a company record but also highlights Santos' capability in executing complex drilling operations in challenging environments.
The project has successfully prepared all 120 miles of pipeline for service, with commissioning works for the seawater treatment plant underway. With first oil expected in the first quarter of 2026 and a ramp-up to a plateau of 80,000 barrels of oil per day (gross) anticipated by mid-2026, Pikka phase 1 is positioned to significantly enhance Santos' production portfolio.
Implications for the Industry
The robust performance reported by Santos signals a positive outlook for the broader oil and gas sector, particularly in terms of production resilience and operational efficiency. The successful execution of major projects like Barossa LNG and Pikka phase 1 illustrates the strategic importance of innovation and investment in enhancing production capabilities.
Santos' focus on sustainability, as evidenced by the Moomba CCS project, aligns with global energy trends prioritizing emission reductions and environmental responsibility. This positions the company favorably among industry peers as it navigates the transition to a low-carbon future while continuing to deliver strong returns to shareholders.
Outlook for the Future
Looking ahead, Santos is well-positioned to capitalize on its strategic projects and partnerships. The anticipated production increases from Barossa LNG and Pikka phase 1 are expected to drive significant revenue growth, with projections indicating an approximate 30 percent increase in production levels by 2027 compared to 2024.
Management remains focused on operational excellence and maintaining a disciplined, low-cost operating model. The recent challenges faced with software issues onboard the BW Opal FPSO have been addressed, and the company is confident in achieving its ambitious production targets without compromising safety.
With a clear strategy and robust operational foundation, Santos is poised to deliver sustainable results and strong returns for its shareholders in the coming years, reinforcing its leadership position in the global energy landscape.
