Santos Expects 2026 Output of Up to 111 Million BOE; Pikka Costs Rise

By David Winning

SYDNEY--Santos signaled a large step up in oil and natural gas production this year as the Barossa and Pikka Phase 1 projects come online, but signaled the latter had run over budget as it approaches completion.

Santos forecast output of between 101 million and 111 million barrels of oil equivalent in the 12 months through December. That would represent a significant increase on the 87.7 million BOE produced in 2025, which missed company guidance due to a roughly two-month delay to the startup of the Barossa natural-gas project in Australia.

Chief Executive Kevin Gallagher said the company had experienced two connection failures on the utilities and firewater mains GRE pipework systems at Barossa that resulted in the delay. Management chose to strengthen similar connections at the floating production storage and offloading vessel in an effort to prevent a repeat in future.

However, Gallagher said the first liquefied natural gas cargo from Barossa is being loaded at the Darwin LNG facility and will be shipped to the Sakai import terminal in Japan.

Santos also said the Pikka Phase 1 project in Alaska is 98% complete and on track to produce oil for the first time late in the first quarter of this year. However, its share of project costs has risen by around US$200 million, reflecting inflationary pressures in labor and materials, tariffs on production modules for the sea water treatment plant, and higher logistics costs.

"Once at full rates, Barossa LNG and Pikka Phase 1 together are expected to lift Santos' production by around 25-30% by 2027 compared to 2024 levels," Gallagher said.

Santos reported sales revenue of US$1.23 billion in the three months through December, above the US$1.13 billion achieved in its fiscal third quarter. LNG prices fell to US$10.33 per million British thermal units, while crude oil prices averaged US$66.66 a barrel.

Production totaled 22.3 million barrels of oil equivalent in the quarter, up 5% on the three months through September.

Write to David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

January 21, 2026 18:12 ET (23:12 GMT)