Santos Fiscal Year Net Profit Falls 33%, Nears Start of Alaska Project

By David Winning

SYDNEY--Santos said its annual net profit fell as energy prices weakened and it faced the distraction of a US$18.72 billion takeover proposal that was subsequently withdrawn.

Santos reported a US$818 million net profit for the 12 months through December, down 33% from US$1.22 billion a year earlier. Underlying profit, which strips out some one-off items, fell by 25% to US$898 million and it generated US$1.8 billion of free cash flow.

Annual sales revenue fell by 8% to US$4.94 billion, as the prices fetched for its liquefied natural gas and crude oil were lower than the year before. That blunted the benefits of a slight improvement in output to 87.7 million barrels of oil equivalent in the period.

Directors of the company declared a final dividend of 10.3 U.S. cents a share, in line with a year earlier. Santos will now pivot to a new approach of returning more of its earnings to shareholders as it completes two growth projects in Australia and the U.S. that absorbed significant capital during construction.

Under its refreshed capital management framework, Santos aims to return at least 60% of free cash flow to shareholders and, potentially, top it up with a share buyback if gearing is low. It represents a transition from Santos's previous policy of paying out 40% of free cash flow from operations.

Santos said late last month that it had shipped a maiden cargo of liquefied natural gas from the Barossa project in Australia to the Sakai terminal in Japan. The startup of Barossa was a key hurdle that Santos wanted to clear before implementing the new capital management plan.

The company is also approaching the completion of its Pikka Phase 1 project in Alaska, with first oil expected before the end of March and a rampup period over subsequent months.

Santos expects both projects to drive a step change in production. It has forecast output of between 101 million and 111 million barrels of oil equivalent in 2026.

"We are completing two major development projects that will position Santos with a world class asset portfolio, that can continue to grow our business with an all-in break even oil price of US$45-50/bbl to 2030 and deliver shareholder returns," said Chief Executive Kevin Gallagher.

Santos's share price is down some 13% since mid-September when a consortium led by Abu Dhabi National Oil Co. unit XRG abandoned a billion takeover offer for Australia's second-largest energy company. The deal foundered on disagreements over terms given the length of time it could take for a transaction to complete.

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

(END) Dow Jones Newswires

February 17, 2026 17:57 ET (22:57 GMT)