Santos’ CCS Success and LNG Contracts Signal Shift Amid Market Pressures

Strong Financial Performance Caps 2024

Santos has closed out 2024 with a solid financial and operational performance, reporting sales revenue of more than US$1.4 billion in the fourth quarter alone, contributing to a full-year total of US$5.4 billion. The company’s free cash flow from operations was approximately US$430 million in Q4, culminating in a robust US$1.9 billion for the year. This financial strength underpins Santos’ ability to sustain shareholder returns, fund ongoing operations, and invest in major projects.

Notably, Santos achieved a free cash flow breakeven price of less than US$33.50 per barrel for the full year unhedged, reflecting disciplined cost management amid fluctuating commodity prices.

Operational Highlights and Production Stability

Production remained steady with 21.5 million barrels of oil equivalent (mmboe) produced in Q4 and 87.1 mmboe for the full year. The company completed the sale of a 2.6% interest in PNG LNG to Kumul Petroleum Holdings Limited, receiving a total cash consideration of US$602 million, which strengthens its balance sheet further.

Key development projects are advancing well. The Barossa Gas project is 88.3% complete and remains on schedule for first production in Q3 2025. Similarly, the Pikka phase one project in Alaska is 74% complete, with drilling and pipelay activities progressing as planned, targeting first oil in mid-2026.

Decarbonisation and Carbon Capture Initiatives

Santos’ Moomba Carbon Capture and Storage (CCS) project achieved full nameplate injection rates during Q4, injecting and storing nearly 340,000 tonnes of CO2 equivalent. This milestone positions Moomba CCS as a leading large-scale emissions reduction project, with operational performance exceeding initial expectations.

The company also signed a memorandum of understanding with Japanese utility Chubu Electric Power to explore CO2 transport and storage collaboration, signaling a strategic push into carbon management services.

LNG Contracting Strengthens Market Position

In 2024, Santos secured four new long and mid-term LNG contracts, including a long-term supply agreement with Shizuoka Gas Co. Ltd for 0.35 to 0.4 million tonnes per annum over 12 years starting in 2032, and a mid-term contract with TotalEnergies for up to 0.5 million tonnes per annum over three years commencing late 2025. These deals reinforce Santos’ strategic positioning to supply lower-cost, lower-carbon LNG to Asia-Pacific markets through its world-class LNG portfolio.

Looking Ahead

With major projects nearing completion and a strong LNG contracting pipeline, Santos is well positioned for growth in 2025. The company plans to focus on operational excellence, safety, and further decarbonisation efforts while maintaining disciplined capital allocation. Investors will be watching closely as Santos delivers first gas from Barossa and advances the Pikka project, both critical to sustaining long-term production and cash flow.