How Santos’ Barossa LNG and Pikka Projects Are Shaping Its 2026 Outlook
Santos Limited reported robust Q3 2025 results, highlighted by the Barossa LNG project commencing production and Pikka phase 1 nearing first oil. The company’s diversified portfolio and operational discipline underpin a confident outlook despite some operational delays.
- Q3 free cash flow of ~$300 million, $1.4 billion year-to-date
- Barossa LNG FPSO reached Ready for Start-up; first LNG cargo expected Q4 2025
- Pikka phase 1 over 95% complete, on track for first oil in Q1 2026
- PNG LNG and GLNG maintain strong production with high reliability
- 2025 production and sales guidance narrowed due to operational delays and floods
Strong Financial and Operational Momentum
Santos Limited delivered a solid third quarter in 2025, generating approximately $300 million in free cash flow and bringing year-to-date free cash flow to around $1.4 billion. Production for the quarter stood at 21.3 million barrels of oil equivalent (mmboe), with sales revenue reaching $1.1 billion, contributing to a cumulative $3.7 billion for the year. These figures underscore the resilience of Santos’ diversified portfolio amid a transition from capital-intensive growth to a phase focused on delivering stronger shareholder returns.
Barossa LNG and BW Opal FPSO – A New Chapter Begins
The Barossa LNG project marked a significant milestone as the BW Opal floating production, storage and offloading vessel (FPSO) achieved Ready for Start-up (RFSU) and commenced production operations. Despite a two-week unplanned shutdown caused by software issues affecting safety systems, these challenges have been resolved. Santos anticipates shipping the first LNG cargo from Barossa LNG in the fourth quarter of 2025, a development expected to boost production volumes and revenue in the coming periods.
Pikka Phase 1 Nears Completion with Record Drilling Achievements
Progress on the Pikka phase 1 oil development in Alaska is advancing rapidly, with over 95% completion and 22 wells drilled, including the company’s longest well to date at nearly 27,000 feet. The project remains on track for accelerated first oil in the first quarter of 2026, targeting a plateau production rate of 80,000 barrels per day by mid-2026. This milestone will be pivotal in lifting Santos’ overall production by approximately 30% compared to 2024 levels by 2027.
Operational Highlights Across Key Assets
PNG LNG maintained an 8.6 million tonnes per annum run rate with facility reliability exceeding 98%, while GLNG upstream gas production increased slightly to an average of 711 terajoules per day. Western Australia’s domestic gas production rose 8% year-to-date, supported by strong well performance and facility reliability. Cooper Basin production is recovering from earlier floods, with 50 wells and a compressor returned to service, though full recovery is expected to extend into the fourth quarter.
Sustainability and Strategic Partnerships
Santos’ Moomba Carbon Capture and Storage (CCS) phase 1 project safely stored over 1.3 million tonnes of CO2 equivalent in its first year, with Australian Carbon Credit Units expected imminently. The company also signed a mid-term LNG supply contract with QatarEnergy Trading LLC and memoranda of understanding with ENGIE, Orica, and Narrabri Shire Council to support long-term domestic gas supply. These partnerships align with Santos’ commitment to sustainable growth and energy transition.
Guidance and Outlook
Reflecting operational delays, including the slower ramp-up of the BW Opal FPSO and flood impacts on Cooper Basin production, Santos narrowed its 2025 production guidance to 89-91 mmboe and sales volume guidance to 93-95 mmboe. Capital expenditure and unit production cost guidance remain unchanged. CEO Kevin Gallagher emphasized the company’s disciplined capital allocation and operational excellence as key drivers for sustainable results and shareholder value.
Bottom Line?
As Santos navigates operational challenges and project milestones, its upcoming Barossa LNG first cargo and Pikka first oil will be critical to sustaining growth momentum.
Questions in the middle?
- How will the recent software issues on BW Opal FPSO affect long-term operational reliability?
- What impact will the ongoing legal appeals related to the Narrabri Gas Project have on its development timeline?
- How will Santos balance capital expenditure with production growth amid evolving market conditions?
