Disciplined financial performance
- Increased production of 22.5 mmboe, up 1 per cent on the prior quarter and 3 per cent on the corresponding period in 2025, as Barossa achieved its first cargoes.
- Sales revenue of approximately $1.27 billion for the first quarter, up 3 per cent on the prior quarter.
- Free cash flow from operations of ~$383 million, in line with the prior quarter.
- Full year 2026 guidance remains unchanged.
Pikka phase 1 update
- Pikka phase 1 reached mechanical completion early in the quarter, followed by fuel gas introduction to support electrification. Dynamic commissioning continued through quarter end, and oil initiation for first tank and facility fill activities is now underway. First sales oil into the pipeline network is expected in the coming weeks.
- Once continuous and stable operations are achieved, the Seawater Treatment Plant (STP) will be started up, providing reservoir pressure support and enabling ramp-up toward plateau production throughout the second quarter into early third quarter.
- Twenty-seven development wells have been drilled to date, with 20 wells stimulated and flowed back in line with pre-drill expectations.
Barossa LNG update
- The Barossa floating storage and offloading facility (FPSO) is expected to commence ramping up production in the next week as we complete the flushing and cleaning of heat exchanger trains. During this recent shutdown the dry gas compressor seals have been replaced to allow full production rates once the facility is back online. LNG production is expected to commence a few days after the FPSO is online.
Strong operational performance and appraisal success
- PNG LNG maintained high-plant reliability of more than 98 per cent, delivering an annual run rate of ~8.6 Mtpa, with Santos-operated gas facilities performing strongly during the quarter.
- In Western Australia Halyard-2 continues to perform strongly. It has produced more than 80 per cent of its initial estimated 2P over the 14 months since it was brought online, with minimal decline and no water breakthrough.
- GLNG delivered stable upstream production, with LNG production at an annual run rate of 5.8 Mtpa and 24 contracted cargoes shipped during the quarter. The Roma field achieved record daily production of 226 TJ per day. Scotia development progressed with 10 wells drilled, Arcadia achieved facility reliability above 99 per cent, and Fairview production remained stable with 23 wells drilled during the quarter.
- In Alaska, the successful completion of the Quokka-1 appraisal well confirms a high-quality Nanushuk reservoir with approximately 143 feet of net oil play, demonstrating average porosity of 19 per cent. Following a single stage stimulation, the well achieved a flow rate of 2,190 bopd. The well is located approximately six miles (~10 kilometres) from the Mitquq-1 discovery well drilled in 2020. Reservoir sands correlate between the two wells and fluid analyses confirm the presence of high‑quality, light‑gravity oil, supporting strong well performance and improved pricing relative to Pikka oil. This demonstrates Quokka as a material addition to the development runway in Alaska.
- Final investment decision on the Moomba Central Optimisation project, targeting over $600 million in capital and operating cost savings (net Santos) over the life of the Central Fields by moving to more efficient, modern infrastructure, improving productivity, and delivering an expected IRR of more than 15 per cent.
- Santos secured a 10-year, 200 petajoule conditional gas sales agreement with the South Australian Government, including a pre-pay that supports Santos’ investment in the Moomba Central Optimisation project. This reinforces Santos’ role in supporting Australia’s energy security and regional economic development.
- Voluntary Indigenous Land Use Agreement authorised by the Gomeroi people for the Hunter Gas Pipeline and Narrabri Lateral Pipeline, supporting progress towards development of the Narrabri Gas Project.
- Supported Australian domestic fuel security during a period of global market disruption, working constructively with Viva Energy and Ampol to help maintain stable fuel supply to Australian refineries.
Santos Managing Director and Chief Executive Officer Kevin Gallagher said the business delivered a disciplined performance during the first quarter, generating $383 million in free cash flow from operations, underpinned by strong execution across the portfolio.
“Our base business continues to perform reliably, supporting free cash flow generation.
“The Pikka phase 1 oil project is now mechanically complete with commissioning activities progressing well and first sales oil expected in the coming weeks. The project is targeting plateau production early in the third quarter of 2026.
“The Barossa project has had a few challenges during commissioning. Pleasingly we have now replaced the dry gas seals on the compressors and the FPSO is expected to commence ramping up as we complete the flushing and cleaning of the heat exchanger trains.
“The Quokka-1 appraisal well was a resounding success, confirming a high-quality resource that reinforces the strength of our Alaska portfolio. Located close to the Pikka development, Quokka represents a material addition that has the potential to significantly extend our development runway in Alaska with an oil grade that supports a premium to Pikka oil and will support disciplined growth in the region.
“During the quarter, Santos strengthened its strategic position in Australia through key commercial outcomes, including a long-term gas supply agreement with the South Australian Government and a final investment decision on the Moomba Central Optimisation project. These initiatives support Australia’s domestic energy security and enhance the value of our existing asset base.
“Our portfolio of high-quality LNG assets, located close to Asian markets, is well positioned to meet strong and growing LNG demand across this region. Santos also continues to play an important role in supporting domestic energy security and economic development in Australia, including working constructively with industry partners and governments to help maintain stable fuel supply during a period of global market disruption. During the quarter, Santos worked with Viva Energy to bring forward part of a Cooper Basin crude parcel and sold a parcel of Varanus Island crude to Ampol, supporting domestic refining capacity.
“In addition, Santos reached conditional agreement to supply 20 petajoules per year of domestic gas for the South Australian Strategic Reserve over 10 years from 2030 to 2040, supporting the state’s long-term domestic energy security.
“Our focus remains on safe and reliable operations across our base business, disciplined capital allocation and delivering our projects. As Barossa ramps up and Pikka phase 1 comes online, Santos is well positioned to deliver production growth within the $45 to 50 per barrel all-in free cash flow break even target range for the business. This will set Santos up to deliver sustainable, long-term value and competitive shareholder returns,” Mr Gallagher said.
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