Production from Santos’ Western Australian assets sunk to its lowest level since 2018 last year, as the company prioritised other jurisdictions.
Production from Santos’ Western Australian assets sunk to its lowest level since 2018 last year, as the company prioritised other jurisdictions.
Santos produced 87.1 million barrels of oil equivalent across its global portfolio in 2024, generating revenue of $US5.4 billion ($7.9 billion) and delivering a net profit of $US1.2 billion (1.9 billion) – down 14 per cent year-on-year.
But output from the LNG producer’s WA assets slipped back to 19MMboe – their lowest since 2018 – as the company’s assets in the region approach the end of their economic life.
The Reindeer gas field’s life was extended into the second half of 2024 through a well cycling strategy, while volumes from the Varanus Island facility were impacted by maintenance shutdowns on two trains during the year.
Santos expects Varanus Island’s output to lift this year, having recently completed an infill well connecting the Halyard-2 field to the infrastructure.
Halyard-2 is expected to produce through to 2027.
Managing director Kevin Gallagher previously expressed his desire to run the WA business to cover its decommissioning costs in the state.
Santos has completed decommissioning on six of eleven wells across its Mutineer, Exeter, Fletcher and Finucane fields.
It spent $US390 million on decommissioning – predominantly off the WA coast – last year and expects to spend in the realm of $US300 million this year.
Mr Gallagher said he expected decommissioning costs to come in at around $US250 million on average over the years ahead.
On the development front, focus appears to be elsewhere.
Santos is on track to bring the once-stalled Barossa LNG project in the Northern Territory into production in the third quarter this year and is targeting first oil from the Pikka project in Alaska in mid-2026.
Mr Gallagher said previously forecast cost blowouts because of legal action taken against Barossa by activists had yet to impact the project – with costs currently tracking closer to the FID price tag of $US3.6 billion.
The Santos-led PNG LNG joint venture is working towards a final investment decision on its Papua LNG project by the end of 2025, and talked up the potential of its Beetaloo project in the NT.
But the South Australian-headquartered delayed a final investment decision at the Dorado oil project in the Bedout Basin off WA’s coast, after slashing its local workforce in May last year.
Santos today revealed a plan to drill two gas exploration wells at Dorado in 2026, and Mr Gallagher said the plan for projects beyond Barossa and Pikka would be up in the air.
“They will be competing to get in the queue, to beat each other, to be the next project in the line,” he said.
“That’s going to have to fit into our capital allocation framework.”
The company previously expected to make an FID call on Dorado in 2025.
Santos also flagged a further review of its operating model, with targeted annualised savings in a range between $US100 million and $US150 million over the coming years.
Santos declared a US10.3c dividend, down 41 per cent year-on-year.
Santos shares fell 2.6 per cent, to $6.71 this morning.
