Santos Raises Dividend Despite 19% Fall in 1st Half Profit

By David Winning

SYDNEY--Santos said its half-year net profit fell by 19% as its natural gas fetched a lower price than a year earlier and production was disrupted by bad weather and planned maintenance.

Santos said its net profit totaled US$636 million in the six months through June, down from US$790 million a year ago. Underlying profit, which strips out some one-off items, fell by 18% to US$654 million.

Directors of the company declared an interim dividend of 13.0 U.S. cents, up 49% from a payout of 8.7 U.S. cents at the corresponding stage of 2023.

Santos produced 44.0 million barrels of oil equivalent in its fiscal first half, down 2% from 45.0 million BOE a year earlier. Sales volumes dropped by 1.5% to 46.4 million BOE, contributing to half-year revenue falling by 9% to US$2.71 billion. Santos said its annual guidance is unchanged.

Gas prices were a particular headwind to profit growth in the first half, whereas other energy output including crude oil and condensate fetched a higher price. Santos reported an average realized price of liquefied natural gas of US$12.10 per million British thermal units in the half, compared to US$13.24/mmBtu a year earlier. Domestic gas prices were also weaker.

Santos's production is set to rise in coming years as it completes major projects including the Barossa natural-gas development offshore Australia and the Pikka oil project in Alaska. More immediate is the Moomba carbon capture and storage project where final commissioning is underway.

"Phase one of the Moomba CCS project is in advanced commissioning with the pipeline being pressured up and carbon dioxide to be introduced into the system imminently," said Chief Executive Kevin Gallagher. "The project remains on track for first injection and ramp up to full capacity this year."

Gallagher said the Barossa project is nearing 80% complete, with first gas expected in the third quarter of 2025.

"We're excited with our progress and the outlook at Barossa with initial results from the third well showing excellent reservoir quality and thickness," he said. "At full production rates, Barossa is expected to add around 1.8 million tons per annum to Santos's expanding LNG portfolio."

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

(END) Dow Jones Newswires

August 20, 2024 19:35 ET (23:35 GMT)

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