Santos shares tumble after lower-than-expected FY profit
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More news: Santos shares shed more than 3% in morning trade after the oil and gas heavyweight missed underlying profit forecasts for the year.
Santos shares were down 3.3% to $6.67 at 11:55am AEDT.
UBS analysts said the result was operationally in line with estimates, but underlying NPAT fell short of average estimates due to higher taxes compared to 2023.
They noted that the “new information” from Santos’ update is its cost reduction initiative, which targets US$100 million to US$150 million in annual structural savings over the next one to two years.
However, the analysts said that while the move meets market expectations for cost cuts, it misses the opportunity to be “bigger and broader” than expected.
Santos posts 15.6% slide in full-year profit, misses estimates
The news: Oil and gas giant Santos reported a 15.6% slide in underlying profit to USD1.2 billion ($1.9 billion), as lower volumes and softer energy prices hit its full-year earnings.
Analysts polled by Visible Alpha had expected a 7% decline in underlying profit to USD1.32 billion.
The numbers: Net profit after tax shrank 14% year on year to USD1.2 billion, as free cash flow lowered 11% to USD1.9 billion. Santos slashed its dividend by 41% to 10.3 cents per share.
The company reported annual production of 97.1 million barrels of oil equivalent (mmboe) and sales volumes of 91.7 mmboe. These were both down 5% on last year's figures.
The average realised oil price decreased 3% to USD84.76 a barrel, while the average realised liquified natural gas (LNG) price lowered 3% to USD12.31 per million British thermal units. Production cost per barrel rose 3% to USD7.85 billion.
Santos guided 2025 production volumes of between 90 mmboe and 97 mmboe, and sales volumes of 92 mmboe to 99 mmboe.
Santos shares were down 0.8% to $6.84 at 10:45am AEDT.
The context: Santos said its "low-cost disciplined operating model" is "more important than ever in a volatile external market".
The company is targeting USD100 million to USD150 million in annual structural savings over the next one to two years.
Santos also noted that its Barossa LNG project in the Timor Sea is 91% complete and remains on track for first gas in the third quarter this year. A Federal Court decision cleared the way for the project to proceed last month, after Tiwi traditional owner Simon Munkara that it would damage areas of cultural significance.
What they said: "The global economy in 2024 was marked by geopolitical instability and macroeconomic uncertainty, which continue to pose risks to markets," the company said.
"This has led to a renewed focus on energy security amid ongoing price volatility and increasing challenges for energy transition as technology development has fallen behind."
The sources: ASX announcement, UBS research
