Santos reports strong Q4 earnings amid Barossa legal fight and merger talks

The news: Santos reported fourth-quarter earnings of USD1.5 billion ($2.3 billion), with production levels at the top end of the full-year guidance. While early stage discussions with energy rival Woodside are progressing, CEO Kevin Gallagher said there is "no certainty" that a potential merger will be agreed.

The numbers: The oil and gas giant said full-year production totalled 92 million barrels of oil equivalent (MMboe), at the top end of the company guidance. Though quarter-on-quarter sales revenue climbed 3%, full-year revenue was down 24% compared to the previous year.

Santos, which recently scored a legal win to proceed with its Barossa gas project, has increased its budget for the development by up to USD300 million after the legal challenges slowed progress. The increase will take the project's total cost to between USD4.5 billion and USD4.6 billion, while the start date for the development has been postponed to Q3 2025.

The context: On the potential merger with Woodside, Gallagher said the two companies have agreed to exchange information to assess the benefits for their shareholders. However, as his Woodside counterpart Meg O'Neill reiterated on Wednesday, Gallagher flagged that it was too early to say whether any deal would eventuate from the early stage discussions.