Santos sets new targets for shareholder returns, carbon storage
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The news: Oil and gas giant Santos has unveiled an updated capital allocation framework, aiming to return at least 60% of all-in free cash flow to shareholders from 2026.
The numbers: The new framework follows a period of major capital investment to bring new production online from Santos' Barossa and Pikka projects, which is expected to increase group production by more than 30% by 2027 compared to 2024.
Beyond the 2026 target, Santos said it will return 100% of free cash flow to shareholders in the form of dividends or buybacks, once gearing is below its target range of 15% to 25%.
Santos also announced a carbon storage growth target to build and operate a commercial carbon storage business that would permanently store around 14 million tonnes of third-party carbon dioxide per year by 2040.
The target is equivalent to around 50% of Santos' 2023 equity Scope 3 emissions from the combustion and use of its products.
Santos launched its Moomba carbon capture and storage project last month, targeting the capture of 1.7 million tonnes of CO2 per year.
The context: Santos' managing director and CEO Kevin Gallagher said the updated capital allocation framework is part of the group's commitment to prioritise shareholder returns when new production comes online.
Meanwhile, the company's new carbon storage growth target supports the global energy transition while generating new revenue streams for the business, he said.
The source: ASX announcement
