Santos (STO) HY26 Production Up 3%, Sees H2 Output Jump 20-30%

On the domestic front, Santos took a final investment decision on the Moomba Central Optimisation project in the Cooper Basin. The project targets more than $600 million in capital and operating cost savings over the life of the Central Fields, and up to $3 a barrel reduction in Cooper Basin unit production costs. A prepayment on a gas sales agreement to supply 200 petajoules of domestic gas to the South Australian Strategic Gas Reserve from 2030 to 2040 is supporting that investment.

“Strong performance from the base business and continued capital discipline are funding investment in the next generation of low-cost, high-margin production growth opportunities in our deep portfolio,” Gallagher said.

The results come as Australian energy producers face a mixed outlook. Oil prices have softened from mid-2025 highs, while the domestic gas market remains tight as eastern states push for more supply. Santos’s portfolio of conventional and LNG assets gives it exposure to both export and domestic pricing.

Santos said it expects the cargo timing effects that dragged on first-half cash flow to reverse in the second half, adding to the production-driven improvement. The company did not provide a formal profit figure for the half, but the free cash flow number gives a read on underlying earnings power before working capital swings.

Gallagher’s guidance on second-half production and the Papua LNG FID timeline are the two key markers for investors. The company’s ability to ramp Barossa and Pikka without major cost overruns will determine whether the cash flow inflection materialises as forecast. The Papua LNG decision, expected by the end of the year, will set the trajectory for Santos’s next growth phase.