Santos reports record dividend amid profit drop
Santos has recorded a record high interim dividend amid a decrease in sales revenue and profits, as major projects near completion.
The Adelaide-based energy firm reported $4 billion in sales revenue for the first half of 2024, a nine per cent decrease from 1H23, as net profit saw a 19 per cent decrease to $942.6 million.
Earnings before interest and tax (EBIT) went down 14 per cent to $1.4 billion. Santos attributed the revenue decrease to lower volumes and lower realised LNG prices, with third-party purchases decreasing as a result.
Amid the decrease in profits, Santos recorded a 49 per cent increase in its interim dividend, declaring a record $625.6 million, at 19 cents per share unfranked.
The final ordinary dividend paid in the reporting period was an unfranked 27 cents per share, up from 22 cents per share in 2023.
Santos managing director and CEO Kevin Gallagher said the results “demonstrate the capability of Santos to generate strong cash flow from operations… and deliver competitive, reliable shareholder returns”.
“The disciplined low-cost operating model underpins our business, and we continue to manage our cost base to be resilient through all scenarios and price cycles.”
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Overall production was slightly down at 44 million barrels of oil equivalent (boe), a 2 per cent decrease.
Unit production costs rose to $11.77 per barrel of oil equivalent (boe), a 4 per cent increase which Santos said was due to increased maintenance at Cooper Basin and higher electricity costs at its Queensland projects.
Santos – the top company in South Australia per the 2023 South Australian Business Index – also provided an update on its major projects, with its $327 million Moomba Carbon Capture and Storage project (CCS) in the Cooper Basin in its final stages of commissioning.
“Phase one of the Moomba CCS project is in advanced commissioning with the pipeline being pressured up and CO2 to be introduced into the system imminently,” Gallagher said.
“The project remains on track for first injection and ramp up to full capacity this year.”
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Gallagher said the project would be “one of the lowest-cost CCS projects in the world”.
“[It will] have capacity to permanently store up to 1.7 million tonnes of carbon dioxide annually, making Moomba CCS a significant part of Australia’s journey to net-zero emissions,” he said.
The construction and regulatory approvals are both complete for the project, with commissioning and plant start-up 90 per cent complete.
Santos reported its Timor Sea Barossa Gas Project, which was the subject of a Federal Court case, was on track with first gas expected in Q3 2025.
“At full production rates, Barossa is expected to add around 1.8 Mtpa to Santos’ expanding LNG portfolio,” Gallagher said.
Cooper Basin production remained steady at 6.6 million barrels of oil equivalent (mmboe), with the project seeing $296.6 million of EBITDAX (earnings before interest, tax, depreciation, amortization, and exploration expense.)
Santos said this 13 per cent decrease in earnings was “primarily due to lower sales volumes and higher production costs, including as a result of extreme weather events, and higher government royalties”.
The company reported $43.8 billion in total assets as at June 30 2024, with total liabilities leaving net assets at $23.2 billion.
“Santos continues to deliver on its strategy to backfill and sustain existing infrastructure by unlocking our adjacent large-scale upstream resource base, decarbonising our operations through projects such as Moomba CCS and electrification, and developing low-carbon fuels,” Gallagher said.
At the time of writing, Santos’ share price had decreased 3.58 per cent since the market opened, to $7.54.
