Santos (STO) H2 2024 earnings summary

Executive summary

• Delivered strong 2024 financial and operational results, with robust cash generation, disciplined low-cost operations, and significant safety improvements despite inflation and lower commodity prices.

• Major projects Barossa (LNG) and Pikka (Alaska) remain on track, supporting future production growth and are within capex guidance, targeting first gas in Q3 2024/2025 and first oil in mid-2026.

• Moomba CCS phase 1 became fully operational, capturing 340,000 tonnes CO2e in Q4 2024 and ramping to 1.7 million tons/year, supporting decarbonisation targets.

• Strategic focus on operational efficiency, technology adoption, and disciplined capital allocation.

Financial highlights

• Sales revenue reached $5.4 billion in 2024, generating EBITDAX of $3.7 billion and profit after tax of $1.2 billion, both lower year-over-year due to lower volumes and realised prices.

• Free cash flow from operations totaled $1.9 billion; $757 million returned to shareholders, representing 40% of free cash flow.

• Final dividend of $0.103 per share declared, total annual dividend $0.233 per share.

• Operating free cash flow was $2.8 billion, down from 2023 due to lower volumes, pricing, and decommissioning costs.

• Gearing including leases at 23.9%, net debt $4.9 billion, liquidity $4.4 billion, and free cash flow break-even cost below $33.50/bbl.

Outlook and guidance

• Production expected to increase by over 30% by 2027 compared to 2024, with 2025 guidance set at 90–97 mmboe and unit production costs targeted at $7.00–$7.50/boe.

• Capital expenditure for 2025 expected at $1.2–$1.3 billion for sustaining and major projects.

• Targeting $100–$150 million in annual structural savings over 1–2 years through cost reviews and technology.

• 2025 hedges: 10 million barrels of oil at $70 floor/$84 cap; FX hedges of $1.75B (2025) and $1.06B (2026).

• Gearing expected to temporarily rise in 2025, then decline as projects complete and revenues grow.