2024 Half-year Results Video Presentation

Summary

Santos's 2024 half-year results presentation highlighted strong financial performance with $27 billion in sales revenue and $1.8 billion in EBITDAX. The company is progressing on major projects like Barosa, Pika, and Mumba CCS, aiming for stable production and cash flows. Santos is committed to safety and operational efficiency, with a focus on decarbonization and low-carbon fuel development. A record interim dividend of $422 million was announced, reflecting the company's strategy to return at least 40% of free cash flow to shareholders.

Takeaways

• 📍 Santos's 2024 half-year results demonstrate a disciplined operating model and strategic success.
• 💹 The company reported sales revenue of $27 billion, EBITDAX of $1.8 billion, free cash flow from operations of $1.1 billion, and an underlying profit of $654 million.
• 📈 Santos plans to pay a record interim dividend of $422 million, reflecting a commitment to returning at least 40% of free cash flow to shareholders.
• 🔍 The company's free cash flow from operations in the first half of 2024 is consistent with the same period in 2023, allowing for a significant return to shareholders.
• 🏗️ Major projects like Barosa, Pika, and Mumba CCS are progressing well, with Barosa expected to start up in less than a year and Mumba CCS to begin operations this year.
• 🌿 Santos is committed to safety and has seen improvements in personal safety performance and a reduction in loss of containment incidents.
• ⚙️ Operational performance remained strong despite external challenges like extreme weather and inflation, with a focus on managing costs.
• 🌐 Santos is expanding its LNG production to meet regional demand, with a portfolio that will have a capacity of nearly 8 million tons per annum by 2028.
• 🌿 The company is progressing towards decarbonization with its CCS projects, aiming for net-zero scope one and two emissions by 2040.
• 🔋 Santos's balance sheet is strong, with gearing within the target range and a focus on cost management and operational efficiency.

Q & A

What are the key financial highlights for Santos in the first half of 2024?

Santos reported sales revenue of $2.7 billion, EBITDA of $1.8 billion, free cash flow from operations of $1.1 billion, and an underlying profit of $654 million. The company also declared a record interim dividend of $422 million (13 US cents per share).

What are the major projects contributing to Santos's long-term production and cash flow?

Santos is progressing on key projects such as Barosa, Pika, and Mumba Carbon Capture and Storage (CCS). Barosa is expected to start production within a year, and Pika is following closely behind. The Mumba CCS project is set to generate new revenue from carbon credits by the end of 2024.

How does Santos plan to return value to its shareholders?

Santos aims to return at least 40% of free cash flow from operations to shareholders. In the first half of 2024, it returned $422 million through dividends. The company’s strong free cash flow enables it to maintain consistent and reliable shareholder returns.

How has Santos improved its safety performance in the first half of 2024?

Santos saw improvements in personal safety and a significant reduction in loss-of-containment incidents. The company focuses on process safety and continuous learning from incidents to enhance safety across its operations.

What are the future growth prospects for Santos in terms of production?

Santos expects to grow production with continued development in areas like the granite wash play at Mumba, with improvements in drilling technology and cost optimization. Additionally, record production rates were achieved from its CSG fields in GLNG.

How is Santos contributing to decarbonization and renewable energy efforts?

Santos is developing projects like the Mumba CCS, which is one of the largest CCS projects globally and will start generating revenue through carbon credits. Additionally, solar and battery systems were installed at camps in the Cooper Basin, advancing electrification of operations.

What role does Santos see for LNG in the energy transition?

Santos views LNG as crucial for energy security and the transition to low-carbon energy. It is expanding its LNG production to meet regional demand, with projects expected to produce nearly 8 million tons per annum by 2028.

What operational challenges did Santos face in the first half of 2024?

Santos managed several external challenges, including extreme weather events and inflation. Despite these, the company focused on cost management, maintaining a strong operational performance.

What is the progress on the Barosa gas project?

The Barosa project is 80% complete, with two wells drilled and completed. The gas export pipeline is finished, and the project is on track for first gas production within the next year.

How is Santos positioned to meet future energy demand in Asia?

Santos is well positioned to meet Asia's growing demand for LNG, with a portfolio of world-class assets and a proximity advantage to Asian markets. It has strong contracted pricing and expects to benefit from the demand growth projected through 2050.