Santos will concentrate its growth strategy on LNG and oil projects in Australia, Alaska, and Papua New Guinea, while seeking to cut its net debt by approximately $2.5 billion by 2030. The Australian company, one of the country’s largest oil and gas producers, will direct spending toward assets with existing infrastructure and higher cash generation capacity.
The decision comes in an energy market marked by firmer prices for crude oil and liquefied natural gas, driven by geopolitical tensions in the Middle East and risks to key supply routes. In this scenario, Santos seeks to prioritize projects capable of increasing production without skyrocketing the required capital.
Moomba and Cooper Basin gain weight in the portfolio
According to the new strategy, investment will focus on Moomba Central Fields, within the Cooper Basin, one of Australia’s historic energy production areas. At the same time, Santos will reduce priority in other areas of the region to contain expenses and improve returns.
The company expects this adjustment to reduce costs by approximately $300 million annually for three years starting in 2027. After that period, the projected savings would be close to $150 million per year, a significant figure for strengthening the balance sheet and sustaining operational commitments.
Additionally, Santos will maintain focus on domestic gas supply and its decommissioning obligations, but with lower capital intensity. Likewise, the company will evaluate how to better leverage its current assets before committing to new high-risk investments.
LNG and oil drive growth in Alaska and Papua New Guinea
In Alaska, the Pikka project has already reached first oil in its initial phase. Santos operates the unit with a 51% stake, while Repsol maintains the remaining 49%. The asset is key to increasing crude production and strengthening cash flow in the coming years.
On the other hand, Papua New Guinea will remain within the strategic core due to its connection with the LNG business. The company recently approved a natural gas expansion associated with existing infrastructure, featuring new wells, facility modifications, and a 19-kilometer pipeline to connect production with the PNG LNG system.
This type of brownfield project allows for adding capacity using already developed networks. For Santos, this formula combines growth, lower execution risk, and a clearer path toward higher operating margins.
Beetaloo and Bedout remain under evaluation
In Australia, Santos will also review the Beetaloo and Bedout basins with the aim of determining if they can provide scale and profitability. The key will be to utilize available infrastructure and limit outlays in areas that do not align with the financial discipline of the new stage.
The strategic shift occurs after the company announced in February a cut of nearly 10% of its workforce and a review of its Australian oil and gas portfolio. With these measures, Santos seeks to transition from a high-spending phase to one focused on cash flow, controlled debt, and shareholder returns.
Net debt remains at the center of the plan
The company estimates that the measures will allow for a reduction in net debt of approximately $2.5 billion by the end of the decade. It also estimates a decrease of around $150 million in annual interest, which would provide more financial margin to sustain selective investments.
For the market, the plan signals discipline after years of capital-intensive projects. Although Santos shares ended with a slight decline after a positive opening, the corporate message points to a more focused portfolio, with oil, LNG, and top-tier assets as growth pillars.
Source: Reuters
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