Santos shares experienced a rally of nearly 5 per cent following the confirmation that its Barossa LNG project has commenced loading its first cargo. This development has eased investor anxieties regarding commissioning risks, redirecting market attention towards the company’s overall growth portfolio execution. Santos is an Australian energy producer. They supply essential fuels to the businesses and homes that support our communities.
Citi analyst Tom Wallington noted that the successful first cargo loading should alleviate concerns about significant issues arising during the Barossa start-up phase. Wallington suggests that the ongoing risk reduction across Santos’ growth projects outweighs the impact of softer production guidance for 2026 and moderately increased capital expenditure.
Santos reported a December-quarter production of 22.3 million barrels of oil equivalent, which was broadly in line with Citi’s expectations but slightly below broader consensus estimates. However, sales figures exceeded forecasts due to stronger seasonal shaping at GLNG and the timing of equity-lifted LNG cargoes at PNG LNG. This drove revenue above expectations and contributed to keeping gearing, including leases, below market estimates, despite increased spending at Pikka.
While Santos’ newly issued 2026 production guidance fell short of consensus expectations, Wallington highlighted that unit cost guidance was significantly lower than market predictions. Balance sheet metrics are supported by robust free cash flow, proceeds from asset sales, and favourable movements in working capital. Shares in Santos were last trading up by 4.5 per cent following the announcement.
