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Australian Energy Major Santos Saw Profits Drop Dramatically in 2023

Australia’s energy major Santos reported net earnings of $1.42 billion for 2024, a drop of 42% on 2022, which was a deeper one than analysts polled by Reuters had expected.

The company’s stock declined following the financial report, as it also said its revenues had declined substantially in 2023 as had earnings before interest, tax, depreciation, depletion, exploration, evaluation, and impairment. Cash flow was also down substantially, by 42%.

A certain decline in financial performance last year was expected from the energy industry after the record-breaking 2022 that resulted from strong price rallies in both oil and gas. However, it appears that the extent of the decline in the case of Santos had investors disappointed.

Despite the decline in earnings, Santos declared a higher dividend for 2023. It also said that its Barossa gas project, whose progress has been difficult after a court injunction delayed construction work. The injunction was granted following an application that demanded from Santos to revise its environmental plan for Barossa.

The project is now slated to start producing in the third quarter of next year, Santos said in its earnings release. It would add 1.8 million tons to Santos’ annual LNG export capacity, the company also said. The gas from Barossa will be fed into the Darwin LNG facility, with more than two-thirds of the pipeline for the purpose already complete, Santos also said.

The Australian company was earlier this year in talks with sector player Woodside regarding a potential tie-up. The talks broke off earlier this month, however, after the two failed to agree on the price Woodside would have to pay for Santos.

The development was not unexpected, especially since some investors voiced concern that Woodside would need to pay a substantial premium for Santos to make the deal worthwhile for the company.

By Irina Slav for Oilprice.com

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