Santos Shares Rise as First-Half Earnings Beat Estimates
(Bloomberg) -- Santos Ltd. shares rose after the Australian oil and gas producer reported earnings that beat expectations, while extending the exclusivity period for a Abu Dhabi National Oil Co.-led takeover.
The stock climbed as much as 1.6% in Sydney after the company said underlying profit fell by more than a fifth in the first half, a drop that was less steep than analysts had forecast.
Sales revenue fell due to lower oil and liquefied natural gas prices, the Adelaide-based company said in a statement on Monday. Around 90% of the LNG that will be produced by the company over the next five years has already been contracted, Chief Executive Officer Kevin Gallagher said.
Shares in Santos, which is also a major supplier to Australia’s domestic natural gas market, have been buffeted in recent weeks by delays in forming a binding agreement for the takeover, first announced in June. The stock is still trading at a discount of more than 10% to the offer price, suggesting there is skepticism that the deal will gain regulatory approval in Australia, Papua New Guinea and the US.
The results were originally scheduled to be released last week but were delayed after Santos said the group seeking to buy it for $18.7 billion would need more time. The Australian company extended the exclusivity period for the consortium, which includes Adnoc’s XRG unit, Abu Dhabi Development Holding Co. and Carlyle Group by four weeks to Sept. 19, it said in a separate filing on Monday.
“We still look for comfort regarding the risk to further extensions and how dividends would be treated in context of the bid,” Jarden analysts Nik Burns and Joshua Mills-Bayne said in a note.
Underlying profit at Santos declined 22% to $508 million in the six months through June. That compared with the median estimate for a $433.5 million loss in a Bloomberg survey.
Santos said its Pikka Phase 1 project in Alaska has been accelerated, and is now expected to deliver first oil in the first quarter of 2026. Meanwhile, the Barossa project in Australia is expected to deliver its first gas imminently. The two developments will deliver a 30% increase in production by 2037, Santos said.
(Updates throughout with share price and additional commentary.)
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