Santos Trims Gas Output Outlook After Barossa Outage and Floods
(Bloomberg) -- Santos Ltd. trimmed its natural gas production outlook, citing a software failure that stalled a key export project and the impact from floodwaters in Australia.
The major supplier of LNG to buyers in Asia expects output of 89 million to 91 million barrels of oil equivalent in 2025, down from 90 million to 95 million previously, it said in a quarterly report Thursday. That’s still higher than the 87.1 million the company produced in 2024.
The cut comes as Santos faces increased investor scrutiny, following the collapse of a $19 billion takeover approach from an Abu Dhabi National Oil Co.-led group last month. Furthermore, the Adelaide-based company earlier this week announced the resignation of its chief financial officer, who was widely seen as a front runner to replace current Chief Executive Officer Kevin Gallagher, and is facing criticism over a methane leak at its Darwin LNG facility.
Santos said the output growth downgrade came after the floating production and storage facility at its recently started Barossa project had a two-week unplanned shutdown as a result of a software issue in September. Gas started flowing into the pipeline to the Darwin plant earlier this week, and production of LNG is expected to start in the coming weeks.
Meanwhile, floods in the Cooper Basin straddling Queensland and South Australia have reduced domestic production. About 155 wells remain offline as floodwaters recede more slowly than expected, and recovery efforts will extend into the fourth quarter, it said.
“Last-minute hiccups at Barossa have triggered the production downgrade and, while disappointing, should not be material to valuation,” Jarden Group analysts Nik Burns and Joshua Mills-Bayne said in a note. “We were cautious on 2025 guidance going into the quarter, with everything needing to go right in our view to maintain the prior guidance range. We expect consensus earnings downgrades to follow.”
Santos shares were up 0.2% at 11:25 a.m. in Sydney, after closing at their lowest since May on Wednesday. The company has fallen more than 5% this year.
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