Santos Announces Record Free Cash Flow and Underlying First Half Earnings, Higher Returns for Shareholders
Santos today announced its half-year results for 2022, reporting record free cash flow of $1.7 billion and underlying profit of $1.3 billion. The results reflect significantly higher oil and LNG prices compared to the corresponding period due to stronger global energy demand combined with increased interest in PNG LNG following the Oil Search merger.
Santos intends to return US$605 million to shareholders (the equivalent of 18 US cents per share) as part of the company’s capital management, including a 38% increase in the interim dividend to 7.6 US cents per unstamped share (US$255 million) and an increase in the previously announced market buyback of US$250 million to US$350 million.
The US$350 million market repurchase includes the initial US$250 million market repurchase announced in April 2022, of which US$174 million had been completed by the end of June 2022. Santos intends to return the remaining US$176 million to shareholders through market buybacks during the remainder of 2022.
Santos Managing Director and Chief Executive Officer Kevin Gallagher said Santos posted record production, free cash flow and underlying earnings in the first half of 2022 as the company benefited from strong demand from customers for our products and rising raw material prices.
“Demand for our products remained strong in Australia and overseas, due to increased demand and supply shortages from producing countries due to global underinvestment in new supply,” said Mr Gallagher.
“We see these issues manifesting in the significant shift in global energy policy towards energy security as a key priority.
“Our essential fuels not only play a key role in Australia’s and Asia’s energy security, they also provide affordable and reliable alternatives to transition to higher-emitting fuels.
“Today’s results demonstrate the strength of Santos, with strong diversified cash flows and its ability to deliver sustainable returns to shareholders, fund new developments and the transition to a low carbon future.
“Strong free cash flow in the first half means we are able to deliver higher returns to shareholders through increased interim dividend and market buyback, consistent with our disciplined cash management framework. capital.”
Santos also announced today that a final investment decision has been made to proceed with the Pikka Phase 1 oil project located on Alaska’s North Slope. Further details are available in Santos’ separate ASX announcement on the project dated August 17, 2022.
Santos is also in advanced discussions with pre-qualified counterparties for the sale of a 5% stake in the PNG LNG project. Throughout this process, there has been strong interest from reputable counterparties whose expected revenues are in line with consensus market valuation. Santos intends to retain a 37.5% stake in PNG LNG.