Australian oil and gas developer, Santos has reporting record free cash flow of $1.7 bill and underlying profit of $1.3 bill for the first half of this year.
The results reflected significantly higher oil and LNG prices, compared to the corresponding period in 2021, due to stronger global energy demand combined with a higher interest in PNG LNG following the Oil Search merger.
Santos said that it intended to return $605 mill to shareholders (equivalent to 18 cents per share) under the company’s capital management framework, comprising a 38% increase in the interim dividend to $7.6 cents per share unfranked ($255 mill) and an increase in the on-market share buyback from $250 mill to $350 mill.
Santos Managing Director and CEO, Kevin Gallagher, said Santos delivered record production, free cash flow and underlying earnings in 1H22, as the company benefited from strong customer demand for its products and higher commodity prices.
“Demand for our products has remained strong in both Australia and internationally, due to increased demand and shortages of supply from producing nations, due global underinvestment in new supply,” Gallagher said.
“We are seeing these issues play out in the significant shift in global energy policy towards energy security as a key priority.
“Our critical fuels not only play a key role in the energy security of Australia and Asia, but they also provide affordable and reliable alternatives to switch from higher emitting fuels.
“(Today’s) results demonstrate the strength of Santos, with strong diversified cash flows and capacity to provide sustainable shareholder returns, fund new developments and the transition to a lower carbon future.
“Strong first half free cash flows mean we are in a position to deliver higher shareholder returns through an increase in the interim dividend and on-market buyback, consistent with our disciplined capital management framework.”
Santos also announced that it was in advanced discussions with shortlisted counterparties for the sale of a 5% interest in the PNG LNG project.
Throughout this process, there has been strong interest from reputable counterparties with expected proceeds in-line with market consensus valuation. Santos intends to retain a 37.5% stake in PNG LNG, the company said.
