Santos has announced an updated capital allocation strategy, targeting returns of at least 60 percent of all-in free cash flow to shareholders starting in 2026. This follows substantial investments in the Barossa and Pikka projects, which are set to bring significant new production online. Additionally, the company has introduced a carbon storage growth target to build and operate a commercial business capable of permanently storing approximately 14 million tonnes of third-party CO₂ equivalent annually by 2040. This target equates to around half of Santos’ 2023 equity Scope 3 emissions from the use of its products.
The recent successful startup of Santos’ Moomba Carbon Capture and Storage project has demonstrated the viability of its technology and storage reservoirs. The project, which can store up to 1.7 million tonnes of CO₂ per year, has already safely stored over 150,000 tonnes. These advancements position Santos to expand its carbon storage capacity, providing low-cost, permanent solutions for customers and hard-to-abate industries.
Speaking at the company’s Investor Day in Sydney, managing director and CEO Kevin Gallagher reiterated Santos’ commitment to balancing shareholder returns with its role in the global energy transition. He highlighted the company’s achievements, including the commissioning of Angore wells in Papua New Guinea, which now supply up to 350 million standard cubic feet of gas daily to sustain PNG LNG production. Progress on key projects was also outlined, with Barossa now 84 percent complete and targeting first gas by the third quarter of 2025, and Pikka around 70 percent complete, aiming for first oil by the first half of 2026.
Santos’ LNG portfolio, backed by long-term contracts and its strategic proximity to Asian markets, provides both cost and emissions advantages over competitors. With the addition of production from Barossa and Pikka, the company expects output to increase by more than 30 percent by 2027 compared to 2024, significantly reducing unit production costs and supporting free cash flow generation across market cycles.
The updated capital allocation framework reflects Santos’ commitment to shareholder value. From 2026, at least 60 percent of free cash flow will be returned to shareholders, with the potential for 100 percent of free cash flow to be distributed through dividends or buybacks once gearing falls below the target range of 15–25 percent. Gallagher emphasised that Santos’ investments in new production and carbon management are aligned with global demand trends and the critical need to decarbonise hydrocarbon production.
With its successful CCS operations and the ability to leverage low-cost storage resources near existing infrastructure, Santos is positioned as a leader in carbon storage solutions. The company is also focusing on sustaining production at its LNG plants, with further development opportunities in the Cooper Basin, the McArthur (Beetaloo) Basin, and Papua New Guinea. These developments align with the International Energy Agency’s projections, which indicate growing reliance on CCS to meet net-zero goals.
Gallagher highlighted the significance of Santos’ Moomba CCS project, which is one of the world’s largest and lowest-cost initiatives dedicated to permanent CO₂ storage. He expressed confidence in Santos’ ability to expand its carbon storage business while delivering sustainable, low-cost energy to meet ongoing demand. With a robust balance sheet, a clear path to production growth, and strong market fundamentals, Santos aims to deliver superior long-term value for its shareholders while supporting global decarbonisation efforts.
For more information visit www.santos.com
