Australia's Santos cuts 2026 volume forecast as Pikka disruptions offset strong quarter

Oct 22 — Santos narrowed its 2026 production and sales volume forecast on Thursday after temporary disruptions ​at its Pikka oil project in Alaska, despite reporting record quarterly output and a 78% jump in third-quarter revenue.

Santos, Australia's second-largest independent oil ‌and gas producer, now expects production of 99 million to 102 million barrels of oil equivalent (mmboe) in ⁠2026, compared with its previous projection ​of 99 to 105 mmboe.

Its sales ⁠volume forecast was also narrowed to 102-105 mmboe, down from 102-108 mmboe.

Santos ‌said the narrower outlook ‌reflected delays in commissioning a seawater treatment plant at Pikka, output curtailments ⁠following a weather event, and a shutdown ⁠of the Kuparuk pipeline after a road accident.

Pikka briefly reached its minimum expected plateau production rate before quarter-end, and output exceeded 80,000 barrels per day at one point.

The company said output at Pikka would be held at roughly 70,000 barrels per day for a short period before ramping ‌up toward 80,000 barrels per day.

Shares of the firm ​fell more than 1% in early trading.

Santos said its third-quarter production benefited from Barossa reaching steady-state production and the continued ramp-up of Pikka, while revenue was boosted by higher LNG prices, increased LNG sales volumes and stronger crude and condensate sales.

Its third-quarter sales revenue rose to $2.01 billion from $1.13 billion a year earlier, matching Visible Alpha estimates, while production climbed 23% to ​a record 26.3 mmboe.

The production increase helped Santos generate record free cash flow from operations ‌of about $1.07 billion ‌during the ⁠quarter, with Chief Executive Kevin Gallagher saying the "inflection point" expected from the start-up of Barossa and Pikka had now arrived.

With Barossa and Pikka now online, Santos said more than 50% of its quarterly free cash flow was generated from its ‌international operations in Papua ​New Guinea and Alaska, underscoring a shift toward ‌newer growth projects beyond ⁠its Australian ​asset base.

(Reporting by Rajasik Mukherjee and Kumar Tanishk in Bengaluru; Editing by Sahal Muhammed and ​Sherry Jacob-Phillips)

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