Shares of Santos Ltd closed lower on Wednesday, as the Australian energy producer disclosed financial results that fell short of expectations and outlined a strategic restructuring plan. The company's stock finished the trading session down 0.6% at A$6.63.
The decline followed the release of Santos's full-year financial statement, which reported an underlying net profit after tax of $898 million for the 2025 fiscal year. While the company generated substantial free cash flow of $1.8 billion and maintained unit production costs at $6.78 per barrel of oil equivalent, the profit figure missed market forecasts.
In response to the performance, Santos announced plans to reduce its global workforce by approximately 10%. Concurrently, management initiated a comprehensive review of its integrated oil and gas assets within Australia. The objective of this portfolio assessment is to identify opportunities to enhance shareholder value and streamline operations.
Despite the profit shortfall and restructuring moves, Santos reaffirmed its operational and financial guidance for 2026. The company continues to anticipate production and sales volumes between 101 million and 111 million barrels of oil equivalent. A significant milestone, the first oil from the Pikka Phase 1 project in Alaska, remains on schedule for late in the first quarter of 2026.
The board declared a final dividend of 10.3 U.S. cents per share. Key dates for the distribution include an ex-dividend date of Monday, February 23, a record date of February 24, and a payment date of March 25. Investors should note this dividend will not be franked, meaning it does not carry Australian tax credits. The company plans to announce the Australian dollar equivalent amount on March 3, following the finalization of exchange rates.
Market analysts have highlighted investor skepticism regarding the value of Santos's undeveloped resource portfolio. Dale Koenders, Head of Energy Research at Barrenjoey, observed that the market is currently assigning "zero value" to these assets, underscoring a potential area for the portfolio review to address.
The announcement comes at a critical operational juncture for Santos, as several major projects transition from the capital-intensive construction phase to routine production. This shift often introduces tighter deadlines and can pressure operating costs, making the company's focus on extracting additional cash from core operations a timely strategic priority.
Broader commodity market pressures added context to the company-specific news. Brent crude oil futures were trading near $67.65 per barrel, hovering around two-week lows after declining nearly 2% in the prior session. Traders monitored developments in U.S.-Iran nuclear negotiations and awaited the latest U.S. inventory data, factors that continue to influence global energy sentiment.
For investors, the immediate focus will be on whether the proposed cost-cutting measures and portfolio review translate into tangible value creation or become merely aspirational. The execution risk is notable; workforce reductions must be managed without impairing operational efficiency, and asset sales must be concluded at acceptable valuations to avoid diluting shareholder value.
