Santos has reported records of first half free cash flow and underlying earnings, and higher shareholder returns for 2022.
The results reflect significantly higher oil and LNG prices due to stronger global energy demand combined with a higher interest in PNG LNG following the Oil Search merger.
The 2022 results show the record free cash flow of US$1.7 billion and underlying profit of US$1.3 billion.
Santos intends to return US$605 million to shareholders (equivalent to US18 cents per share) under the company’s capital management framework, comprising a 38 per cent increase in the interim dividend to US7.6 cents per share unfranked (US$255 million) and an increase in the previously announced on-market share buyback from US$250 million to US$350 million.
Announced in April 2022, the US$350 million on-market buyback is inclusive of the US$250 million initial on-market buyback. The US$174 million had been completed at the end of June 2022.
During the remainder of the year, Santos intends to return the remaining US$176 million to shareholders via market share buybacks.
Santos Managing Director and Chief Executive Officer, Kevin Gallagher, stated that the demand for 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.
“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.
He said the results demonstrated 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.”
A final investment decision has been taken to proceed with the Pikka Phase 1 oil project located on the North Slope of Alaska, which was announced yesterday, 17th of August.
Santos is also in advanced discussions with shortlisted counterparties for the sale of a five per cent 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 per cent stake in PNG LNG.