Adelaide, April 27, 2026, 01:36 (ACST)
- Santos shares finished Friday at A$7.79, chalking up another gain as investors responded to its first-quarter report.
- The company left its 2026 production and sales outlook stuck at 101 million to 111 million barrels of oil equivalent.
- Attention has shifted to Barossa LNG and Pikka Phase 1, as investors look for signs that the projects will transition from their early stages into consistent cash producers.
Santos Limited starts the week trading close to recent highs. Australia’s No. 2 oil and gas producer reaffirmed its 2026 targets, brushing off a first-quarter revenue miss and snags at major assets.
The stock ended Friday at A$7.79, gaining 1.04% after Thursday’s 3.63% surge that followed the company’s quarterly update. Investors are now zeroing in on progress at Barossa and Pikka rather than the weaker sales figures.
Santos is shifting gears, leaving behind its intensive construction period as it works to demonstrate that two repeatedly delayed growth projects can actually boost output. Barossa, one of those projects, delivers liquefied natural gas—LNG, essentially gas cooled down to liquid for easier shipping. The other, Pikka, is all about oil in Alaska and is close to generating its first sales.
Santos turned in first-quarter production of 22.5 million barrels of oil equivalent—that’s gas and liquids tallied up as one oil-based number. Sales revenue reached US$1.271 billion, climbing 3% versus the previous quarter but slipping 2% year-on-year. The company noted all dollar amounts in the report refer to U.S. currency unless otherwise specified.
“Supportive oil price moves” gave the stock a lift, according to Saul Kavonic, head of energy research at MST Marquee. The market, he added, is “looking through the revenue miss” and focusing attention on Barossa and Pikka start-ups, Reuters reported. Reuters
Broad gains across the oil complex gave the market a lift. Brent crude wrapped up Friday at $105.33 a barrel, notching a 16% weekly surge. U.S. West Texas Intermediate finished up close to 13% for the week. Traders kept a wary eye on Middle East supply threats and the prospect of U.S.-Iran negotiations, according to Reuters.
Barossa is up first. Santos reported that its Barossa floating production, storage and offloading vessel—FPSO, for short—should start ramping up once crews finish cleaning heat exchanger trains and swap out dry gas compressor seals. LNG production is set to follow within days of the FPSO returning to service.
Chief Executive Kevin Gallagher admitted the project ran into “a few challenges during commissioning”, adding that Santos has since swapped out the dry gas seals. For the quarter, the company reported free cash flow from operations — that’s cash left over after operating costs, investments, and lease payments, a non-IFRS metric — at around US$383 million.
Pikka Phase 1 is nearly there. Santos reported the Alaska project hit mechanical completion, commissioning is underway, and first sales oil should enter the pipeline network within weeks. Plateau production is still aimed at early in the third quarter.
Santos and Beach Energy are moving forward with the Moomba Central Optimisation project in the Cooper Basin, South Australia. The overhaul, according to Santos, should knock more than US$600 million off costs throughout the Central Fields’ lifespan and consolidate seven gas-driven compressor stations into a single electric-powered hub.
The local story’s picking up pace, too. Santos has struck a conditional deal to deliver 20 petajoules of gas each year to the South Australian Strategic Reserve spanning 2030 through 2040, while also teaming up with Viva Energy and Ampol last quarter on refinery supply support.
The next few weeks come with their own set of risks. If Barossa’s ramp-up stalls, if there’s a delay in Pikka’s start, or if weather throws another curveball, holding the current guidance line could prove tough. On top of that, Santos has hedged 17.2 million barrels of Brent using option collars, putting a cap on both the downside and the upside.
Santos has set its investor briefing day for May 26 in Sydney. By that point, the market should have a sharper sense of whether last week’s share rally signaled optimism about production growth or simply reflected relief that guidance held through a turbulent quarter.
