ADELAIDE, April 3, 2026, 07:57 ACDT
Santos is moving ahead with two more wells at the Yarrow gas field in South Australia’s Cooper Basin after joint venture partner Red Sky Energy said it had signed a binding Authority for Expenditure, a project spending approval, with the Australian producer. Red Sky said drilling on the first well was expected to start imminently and that it would keep its 20% working interest in the field. 1
The step gives Santos a fresh near-term drilling program in a basin it is already using to bolster domestic supply, as Canberra weighs tougher gas rules and possible windfall taxes even after the market operator pushed the feared east-coast gas shortfall out to 2030. AEMO still said committed and anticipated supply projects need to arrive on time. 1
Yarrow sits inside the Santos-operated Innamincka Dome system, where Red Sky said existing gathering and processing infrastructure should speed tie-ins. Yarrow 1, brought online in November, initially produced about 2.4 million standard cubic feet a day, above the 1.6 million used in the base case for the spending approval. “These wells sit within existing infrastructure and provide a direct pathway to near-term production and cash flow,” Red Sky Managing Director Andrew Knox said. 1
Santos has been building out the same basin on several fronts. In March it and Beach Energy approved the A$357 million Moomba Central Optimisation project, which Santos said should deliver more than $600 million in capital and operating savings over the life of the Cooper Basin’s Central Fields, while in February it signed a 10-year deal to supply 20 petajoules of gas a year from the basin from 2030 for the Whyalla Steelworks transition. 2
That domestic push now sits beside a harder political argument over LNG profits. Speaking at an industry conference this week, Chief Executive Kevin Gallagher said the idea exports strip value from Australia was wrong and that “every LNG tanker that departs Gladstone represents around A$4.5 million in royalties” to the state, while Shell and Chevron used the same forum to warn a windfall tax would deter investment. 3
Santos is also trying to steady the broader business after its profit miss earlier this year. In February it said it would cut about 10% of staff and review its Australian integrated oil and gas portfolio after underlying 2025 profit fell 25% to $898 million. Around that time, Barrenjoey’s Dale Koenders said the market was assigning some undeveloped Santos assets “zero value.” 4
But the Yarrow wells are small next to Santos’ group portfolio, and they arrive after the company temporarily shut Darwin LNG last month for equipment replacement and commissioning work linked to Barossa. A longer disruption there, or tougher export-tax and domestic-reservation settings, could still swamp the benefit of incremental Cooper Basin volumes. 5
Santos said in January it expected 2026 production of 101 million to 111 million barrels of oil equivalent, up from 87.7 million in 2025, as Barossa gas and first oil from Pikka in Alaska ramp up. The Yarrow program will not shift that outlook on its own, but it shows Santos is still leaning on smaller, tied-back gas developments while bigger projects and policy fights play out. 6
