ADELAIDE, April 3, 2026, 07:57 ACDT
Santos will press ahead with drilling two additional wells at the Yarrow gas field in South Australia’s Cooper Basin. The move follows Red Sky Energy’s announcement that it has finalized a binding Authority for Expenditure—essentially, a project greenlight—with the Australian producer. Drilling on the first well is set to kick off very soon, according to Red Sky, which maintains its 20% working stake in the field.
This move hands Santos a new round of drilling targets in a basin it’s already tapping to shore up domestic supply, just as Canberra mulls stricter gas measures and potential windfall taxes—even after the market operator delayed the projected east-coast shortfall to 2030. Still, AEMO warned that both committed and expected supply projects have to be delivered on schedule.
Yarrow is part of the Santos-run Innamincka Dome, tapping into infrastructure already in place—something Red Sky expects will speed up connections. The Yarrow 1 well, which came online in November, saw initial production hit roughly 2.4 million standard cubic feet per day, topping the 1.6 million assumed in the project’s spending case. “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. Market Index Data API
Santos is pushing ahead on multiple fronts in the same basin. March saw the company and Beach Energy give the green light to the A$357 million Moomba Central Optimisation project—Santos expects more than $600 million in capital and operating savings over the life of the Cooper Basin’s Central Fields. Back in February, Santos lined up a 10-year contract to supply 20 petajoules of gas each year from 2030, designated for the Whyalla Steelworks transition.
The domestic supply push now runs alongside a sharper political fight over what to do with LNG profits. At an industry conference this week, Chief Executive Kevin Gallagher argued it’s a myth that exports drain value from Australia, telling attendees that “every LNG tanker that departs Gladstone represents around A$4.5 million in royalties” for the state. Shell and Chevron, speaking at the same event, cautioned that a windfall tax would scare off investment. Reuters
Santos is still working to stabilize the wider business following a profit miss earlier this year. Back in February, the company announced plans to trim roughly 10% of its workforce and take another look at its Australian integrated oil and gas portfolio, after underlying profit for 2025 dropped 25% to $898 million. At that point, Barrenjoey’s Dale Koenders said the market was putting “zero value” on some undeveloped Santos assets. Reuters
The Yarrow wells barely register compared to the heft of Santos’ broader portfolio, coming onstream just after the company idled Darwin LNG last month for equipment swaps and Barossa-related commissioning. If that outage drags on—or if export taxes or domestic reservation rules tighten further—any lift from extra Cooper Basin barrels could easily be washed out.
Back in January, Santos projected 2026 output will land somewhere between 101 million and 111 million barrels of oil equivalent, a jump from the 87.7 million it’s targeting for 2025 as Barossa gas and Alaska’s Pikka oil come online. Even with the Yarrow program in the mix, that forecast doesn’t budge—Yarrow by itself won’t move the needle. What it does underline: Santos keeps turning to these smaller, tied-back gas plays while the fate of its larger ventures and policy questions hang in the balance.
