SYDNEY, March 18, 2026, 09:45 AEDT
Santos Limited shares edged up on March 17, last at A$7.71, as Brent crude settled at $103.42 a barrel after renewed Iranian attacks on the UAE deepened worries over Middle East supply. For Santos, Australia’s No. 2 oil and gas producer, that was enough to keep the stock in play. 1
The timing matters. Santos said in January that 2026 production should rise as the Barossa gas project and Alaska’s Pikka oil project ramp up. Chief executive Kevin Gallagher said the two projects should “lift Santos’ production by around 25 to 30 per cent by 2027.” 2
That promise sits beside a weaker earnings base. In February, Santos reported a 25% drop in underlying 2025 profit, missed market estimates, and unveiled plans to cut about 10% of staff while reviewing its Australian integrated oil and gas portfolio. Jarden analysts wrote that the market should like the headcount cut as a sign of lower operating costs, even as the shares closed that day at A$6.63. 3
The oil rally also brought a second message on March 17. Australia’s central bank raised the cash rate by 25 basis points, or a quarter of a percentage point, to 4.1% in a 5-4 vote, warning that the war-driven jump in energy prices posed a material inflation risk. Commonwealth Bank economist Belinda Allen said the domestic data alone justified a hike and that the Iran war had added a fresh inflation problem. 4
Santos has tried to give investors a company story, not just a macro trade. On March 9 it approved the A$357 million Moomba Central Optimisation project with Beach Energy, saying the work should deliver more than $600 million in capital and operating savings over the life of the Cooper Basin’s Central Fields and cut unit production costs by as much as $3 per barrel of oil equivalent, a standard measure that combines oil and gas output. 5
Gas markets are adding pressure of their own. Reuters reported this month that Australian liquefied natural gas, or LNG — gas chilled into liquid for export — has little spare capacity to replace lost Qatari cargoes; Rapidan Energy Group’s Alex Munton said “there is no massive capacity on the sidelines,” while MST Marquee analyst Saul Kavonic said there was “almost no scope” to push out much more Australian LNG quickly. 6
That leaves price and execution doing most of the work for Santos. The company said its first Barossa cargo had been loaded and departed Darwin LNG, while Reuters reported in January that Pikka phase 1 was 98% complete and still targeted first oil late in the first quarter of 2026. 7
Among local peers, Woodside flagged lower 2026 output in January even after beating fourth-quarter revenue estimates, while Beach is tied directly to Santos through the Moomba work program. That leaves Santos with one of the clearer near-term execution stories in the local energy pack. 8
But the risk case has not gone away. Santos said in January that Pikka phase 1 capital spending had risen by $200 million because of higher labour and material costs, and February results showed Barossa’s ramp had already been slowed by a technical issue. If oil eases or another delay bites, the stock’s recent steadiness could thin out fast. 2
For now, though, the setup is plain enough: Brent is back above $100, the RBA is openly reacting to the inflation shock, and Santos is closer to fresh production growth than it was a quarter ago. The shares are no longer moving only on headline oil prices; they are moving on whether management can turn this window into cash flow. 9
