SYDNEY, June 24, 2026, 07:05 AEST
Santos Ltd said output at its Pikka oil project is steady at around 20,000 gross barrels a day, or about a quarter of where the group wants it for the third quarter. Shares closed Tuesday up 0.14% at A$7.31.
Santos’s share price didn’t move much, even though Pikka is big compared to its current production. The project could bring in 12.1 mmboe a year for Santos at full run, which is about 14% of the group’s 2025 forecast of 87.7 mmboe. Costs are expected below $8 for each barrel of oil equivalent. Mmboe stands for million barrels of oil equivalent, which combines oil and gas output.
Santos (STO.AX) shares ended at A$7.31, nearly 10% off the A$8.12 reached on May 18 after the Pikka first oil news. With 3.25 billion shares out, that’s about A$2.6 billion wiped from market value since then. Turnover on Tuesday hit 9.71 million shares, 20% below the average, showing little fresh demand after the latest production update.
Santos managed to outperform a weak session, gaining 0.14% while the S&P/ASX 200 finished down 0.33%. Woodside Energy slid 0.42% and Beach Energy gave up 1.05%. Brent crude was down 1.1% to $77.08 a barrel as oil traders tracked shipments through the Strait of Hormuz after the U.S.-Iran talks.
Pikka looked like it kept Santos from falling harder in a soft energy session, but traders did not push a full re-rating. The market has shifted from questions about project start-up to doubts around the planned fourfold ramp in production and when it starts to deliver cash.
Santos CEO Kevin Gallagher said the first wells are online and producing steadily. The company is preparing to start seawater injection for pressure support in the next few weeks. Santos plans to ramp up output by adding wells, targeting around 80,000 barrels per day in the third quarter.
Santos is moving away from big project spending to focus on cash generation. The company said in May it plans to cut net debt by about $2.5 billion by 2030 and reduce annual interest costs by $150 million. Mark Gardner, founder and CEO of MPC Markets, called it “a disciplined reset” and said Santos should “harvest cash flow and strengthen the balance sheet.” Reuters
The next phase isn’t guaranteed. Gross Pikka output has to jump fourfold, the pressure-support program hasn’t started, and lower crude prices could hurt returns. Santos’s investor-day numbers show a $10 move in oil prices above breakeven would mean $550 million to $600 million in extra annual free cash flow when Pikka and Barossa hit peak production. If oil prices fall, the hit is just as big.
ASX cash market sat in pre-open at the dateline, with regular trading set to start just before 10 a.m. Sydney. Investors Wednesday will see if Pikka’s operating ramp gets more attention than it did at Tuesday’s muted close.
