Santos (SSLZY) AI Stock Analysis

Company Guidance

The call guided that Santos expects materially stronger second‑half cash generation after a transitional H1 that delivered sales revenue of $2.6 billion, EBITDAX of $1.6 billion and free cash flow from operations of $378 million (with an interim dividend of USD 0.116/share), following H1 production of 45.6 million boe (+3% y/y) and an expected H2 production lift of about 20–30% versus H1. Management said Barossa is in steady ramp (six wells ~300 MMscfd each; facility ~550 MMscfd now, ~600 MMscfd by quarter‑end; cargo cadence ~8 days; reliability >85% in July; 4 of 7 Barossa cargoes lifted pre‑30 June) and Pikka has reached ~23,000 bbl/d gross at period end with seawater treatment commissioning nearly complete and a path to an ~80,000 bbl/d gross plateau by quarter‑end (first crude cargo ~450,000 bbl); PNG underlift was ~1.3 million boe and ~$300 million of cargo proceeds were received shortly after period end. On costs and balance sheet the company reported unit production cost $7.53/boe (target < $7/boe over time; LNG upstream unit cost $6.80/boe), LNG realized $10.95/MMBtu and crude $92/bbl (JCC now >$100), a free‑cash‑flow breakeven of $45–$50/bbl to 2030 (operations < $35/bbl), sensitivity of an extra ~$550–$600m FCF per $10 Brent above breakeven at plateau (vs ~ $400m today), net debt ~ $6bn, gearing 28.1% incl leases (23.2% excl), liquidity $3.8bn, target $2.5bn net‑debt reduction by 2030, H1 recurrent savings on track to reach $150m by end‑2026, and hedges of 11.5 million barrels for 2H (zero‑cost collars floor $67.10 / avg cap $98.59) plus AUD FX hedges (AUD975m 2H @ $0.643; ~AUD1.5bn 2027 @ $0.658).