Reporting Season

Santos delivers triple-digit growth thanks to surging energy prices

Wed 16 Feb 22, 10:13am (AEST)
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Key Points

  • Santos declares highest dividend in six years
  • Board considering capital management options in 2022
  • Oil Search merger will deliver increased scale, synergies and production over the next decade

Surging oil and gas prices has set Santos (ASX: STO) up for a record result in the 2021 calendar year.

Financials at a glance: 

  • Revenue of $6.6bn, up 39%  

  • Underlying profit of $1.3bn, up 230% 

  • Net profit of $920m, up 284% 

  • Free cash flow of $2.1bn, up 103% 

  • Financial dividend of 12 cents per share, up 70% 

Santos shares will go ex-dividend on Monday, 21 February. This is the highest dividend Santos has paid out in six years and represents a yield of 1.66% based on today's open price of $7.21.

The $920m profit tops Bell Potter and Citi forecasts of $900m.

Group margins of 58% came up short against Morgans' expectations of 67%.

A step change year 

“The successful merger with Oil Search Limited, which completed in December 2021, has transformed Santos into a company with the size and scale necessary to fund sustainable growth, the transition to a lower carbon future and deliver returns for shareholders,” CEO Kevin Gallagher said. 

The result included a three week contribution from Oil Search. 

“Had the merger been in place for all of 2021, the combined asset portfolio would have generated more than US$2.3bn [A$3.2bn] in free cash flow for the year.” 

Outlook 

Santos expects 2022 production to be within the range of 100 to 110 million barrels of oil equivalent (mmboe), up from 92.1mmboe in 2021. 

Management plans to “further optimise the portfolio, reduce gearing and conduct a review of the capital management framework including returns to shareholders.” 

This could put some form of special dividend or share buy-back on the cards.

Written By

Kerry Sun

Finance Writer & Social Media

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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