Santos Indicates Growth Projects are Progressing Well Despite Q2 Revenue Dip

Santos said on Thursday growth projects were making good progress, with flagship Barossa natural gas development now 77% complete as Australia's second-largest fossil fuel producer makes attempts to speed up its ambitious forward strategy.

Barossa in offshore Australia has faced criticism and opposition, with the company having to fight regulators and litigations which might potentially delay the project's start in 2025.

Santos cannot resume production at Darwin LNG operations, which shut down in 2023, without the Barossa development.

"The Barossa gas and condensate project to backfill Darwin LNG is 77% complete," Santos said in a statement, adding that the offshore development remains on target to begin production in the third quarter of 2025.

Santos, with assets stretching across Australia to Alaska and Papua New Guinea (PNG), has been eyed by suitors for its liquefied natural gas business, especially its stake in PNG LNG.

Other developments, including the Pikka oil project in Alaska and Moomba phase one Carbon Capture and Storage project had also progressed from the previous quarter, Santos said.

"Barossa... will comfortably meet 3Q25 first gas, and may possibly move forward to late 2Q in our view," analysts at Citi said in a note.

The energy giant, which is seen as a potential buyout target, reported second-quarter sales revenue of $1.31 billion, down from $1.40 billion in the previous quarter.

Oil prices saw volatility in the reported quarter ended June 30, as a price rise due to OPEC+ curbing supplies offset a downtrend due to poor Chinese demand.

The company's update comes even as spot prices of LNG rebounded, as heatwaves across the northern hemisphere kept demand elevated for electricity used for cooling purposes.

Average realized price for the company's LNG product was $11.47 per million British thermal units (mmBtu), down from last quarter's $12.68 per mmBtu.

(Reuters - Reporting by Roshan Thomas in Bengaluru; Editing by Shailesh Kuber and Rashmi Aich)