Santos posts record output of 26.3 million barrels, trims upper end of annual guidance
Key Facts
Santos reported record production of 26.3 million barrels of oil equivalent in the third quarter of 2026, while lowering the upper end of its annual guidance following operational disruptions at the Pikka project in Alaska, according to Dow Jones and Reuters. Output rose about 14% from the second quarter, extending growth as new projects came on stream. The company had reported production of 23.1 million barrels of oil equivalent in the second quarter, according to its report for that period. Chief Executive Kevin Gallagher attributed the growth in activity to the start of production at the Barossa and Pikka projects, according to Dow Jones. For the full year, Santos narrowed its production guidance to 99–102 million barrels of oil equivalent from a previous range of 99–105 million, according to Reuters. It also revised its annual sales volume guidance to 102–105 million barrels of oil equivalent from 102–108 million. The revision left the lower end of both production and sales guidance unchanged while cutting the upper end of both amid delays in ramping up output at the Alaska field.
In its third-quarter financial results, sales revenue rose 49% from the previous quarter to about US$2.01 billion, according to Dow Jones. Second-quarter revenue had totalled US$1,349 million, according to the company's previous quarterly report, providing the comparison base for the jump in the latest period. Revenue growth was accompanied by an 11% quarterly increase in sales volumes to 26.4 million barrels of oil equivalent. Reuters attributed the revenue improvement to higher realised liquefied natural gas selling prices and increased sales volumes from the Barossa project. Sales thus benefited from the new project's contribution, alongside improved prices achieved by the company on LNG sales. Quarterly revenue was in line with estimates compiled by Visible Alpha, according to Reuters. On the pricing of those sales, Santos had said in its second-quarter report that most of its LNG contracts reflected prices with a lag of 3 months, in line with standard industry practice.
The operational disruptions centred on the Pikka project, where a weather event affected operations at the seawater treatment plant, according to Dow Jones coverage. The impact on the plant temporarily constrained production, part of a series of disruptions the project faced during its ramp-up. Production also halted briefly after the Kuparuk pipeline was closed following a traffic accident, another disruption to the field's operations. Explaining the decision to temporarily restrict production to allow reservoir voidage replacement through water injection, Gallagher said: "This is a deliberate decision." The chief executive described the measure as part of the reservoir management approach, linking the temporary production constraint to allowing water injection to replace volumes withdrawn from the reservoir.
Santos operates the Pikka project and holds its largest stake, according to its announcement on the start of seawater injection at the project. The company holds 51%, while Repsol owns the remaining 49%, according to the same announcement. As commercial exports from the project began, Santos announced the loading of its first oil cargo, comprising about 450,000 barrels. The cargo included Alaska North Slope crude, according to the company's announcement on the first Pikka shipment. It was loaded onto the tanker "Polar Resolution" at the Valdez Marine Terminal, bringing oil exports into the commercial operations of the project supporting Santos' production growth.
Under the operating plan announced with the results, Santos intends to keep Pikka production near 70,000 barrels per day for a short period, according to Reuters. After the temporary restriction, the company aims to increase output towards 80,000 barrels per day as part of the project's ramp-up. The planned move between the two rates follows the temporary maintenance of production at the lower level to allow reservoir voidage replacement through water injection, according to Gallagher's explanation of reservoir management. On gas projects, Santos had said in its first-half 2026 results that the Papua LNG project was progressing towards a final investment decision. In that earlier disclosure, the company identified the fourth quarter of 2026 as the target date for that decision.