Feb 18 (Reuters) – Australian oil and gas producer Santos Ltd reported a steeper-than-expected drop in annual profit on Wednesday, hurt by weak commodity prices, and said it would reduce its headcount by about 10% as major growth projects near completion.
Shares of Australia’s second-largest gas producer slipped as much as 1.8% in early trading, but retraced most of those losses to trade marginally lower as of 0020 GMT.
Chief Executive Kevin Gallagher said that, as it delivered on its Barossa LNG offshore project and neared completion of the Pikka phase 1 project in Alaska, its growth projects would transition to the “base business”.
“As these major growth projects come to an end and become a part of the base business, and as we deliver on our cost savings objectives, we are targeting a headcount reduction of around 10%, rightsizing the business.”
Santos employs around 4,028 people, according to its 2025 annual report issued along with the results announcement, implying the layoffs would affect around 400 roles. The gas producer did not provide any further details on the cuts.
“The market should like the targeted 10% headcount reduction as a sign of lower forecast operating costs,” analysts at Jarden said.
The company added that it will prioritise conducting “a strategic review of Australian Integrated Oil and Gas Portfolio” in 2026, which Jarden said, “may imply a potential for (Santos’) Australian asset divestments”.
Underlying earnings for fiscal year 2025 at the oil and gas producer tumbled 25% from the prior year to $898 million, missing the Visible Alpha consensus of $904 million by a wide margin.
Weaker commodity prices and a delay in ramping up Barossa LNG due to a technical issue impacted annual earnings.
Santos declared a final dividend of 10.3 cents per share, in line with the FY24 payout but below the market consensus of 20 cents. Revenue for fiscal year 2025 fell 8% to $4.94 billion.
(Reporting by Shivangi Lahiri in Bengaluru; Editing by Sriraj Kalluvila, Maju Samuel and Rashmi Aich)
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