Oct 22 (Reuters) – Santos narrowed its 2026 production and sales volume forecast on Thursday after temporary disruptions at its Pikka oil project in Alaska, despite reporting record quarterly output and a 78% jump in third-quarter revenue.
Santos, Australia’s second-largest independent oil and gas producer, now expects production of 99 million to 102 million barrels of oil equivalent (mmboe) in 2026, compared with its previous projection of 99 to 105 mmboe.
Its sales volume forecast was also narrowed to 102-105 mmboe, down from 102-108 mmboe.
Santos said the narrower outlook reflected delays in commissioning a seawater treatment plant at Pikka, output curtailments following a weather event, and a shutdown of the Kuparuk pipeline after a road accident.
Pikka briefly reached its minimum expected plateau production rate before quarter-end, and output exceeded 80,000 barrels per day at one point.
The company said output at Pikka would be held at roughly 70,000 barrels per day for a short period before ramping up toward 80,000 barrels per day.
Shares of the firm fell more than 1% in early trading.
Santos said its third-quarter production benefited from Barossa reaching steady-state production and the continued ramp-up of Pikka, while revenue was boosted by higher LNG prices, increased LNG sales volumes and stronger crude and condensate sales.
Its third-quarter sales revenue rose to $2.01 billion from $1.13 billion a year earlier, matching Visible Alpha estimates, while production climbed 23% to a record 26.3 mmboe.
The production increase helped Santos generate record free cash flow from operations of about $1.07 billion during the quarter, with Chief Executive Kevin Gallagher saying the “inflection point” expected from the start-up of Barossa and Pikka had now arrived.
With Barossa and Pikka now online, Santos said more than 50% of its quarterly free cash flow was generated from its international operations in Papua New Guinea and Alaska, underscoring a shift toward newer growth projects beyond its Australian asset base.
(Reporting by Rajasik Mukherjee and Kumar Tanishk in Bengaluru; Editing by Sahal Muhammed and Sherry Jacob-Phillips)
