Santos Plans to Cut Debt by $2.5 Billion, Boost LNG Production

• Santos expects to save $300 million in capital expenditure between 2027-2030, with an additional $150 million in savings thereafter, by focusing on higher-margin Moomba Central fields in the Cooper Basin
• The company will prioritize investment in tier-1 basins in Alaska and Papua New Guinea, while fully appraising Australia's Beetaloo and Bedout basins to leverage existing infrastructure
• Santos' Australian domestic business will be repurposed as a lower capital-intensity, higher-margin operation focused on domestic gas supply and decommissioning commitments

Summary

Santos, Australia's second-largest oil and gas producer, announced a strategic plan on May 26 to reduce net debt by $2.5 billion by 2030 while refocusing investments on high-margin liquefied natural gas (LNG) production.

Key Financial Targets:

• Net debt reduction of $2.5 billion by 2030, resulting in approximately $150 million in annual interest savings
• $300 million in capital expenditure savings expected between 2027-2030
• Additional $150 million in savings thereafter

Strategic Priorities:

The company will concentrate investment in tier-1 basins in Alaska and Papua New Guinea for major oil and LNG production, while fully appraising Australia's Beetaloo and Bedout basins. This approach aims to generate higher margins by leveraging existing infrastructure.

Santos plans to transform its Australian domestic oil and gas business into a lower capital-intensity, higher-margin operation focused on meeting domestic gas supply and decommissioning obligations.

Operational Changes:

The company will prioritize higher-margin production in the Moomba Central fields within the Cooper Basin while deprioritizing development in other Cooper Basin areas.

Market Implications:

This debt reduction and operational streamlining strategy signals Santos' shift toward financial discipline and operational efficiency. By focusing on tier-1 assets and existing infrastructure, the company aims to improve profitability while maintaining its position in key LNG markets. The plan reflects broader industry trends emphasizing capital efficiency and debt management in the energy sector.