Santos 4Q23 Results | Climate Transition Analysis

Quarterly results
Written By Rohan Bowater

Santos’ transition is looking like a risky bet. FY23 showed capex increasing by 30% while production declined 11%. With Santos sitting above peers on capex/boe and upstream emission intensity, a transition strategy based on the efficiency of costs and carbon looks difficult. Santos has to do a lot more to demonstrate its strategy will be resilient to transition.

Our key takeaways

  • Santos reported a softer FY23 performance compared with FY22. Free cash flow declined 43% (to $2.1bn), revenue decreased 25% due to lower sales volumes and LNG and oil prices.

  • When we compare Santos with European majors’ capex/boe significantly outpaces peers at $31/boe vs $18/boe, with capex expected to increase based on FY24 guidance

  • Santos’ upstream emissions intensity in FY22 was ~13% higher than IEA’s global average calculation at 52 ktCO2e/Mboe vs 46 ktCO2e/Mboe.

  • The company’s pursuit of three CCS hubs (~30 Mtpa) and synthetic methane is risky with more clarity needed on project economics and impact on emission profiles


Rohan Bowater
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