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