By Rajasik Mukherjee and Nikita Maria Jino
Oct 22 (Reuters) – Santos lowered the upper end of its annual production and sales volume forecasts on Thursday after disruptions at its Pikka oil project in Alaska delayed output growth, sending its shares towards their weakest session in three weeks.
The forecast downgrade came even as Australia’s second-largest independent oil and gas producer reported record output and a near 78% surge in revenue for the third quarter.
Santos 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. Sales volume is now seen between 102 and 105 mmboe, down from 102-108 mmboe earlier.
Shares of the company fell as much as 1.8% to A$9.14 and were headed for their biggest single-day decline since October 1, while the broader market was down 0.3%.
Santos said the revised forecast reflected delays in commissioning a seawater treatment plant at Pikka, weather-related production curtailments and a shutdown of the Kuparuk pipeline following a road accident.
“Investors are focused on the fact that Pikka, one of the two key growth projects, is behind schedule and running below its targeted rate,” said Greg Smith, investment specialist at Generate KiwiSaver.
The Pikka project briefly reached its minimum expected plateau production rate before quarter-end, with output exceeding 80,000 barrels per day at one point, Santos said.
The company said output at Pikka would be held at roughly 70,000 barrels per day for a short period before ramping back towards 80,000 bpd.
“If Pikka reaches plateau on the revised timetable, I’d expect most of today’s concern to fade. Another delay would likely test investor patience,” Smith said.
Meanwhile, Santos’ third-quarter sales revenue rose to $2.01 billion from $1.13 billion a year earlier, matching Visible Alpha estimates, while production climbed around 23% to a record 26.3 mmboe.
The company attributed stronger quarterly production to the Barossa field reaching steady-state output and Pikka’s ramp-up, while higher LNG prices and sales volumes, along with stronger crude and condensate sales, supported revenue growth.
(Reporting by Rajasik Mukherjee and Kumar Tanishk in Bengaluru; Editing by Sahal Muhammed, Sherry Jacob-Phillips and Subhranshu Sahu)
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