Santos, Australia’s second biggest liquefied natural gas (LNG) producer, has posted record 2021 profits due to surging gas prices but said more supply is needed to address the “supply crunch”.
Net profit after tax was $658 million, up 284% on 2020, and the highest revenue, free cashflow and underlying profit in Santos’s history.
The profit figure includes losses on commodity hedging and costs associated with acquisitions and one-off tax adjustments.
“The results reflect significantly higher oil and LNG prices compared to the corresponding period due to the recovery in global energy demand combined with supply constraints across the industry due to lower capital investment through the pandemic,” Santos chief executive Kevin Gallagher said.
Gallagher called for an urgent increase in supply, saying booming demand meant Santos had low reserves.
The company has a number of new gas projects in the pipeline across Australia, Papua New Guinea (PNG) and the US.
Adelaide-based Santos is also benefitting from its merger with PNG company Oil Search.
“The highlight of the year was the completion of our merger with Oil Search,” Gallagher said. “The merger delivers increased scale and capacity to drive our disciplined, low-cost operating model.”
The merger created a company with a market capitalisation of about $17 billion. Despite the strong result, Santos’s share price fell more than 2.5% in trading on Wednesday.
- George Russell