Santos to Cut Workforce by 10% After Slump in Annual Profit

The Santos Ltd. Logo atop Santos Place building, which houses the company's office, in Brisbane, Australia, on Monday, Dec. 11, 2023. Woodside Energy Group Ltd.'s hopes of a tie-up with Santos to create Asia's dominant liquefied natural gas exporter face a potential hurdle over the valuation of a target whose shares recently fell to an eight-month low. Photographer: Ian Waldie/Bloomberg Photo by Ian Waldie /Bloomberg

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(Bloomberg) — Santos Ltd. is targeting a 10% headcount reduction after Australia’s second-biggest natural gas producer reported a slump in profit on lower oil and gas prices.

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The layoffs come as major growth projects are completed and the company pursues cost savings, Chief Executive Officer Kevin Gallagher said in a statement on Wednesday. Santos has about 4,000 employees, according to the filing.

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“The market should like the targeted headcount reduction as a sign of lower forecast operating costs,” said Jarden Group analysts analysts Nik Burns and Joshua Mills-Bayne in a note.

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Attributable net income after tax fell by a third to $818 million in the year through December, the Adelaide-based company said. That was below all analyst expectations. Shares fell as much as 3.8% as of 12:50 p.m. in Sydney.

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“Global energy markets in 2025 remained volatile, driven by persistent geopolitical tensions and a slowdown in economic growth,” Chair Keith Spence said in the statement. Despite short-term uncertainty, demand for coal, oil and gas continues to increase, he said. 

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Santos is betting that Asia will underpin growth in demand for LNG, despite forecasts of a supply glut that could begin as early as 2026 and mounting global pressure on nations to accelerate the shift away from fossil fuels and reach net zero commitments. The company argues that LNG provides a lower carbon alternative to coal for key import markets like Japan and Korea.

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“Asia remains at the center of LNG demand growth, with consumption forecast to expand strongly through to 2050. Santos is well positioned with advantaged supply into the region,” CEO Gallagher said in an investor call, adding that gas plays a “unique role” in the energy transition. 

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“It is the only scalable, dispatchable fuel capable of supporting renewables while maintaining grid stability. That makes it a foundation fuel for economies that are growing,” he said.

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The role of LNG in the energy transition is highly contested, with environmentalists arguing that the fossil fuel industry isn’t properly taking into account methane emissions and pollution from shipping the fuel.

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Santos’ average realized oil price dropped 14% to $73.05 a barrel and LNG was down 10% to $11.12 per million British thermal units. That contributed to an 8% cut in sales revenue to about $5 billion, it said. 

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The start of production from the Barossa gas project in September and first oil from the Pikka development in Alaska this quarter are forecast to lift output to 101 million to 111 million barrels of oil equivalent in 2026. 

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(Updates with analyst’s comments in the third paragraph, and executive’s comments from the seventh paragraph.)

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