Recasts paragraph 1 with strategic review, adds analyst comments in paragraph 4, updates shares in paragraph 2
FY underlying profit miss VA consensus estimates
Santos targets headcount reduction of 10%
Announces strategic review of Australian Integrated Oil And Gas portfolio
Shares fall as much as 3.8%
By Shivangi Lahiri and Roshan Thomas
Feb 18 (Reuters) - Santos STO.AX unveiled plans to cut about 10% of staff and review its Australian Integrated Oil and Gas portfolio after reporting a sharp fall in annual profit on Wednesday.
Shares of Australia's No. 2 oil and gas producer closed 0.6% lower at A$6.63, after sliding as much as 3.8% earlier in the session.
The company said it will prioritise a strategic review of its Australian integrated oil and gas portfolio in 2026, without giving details on scope or timing.
"While we think break-ups typically don't create value, Santos has a very large resource base that it has shown no intention to develop, and as a result, the market is currently putting zero value on these assets," said Dale Koenders, head of energy research at Barrenjoey.
Chief Executive Kevin Gallagher said that as Santos delivers its Barossa LNG offshore project and nears completion of the Pikka Phase 1 development in Alaska, those growth projects will transition into the company's "base business", reducing the need for peak construction staffing levels.
Santos employs about 4,028 people, according to its 2025 annual report, implying roughly 400 roles could be affected, though the company gave no further details.
"The market should like the targeted 10% headcount reduction as a sign of lower forecast operating costs," analysts at Jarden said.
Santos also holds undeveloped assets such as the Narrabri gas project in New South Wales and the Dorado oil and gas development offshore Western Australia.
Underlying earnings for fiscal 2025 tumbled 25% to $898 million, missing the Visible Alpha consensus of $904 million, as weaker commodity prices and a delay in ramping up the Barossa LNG project due to a technical issue weighed on results.
Santos declared a final dividend of 10.3 cents per share, in line with the FY24 payout and beating market consensus of 10 cents. Revenue for fiscal year 2025 fell 8% to $4.94 billion.
(Reporting by Shivangi Lahiri and Roshan Thomas in Bengaluru; Editing by Sriraj Kalluvila, Maju Samuel and Rashmi Aich)
((Shivangi.Lahiri@thomsonreuters.com;))