Santos Limited
Santos runs Australia's Gladstone LNG and gas fields, exporting to Asia and supplying domestic gas.
On the record
Checkpoint: Federal decision on domestic gas-reservation policy covering 15-20% of export volumes
The call
Santos holds the physical gas and LNG infrastructure that keeps it running, while profit, takeover talks, and a looming gas-reservation rule stay unsettled.
Santos pumps and sells natural gas and liquefied natural gas (LNG) from Australia to global buyers, mainly through its Gladstone LNG facility. It is hard to replace because the company owns the physical plants, underground reserves, pipelines, and long-term contracts with customers, but the Australian government is considering requiring Santos to set aside 15 to 20 percent of its gas for domestic use instead of export, which would directly hurt profits at Gladstone. The company has cut its workforce by 10 percent as of early 2026 and has rejected three takeover bids in two years, so a completed merger or a final ruling on the gas-reservation policy will likely reshape what happens to shareholders over the next three to five years.
Why
01
AI pressure: None apparent. AI data centers raise power and gas demand, feeding Santos rather than threatening its business. Could AI do the core job? Unlikely.
02
Bigger players: Woodside Energy Group. Woodside walked from two merger attempts (2024, 2026) and an ADNOC-led group also dropped an $18.7bn bid; another approach looks likely. Could a giant copy it? No, they are blocked.
03
What protects it. Owns Gladstone LNG plants, gas reserves, pipelines, and long-term offtake contracts that can't be replicated quickly or cheaply.
What would change this call
Outcome of the federal gas-reservation policy (15-20% export volumes) for 2027. Shows whether Gladstone LNG economics are protected or materially impaired.
Completion or further collapse of a takeover bid (Woodside or XRG/ADNOC returning). Shows whether consolidation pressure resolves or repeats.
Completion of the 10% workforce cut and strategic review without a further round. Shows whether cost pressure has stabilized or is still escalating.
Completion or further collapse of a takeover bid (Woodside or XRG/ADNOC returning). Shows whether consolidation pressure resolves or repeats.
Completion of the 10% workforce cut and strategic review without a further round. Shows whether cost pressure has stabilized or is still escalating.
Key numbers
- Underlying NPAT fell 25% to US$898m
- Realized oil price dropped 14% to $73.05/bbl
- ADNOC-led $18.7bn takeover bid withdrawn
Named risks
- Federal gas reservation policy could reserve 15-20% of exports, threatening Gladstone LNG economics from 2027.
- Repeated failed takeover attempts (2024, 2025, 2026) leave Santos as an ongoing consolidation target with valuation uncertainty.
- Execution risk on announced 10% workforce cut and Australian portfolio strategic review starting Feb 2026.
- Gomeroi People native title appeal litigation could delay or block the Narrabri Gas Project.
- Legacy leaking gas storage tank near Darwin raises environmental and regulatory scrutiny, cited in 2025 deal collapse.
Rivals, as read in July 2026
| Rival | Direction | Evidence |
|---|---|---|
| Woodside Energy Group | contesting | Two merger attempts collapsed, Feb 2024 (A$80bn) and May-July 2026, both over valuation |
| XRG/ADNOC consortium | contesting | Withdrew A$36.4bn takeover bid Sept 2025 after PNG tax dispute |
| Beach Energy | contesting | JV partner on Moomba projects, also opposing gas reservation policy in 2026 |
| ExxonMobil | gaining on | Operates PNG LNG at larger scale, with Santos holding only ~39.9% working interest as of 2026 |
Questions people ask
- Is Santos profitable in 2025?
- Yes but declining. Santos reported FY2025 underlying NPAT of US$898m, down about 25% from US$1.201bn in FY2024, and net profit attributable to owners of US$818m versus US$1.224bn prior year, per its full year results released 2026-02-17.
- Will Woodside acquire Santos?
- Unclear. Two Woodside merger attempts collapsed over valuation, first an A$80bn deal in February 2024, then a renewed talk that also fell apart between May and July 2026. A separate A$36.4bn ADNOC/XRG bid was withdrawn in September 2025.
- Is Santos laying off workers?
- Yes. In February 2026 Santos announced plans to cut about 10% of its workforce, mainly short-term staff and contractors, alongside a strategic review of its Australian Integrated Oil and Gas portfolio, targeting over $150m in annual savings.
- Who is Santos's biggest competitor?
- Woodside Energy Group, Australia's largest independent oil and gas company with a market cap roughly 1.5 to 2 times Santos's as of June 2026. Woodside has also twice attempted to merge with Santos, in 2024 and again in 2026, without success.
- Could AI replace Santos's business?
- No. Santos's value sits in owned LNG plants, pipelines, reserves and decades-long offtake contracts that AI cannot replicate. It uses AI for efficiency, such as a five year Xecta digital oilfield partnership launched July 2025 covering over 1,000 Cooper Basin wells.
- What is the gas reservation policy risk for Santos?
- Australia is finalizing a domestic gas reservation policy reserving an estimated 15 to 20% of export volumes, targeted for 2027, which could hit Gladstone LNG economics. Santos publicly said the policy would 'kill an industry' on 2026-05-26.
Timeline
- 2026-07-09Renewed Woodside-Santos merger talks collapse over valuation
- 2026-05-26Australian government sets up fight with Santos over gas reservation plan
- 2026-02-17Santos posts 35% profit fall, announces plan to cut 10% of workforce
- 2025-09-17XRG/ADNOC consortium withdraws A$36.4bn takeover bid after PNG tax dispute
- 2025-07-14Santos launches five-year Xecta digital oilfield partnership
- 2024-09Moomba Carbon Capture and Storage Phase 1 begins operating
- 2024-02-07Woodside ends A$80bn merger talks with Santos
- 1954-03-18Santos founded in Adelaide, South Australia
Revision history
26 July 2026
First assessed. Losing its protection. The text above is fixed as of this date and is not edited afterwards.
In the same band
Sources
- Santos 2025 Full-year results (2026)
- Santos to Cut Workforce by 10% After Slump in Annual Profit (2026-02-17)
- 2025 Second Quarter Report (2025-07-16)
- Santos stock slumps as $18.7 billion ADNOC-led deal collapses (2025-09-17)
- Energy giant Woodside backs away from $80 billion merger deal with Santos (2024-02-07)
- Abu Dhabi consortium drops bid to take over Santos (2025-09-17)
- Why Did Woodside and Santos Walk Away From Merger Talks? (2026-07-09)
- Santos (STO) Number of Employees (2026-06-23)
- Santos to cut 10% of jobs, review portfolio (2026-02-17)
- Santos Barossa Ramp-Up and Merger Exit in Focus (2026-07-20)
- Xecta and Santos launch digital oilfield project (2025-07-14)
- Industry backlash threatens Australia's gas supply fix (2026-07-21)