CANBERA (dpa-AFX) - Oil and gas producer Santos Ltd. (STOSF.PK, SSLTY.PK, STO.AX) announced an updated capital allocation framework, targeting returns to shareholders of at least 60% of all-in free cash flow starting in 2026. This follows a period of significant capital investment aimed at bringing substantial new production online from the Barossa and Pikka projects.
Speaking at the company's Investor Day in Sydney, Managing Director and Chief Executive Officer Kevin Gallagher said 'From 2026 we will return at least 60 per cent of all-in free cash flow to shareholders, and when gearing is below our target range of 15-25 per cent, 100 percent of free cash flow will be returned to shareholders in the form of dividends and/or buybacks.'
In addition, Santos announced a carbon storage growth target to build and operate a commercial carbon storage business that would permanently store approximately 14 million tonnes of third-party CO2e per annum by 2040.
The target is equivalent to around 50 per cent of Santos' 2023 equity Scope 3 emissions from the combustion and use of our products.
With Barossa and Pikka coming online, Santos' production is expected to increase by more than 30 per cent by 2027 compared to 2024, significantly lowering unit production cost which will support strong free cash flow generation throughout the commodity price cycle.
The market outlook for LNG into Asia, domestic gas in Australia and liquids remains strong out to 2040 and beyond.
There is no change to Santos 2024 production, unit cost and capital expenditure guidance.
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