Santos (ASX:STO) shares in focus after 85% revenue hike in 1HFY22

Highlights

• For the six months ending on 30 June, Santos reported an enormous 300% growth in its underlying net profit after tax to US$1,267 million.
• The company had an 85% increase in sales to US$3,766 million.
• Despite the record first-half free cash flow, Santos’ shares were trading in red today (August 17).

Gas and petroleum explorer Santos Limited (ASX:STO) today (August 17)  shared its half-yearly results for the financial year 2022 ending on 30 June 2022.

For the six months, Santos produced an enormous 300% growth in its underlying net profit after tax to US$1,267 million and an 85% increase in sales to US$3,766 million.

Record output, a sharp rise in oil price and LNG, and the merger with Oil Search contributed to the record results.

Despite the record first half free cash flow, underlying earnings, and higher shareholder returns, Santos' shares were trading in the red today. This might be because the overall energy sector was 0.49% down at 11.45 AM AEST. At the same time, the shares of Santos were 2.33% down, trading at AU$6.92 each on ASX today.

What's more in the half-yearly report?

By increasing the interim dividend by 38% to US7.6 cents per share unfranked (US$255 million) and increasing the previously announced on-market share buyback from US$250 million to US$350 million, Santos plans to return US$605 million to shareholders (equivalent to US18 cents per share) as part of the company's capital management framework.

Santos' EBITDAX was 12% up to US$2,831 million, and its free cash tripled to US$1,708 million.

Other updates

In a separate ASX filing, Santos informed that a final investment decision has been made to move on with the Pikka Phase 1 oil project, which is situated on Alaska's North Slope.

First oil is anticipated in 2026, and Pikka Phase 1 is projected to produce 80,000 barrels of gross oil per day.

The project is well-supported by important stakeholders, including the State of Alaska, the North Slope Borough, the landowner company Kuukpik Corporation, and the Arctic Slope Regional Corporation (ASRC). It also has strong fundamentals, is situated in a region known for its oil production and has significant existing infrastructure, has a low intensity of unabated emissions, and low unabated emissions intensity.

The energy firm is also in advanced talks with the shortlisted counterparties to sell a 5% stake in the PNG LNG project. Reputable counterparties have shown substantial interest throughout this process, and estimated proceeds are in line with market consensus valuation.

Santos plans to keep its 37.5% ownership of PNG LNG.