Santos hit by weak prices, announces 10% workforce reduction

Australian energy producer Santos has reported a sharp fall in annual profit and unveiled plans to cut around 10% of its workforce, as weaker commodity prices and project delays weighed on performance.

According to Reuters, the country’s second-largest gas producer said underlying earnings for the year ended 2025 dropped 25% to $898 million, missing the Visible Alpha consensus forecast of $904 million. Revenue declined 8% to $4.94 billion.

The company said it would reduce headcount by roughly 10% as major growth projects near completion and transition into steady-state operations. Santos employs about 4,028 people, based on its 2025 annual report, suggesting the move could affect around 400 roles. The company did not disclose further details on where the cuts would fall.

Chief executive Kevin Gallagher said the completion of the Barossa LNG offshore project and the near-finalisation of the Pikka Phase 1 development in Alaska marked a shift from capital-intensive expansion to what he described as the “base business”.

“As these major growth projects come to an end and become a part of the base business, and as we deliver on our cost savings objectives, we are targeting a headcount reduction of around 10%, rightsizing the business,” Gallagher said, as reported by Reuters.

Weaker oil and gas prices, alongside a technical issue that delayed the ramp-up of Barossa LNG, weighed on annual earnings. The profit miss underscores the pressure facing energy producers as commodity markets soften after a period of elevated prices.

Santos declared a final dividend of 10.3 cents per share, in line with the prior year but below market expectations of 20 cents. The maintained payout signals balance-sheet discipline, though it may disappoint investors hoping for a stronger distribution.

Shares fell as much as 1.8% in early trade before trimming losses to sit marginally lower, reflecting a measured market response. Analysts at Jarden said investors were likely to welcome the targeted workforce reduction as a sign of lower forecast operating costs.

The company also said it would prioritise a strategic review of its Australian integrated oil and gas portfolio in 2026. Jarden noted that this could point to potential asset divestments, raising the prospect of a broader reshaping of Santos’ domestic footprint.

The latest results highlight a pivotal phase for the Adelaide-based group. With major projects nearing completion and cost discipline moving centre stage, Santos is entering a period focused less on expansion and more on operational efficiency and capital allocation. How effectively it navigates softer commodity cycles and executes any portfolio changes will determine whether the reset restores investor confidence.