Australian energy company Santos Ltd revealed Wednesday it will slash roughly 10% of its workforce after reporting annual profits that fell well short of analyst expectations, with weak commodity prices taking a toll on the oil and gas producer’s bottom line.
The company’s stock dropped as much as 1.8% during early trading hours before recovering most of those losses by early morning GMT.
CEO Kevin Gallagher explained the workforce reduction comes as the company wraps up significant expansion efforts, including its Barossa LNG offshore development and the nearly-complete Pikka phase 1 project in Alaska, with these initiatives now moving into regular operations.
“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 stated.
With Santos currently employing approximately 4,028 workers according to their latest annual report released alongside the earnings announcement, the job cuts would impact roughly 400 positions. Company officials did not elaborate on specific details regarding the layoffs.
Market analysts at Jarden viewed the workforce reduction positively, noting “The market should like the targeted 10% headcount reduction as a sign of lower forecast operating costs.”
Santos also announced plans to conduct “a strategic review of Australian Integrated Oil and Gas Portfolio” during 2026, which Jarden analysts suggested “may imply a potential for (Santos’) Australian asset divestments.”
The company’s underlying earnings for the 2025 fiscal year plummeted 25% compared to the previous year, reaching $898 million and falling short of the $904 million consensus forecast from Visible Alpha by a considerable margin.
Declining commodity values and production delays at the Barossa LNG facility caused by technical problems contributed to the disappointing annual performance.
Santos announced a final dividend payment of 10.3 cents per share, matching last year’s distribution but significantly below market expectations of 20 cents. Total revenue for fiscal 2025 decreased 8% to $4.94 billion.
