Santos Earnings: Barossa Cash Flows 18 Months Away and Dividend Surprise

It was a strong 2023 result overall for no-moat Santos with USD 3.3 billion in net operating cash flow, ahead of our expectations. Australia’s second-largest oil and gas producer surprised with a USD 0.17 final dividend, up 16% and bringing the full-year total to USD 0.26, or AUD 0.40. That was considerably ahead of our AUD 0.26 target and equates to a meaningful 5.4% yield at the current share price, albeit unfranked. We had expected Santos to preference share buybacks to a greater degree at the expense of dividends.