Low costs strong cash flow and long-life assets- ASX 200 stock Santos playing the long game
Santos has been quietly building a strong position. Recent announcements and FY25 results show that the company is focusing both on growth projects and shareholder returns. This ASX stock is positioning itself for long-term stable cash flow.
Santos Limited (ASX:STO)
is one of the well-known ASX stock in the oil and gas space and the company recently reported strong performance along with multiple project developments that are important for its long-term growth. This ASX stock has been focusing on low-cost production, strong cash flow and long-life assets which is clearly visible in its latest results and announcements.
In FY2025, it reported revenue of around $4.9 billion and underlying net profit after tax of $898 million. The company also generated strong free cash flow of $1.8 billion which allowed it to pay good dividends to shareholders. Total dividend for the year was 23.7 cents per share showing that this ASX stock is focused on shareholder returns along with growth. Production for the year was around 87.7 mmboe and unit production cost was $6.78 per boe which is among the lowest in the industry.
Another important development for this ASX stock is the Moomba Central Optimisation project in the Cooper Basin. The company has taken final investment decision on this project and Santos will invest around $357 million. The project is expected to reduce production costs and generate more than $600 million in capex and opex savings over time. It is also expected to deliver an internal rate of return above 15 percent and help unlock future production growth.
STO has signed a long-term gas supply agreement with South Australian government for supply of gas from 2030 for 10 years. This agreement supports long-term demand and provides revenue visibility which is positive for this ASX stock’s future cash flows and project investments.
Santos Limited looks like a stable ASX stock with strong cash flow, low production cost, long-life reserves and multiple growth projects like Barossa, Pikka and Moomba projects. The company’s strategy is clearly focused on disciplined capital allocation, cost control and returning cash to shareholders while still investing for future growth. This balance between growth and shareholder returns makes this ASX stock interesting from a long-term perspective.
(Source: Company Announcements)
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