Santos will cut 10% of its workforce as the growth projects reach their end. The annual profit is below expectations.

Australian oil and ?gas producer Santos Ltd reported a ?steeper-than-expected ?drop in annual profit on Wednesday, hurt by weak commodity prices, and said it would reduce its headcount by about 10% as major growth projects near completion.

The shares of Australia's 2nd largest gas producer fell as much as 1.8 percent in early trading. However, they retraced the majority of these losses to trade slightly lower at 0020 GMT.

Kevin Gallagher, Chief Executive Officer, said that as the Barossa LNG project was completed and the Pikka Phase 1 project neared completion in?Alaska the growth projects of the company would be transitioned to the "base" business.

We are aiming for a 10% reduction in headcount as these growth projects end and become part of our base business.

According to the 2025 annual report that was released along with its results announcement, Santos employs approximately 4,028 employees. This would indicate that the layoffs will affect about 400 positions. The gas producer has not provided any additional details about the cuts.

Analysts at Jarden stated that the market would be pleased with the 10% reduction in headcount as it is a sign that operating costs will be lower.

The company said it would prioritise "a strategic assessment of 'Australian Integrated Oil and Gas portfolio" in 2026. Jarden stated that this "may imply a potential for Santos' Australian?assets divestments".

The oil and gas company's underlying earnings for fiscal 2025 fell by 25% from the previous year, to $898 million. This was far below the Visible Alpha consensus estimate of $904 millions.

A technical problem and lower commodity prices impacted the annual?earnings. Santos announced a final dividend of 10.3 cents per scrip, which is in line with the payout for FY24 and higher than the market consensus. Revenues for fiscal year 2020 fell by 8%, to $4.94billion.

(source: Reuters)