Santos to Cut 10% of Workforce as FY25 Profit Slumps on Weak Gas Prices

Santos Ltd, Australia’s second-largest independent gas producer, has initiated a sweeping restructuring plan that includes a 10% reduction in its global workforce and a comprehensive review of its asset portfolio. The move follows the release of the company’s full-year 2025 financial results, which revealed a sharp contraction in both net profit and sales revenue. This downturn was primarily driven by a prolonged period of weakness in global natural gas and liquefied natural gas (LNG) prices, which have faced downward pressure from increased global supply and fluctuating demand in key Asian markets.

The job cuts, expected to impact hundreds of employees across the company’s core operations in Australia and Papua New Guinea, represent a significant strategic pivot toward a leaner operating model. Management has characterized the decision as a necessary step to maintain balance sheet strength and ensure the company remains competitive in a volatile commodity environment. This restructuring comes at a critical juncture for Santos, as it navigates the capital-intensive development of its flagship growth projects, including the Barossa gas project in the Timor Sea and the Pikka Phase 1 oil project in Alaska. By reducing its headcount, the company aims to lower its unit production costs and improve overall operational efficiency.

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Santos Ltd, Australia’s second-largest independent gas producer, has initiated a sweeping restructuring plan that includes a 10% reduction in its global workforce and a comprehensive review of its asset portfolio.

In addition to the workforce reduction, the announced asset review signals a potential shift in Santos’s long-term portfolio strategy. The company is expected to evaluate its stakes in various LNG projects and midstream infrastructure, potentially seeking to divest non-core or high-cost assets to focus capital on its highest-margin production hubs. This move mirrors broader trends in the global energy sector, where major players are increasingly prioritizing value over volume and high-grading their portfolios to withstand price cycles. Analysts suggest that the review could lead to the sale of minority interests in infrastructure assets, providing a cash infusion to fund ongoing development and debt reduction.

The decline in FY25 earnings also reflects the broader regulatory and operational challenges facing the Australian gas industry. While Santos has successfully progressed its major projects through various legal and environmental hurdles, the cumulative impact of regulatory delays and rising inflation has added pressure to the company's margins. Despite these headwinds, Santos maintained its production volume outlook for fiscal year 2026, suggesting that the current cost-cutting measures are designed to optimize existing output rather than scale back production targets. This stance provides some reassurance to investors concerned about the company’s long-term growth trajectory.