<head> <style> body { font-family: Arial, sans-serif; line-height: 1.6; max-width: 800px; margin: 0 auto; padding: 20px; } h1, h2, h3 { color: #333; } hr { border: 0; border-top: 1px solid #eee; margin: 20px 0; } code { background-color: #f5f5f5; padding: 2px 4px; border-radius: 4px; } pre { background-color: #f5f5f5; padding: 10px; border-radius: 4px; overflow-x: auto; } blockquote { border-left: 4px solid #ddd; padding-left: 15px; color: #666; } .footnote { font-size: 0.9em; color: #666; } table { border-collapse: collapse; width: 100%; } table, th, td { border: 1px solid black; } th, td { text-align: left; padding: 8px; } tr:nth-child(even) { background-color: #f2f2f2; } </style> </head><body> The Cooper Basin, a cornerstone of Santos Limited’s (ASX:STO) gas production, faces unprecedented disruption as severe flooding submerges over 200 wells, cutting output by 15%. While Santos has maintained its FY25 production guidance, the prolonged recovery timeline and cascading impacts on infrastructure and partners like Beach Energy underscore risks for investors. This analysis examines the crisis’s implications, recovery prospects, and whether Santos can weather the storm—or if it’s a harbinger of long-term challenges. <img data-src="https://cdn.ainvest.com/aigc/hxcmp/images/compress-1aa5c047e24bc002.png" style="max-width: 100%;"/> <h3>The Production Shock: 15% Drop, but Is It Material?</h3>Santos CEO Kevin Gallagher downplayed the immediate impact, stating the 15% production decline was “not material in the big picture.” However, the company’s reliance on the Cooper Basin—Australia’s oldest and largest onshore gas field—means sustained disruptions could test its financial resilience. <ul><li>Current Impact: Floodwaters have submerged wells critical to Santos’ gas supply, with output dropping to 630 terajoules per day (TJ/day) in May 2025—though this was restored to pre-flood levels after repairs to the Liquids Recovery Plant B train. </li><li>Partnership Strains: Beach Energy, which operates key licenses in the region, reported a 12% production drop in its Western Flank region, with delays to a 10-well drilling campaign now pushed to early 2026. Newport Exploration, holding a 2.5% royalty stake in the area, warns of deferred production of 0.1 million barrels of oil equivalent (MMboe) into . </li></ul><h3>Recovery Timeline: A Race Against Time</h3>The critical variable is floodwater recession speed. As of May 2025, Santos noted water levels were “beginning to slowly recede,” but no definitive timeline exists. Key challenges include: 1. Infrastructure Repairs: The Moomba-to-Adelaide Pipeline, operated by Epic Energy, faces capacity constraints due to flood damage. While AEMO confirms gas supply adequacy for now, winter demand could strain systems if repairs lag. 2. Operational Hurdles: Beach Energy’s delayed drilling and deferred production highlight the basin’s interconnected risks. AEMO’s winter gas supply modeling will be critical to assessing long-term stability. <h3>Supply Chain and Market Risks</h3>Despite Santos’ reassurances, the broader energy sector faces volatility: - Gas Prices: Beach Energy reported a 4% rise in gas prices to AUD$11/GJ in Q3 FY25, reflecting tight supply dynamics. - Global LNG Competitiveness: Santos’ Barossa project, set for first gas in Q3 2025, aims to add 1.2 million tonnes/year of LNG capacity. However, delayed Cooper Basin recovery could divert resources, risking its 30% production growth target by 2027. <h3>Financial and Operational Resilience</h3>Santos’ balance sheet and strategy offer bulwarks against the crisis: - Cost Discipline: A breakeven oil price of **<us$35 ###="" (2025="" (60–100%="" **685,000="" **aud$2.5="" **debt="" **diversification**:="" **floodwater="" **investment="" **moomba="" **project="" **the="" -="" 1.="" 15%="" 2.="" 2025="" 630="" <visual="" a="" absorb="" against="" aligns="" allowing="" and="" are="" australian="" balance="" barossa’s="" barrel**="" basin="" below="" billion="" bottom="" but="" cash="" ccs="" cooper="" could="" co₂**="" critical="" day**="" decarbonization="" delays="" demands.="" downward="" execution**:="" factors:="" first="" flexibility.="" flooding="" floods="" flow="" force="" free="" funds**,="" further="" gas,="" gearing="" growth="" guidance)="" guidance,="" hinge="" hit="" in="" infrastructure="" investors="" is="" it="" its="" key="" line:="" long-term="" losses.="" management**:="" may="" mid-2026="" months,="" moomba="" must="" near-term="" of="" offsetting="" on="" or="" pain.="" pikka’s="" plant’s="" player="" positive="" pre-crisis="" production="" project,="" projects.="" prolong="" prolonged="" prospects="" provide="" q3="" rapid="" rebound="" recession**:="" recovery="" recovery**="" regulatory="" remains="" repairs="" returns)="" revisions.="" risks="" robust="" santos="" santos’="" setback,="" sheet="" shocks.="" short-term="" sign,="" six="" startup="" storing="" takeaway**:="" targets="" targets,="" the="" tj="" to="" tonnes="" treasury="" trends="" two="" validate="" vs.="" weigh="" while="" with="">Historical Cooper Basin gas production volumes (2010–2025) <h3>Conclusion: A Test of Resilience</h3>The 15% production drop and delayed Cooper Basin recovery are significant, but Santos’ financial flexibility and strategic projects (Barossa, Pikka) position it to recover. However, investors should monitor two key metrics: 1. Water Recession Speed: A timeline for full well restoration could be announced by Q4 2025. 2. Winter Gas Supply Adequacy: AEMO’s forecasts will reveal if Santos can meet demand without material guidance cuts. With 30% production growth by 2027 still on the horizon, the next six months will determine whether the flood crisis is a temporary setback—or a warning of deeper operational vulnerabilities. For now, Santos’ stock (STO) offers a high-reward, high-risk bet on its ability to navigate the outback’s whims. Data Sources: Santos Q1 2025 Report, AEMO Gas Supply Forecasts, Beach Energy FY25 Q3 Update, Newport Exploration Press Releases.</us$35></body>

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Santos Flood Crisis: Navigating the 15% Production Drop and Recovery Challenges

<head> <style> body { font-family: Arial, sans-serif; line-height: 1.6; max-width: 800px; margin: 0 auto; padding: 20px; } h1, h2, h3 { color: #333; } hr { border: 0; border-top: 1px solid #eee; margin: 20px 0; } code { background-color: #f5f5f5; padding: 2px 4px; border-radius: 4px; } pre { background-color: #f5f5f5; padding: 10px; border-radius: 4px; overflow-x: auto; } blockquote { border-left: 4px solid #ddd; padding-left: 15px; color: #666; } .footnote { font-size: 0.9em; color: #666; } table { border-collapse: collapse; width: 100%; } table, th, td { border: 1px solid black; } th, td { text-align: left; padding: 8px; } tr:nth-child(even) { background-color: #f2f2f2; } </style> </head><body> The Cooper Basin, a cornerstone of Santos Limited’s (ASX:STO) gas production, faces unprecedented disruption as severe flooding submerges over 200 wells, cutting output by 15%. While Santos has maintained its FY25 production guidance, the prolonged recovery timeline and cascading impacts on infrastructure and partners like Beach Energy underscore risks for investors. This analysis examines the crisis’s implications, recovery prospects, and whether Santos can weather the storm—or if it’s a harbinger of long-term challenges.

<h3>The Production Shock: 15% Drop, but Is It Material?</h3>Santos CEO Kevin Gallagher downplayed the immediate impact, stating the 15% production decline was “not material in the big picture.” However, the company’s reliance on the Cooper Basin—Australia’s oldest and largest onshore gas field—means sustained disruptions could test its financial resilience.

<ul><li>Current Impact: Floodwaters have submerged wells critical to Santos’ gas supply, with output dropping to 630 terajoules per day (TJ/day) in May 2025—though this was restored to pre-flood levels after repairs to the Liquids Recovery Plant B train. </li><li>Partnership Strains: Beach Energy, which operates key licenses in the region, reported a 12% production drop in its Western Flank region, with delays to a 10-well drilling campaign now pushed to early 2026. Newport Exploration, holding a 2.5% royalty stake in the area, warns of deferred production of 0.1 million barrels of oil equivalent (MMboe) into . </li></ul><h3>Recovery Timeline: A Race Against Time</h3>The critical variable is floodwater recession speed. As of May 2025, Santos noted water levels were “beginning to slowly recede,” but no definitive timeline exists. Key challenges include: 1. Infrastructure Repairs: The Moomba-to-Adelaide Pipeline, operated by Epic Energy, faces capacity constraints due to flood damage. While AEMO confirms gas supply adequacy for now, winter demand could strain systems if repairs lag. 2. Operational Hurdles: Beach Energy’s delayed drilling and deferred production highlight the basin’s interconnected risks. AEMO’s winter gas supply modeling will be critical to assessing long-term stability.

<h3>Supply Chain and Market Risks</h3>Despite Santos’ reassurances, the broader energy sector faces volatility: - Gas Prices: Beach Energy reported a 4% rise in gas prices to AUD$11/GJ in Q3 FY25, reflecting tight supply dynamics. - Global LNG Competitiveness: Santos’ Barossa project, set for first gas in Q3 2025, aims to add 1.2 million tonnes/year of LNG capacity. However, delayed Cooper Basin recovery could divert resources, risking its 30% production growth target by 2027.

<h3>Financial and Operational Resilience</h3>Santos’ balance sheet and strategy offer bulwarks against the crisis: - Cost Discipline: A breakeven oil price of **<us$35 ###="" (2025="" (60–100%="" **685,000="" **aud$2.5="" **debt="" **diversification**:="" **floodwater="" **investment="" **moomba="" **project="" **the="" -="" 1.="" 15%="" 2.="" 2025="" 630="" <visual="" a="" absorb="" against="" aligns="" allowing="" and="" are="" australian="" balance="" barossa’s="" barrel**="" basin="" below="" billion="" bottom="" but="" cash="" ccs="" cooper="" could="" co₂**="" critical="" day**="" decarbonization="" delays="" demands.="" downward="" execution**:="" factors:="" first="" flexibility.="" flooding="" floods="" flow="" force="" free="" funds**,="" further="" gas,="" gearing="" growth="" guidance)="" guidance,="" hinge="" hit="" in="" infrastructure="" investors="" is="" it="" its="" key="" line:="" long-term="" losses.="" management**:="" may="" mid-2026="" months,="" moomba="" must="" near-term="" of="" offsetting="" on="" or="" pain.="" pikka’s="" plant’s="" player="" positive="" pre-crisis="" production="" project,="" projects.="" prolong="" prolonged="" prospects="" provide="" q3="" rapid="" rebound="" recession**:="" recovery="" recovery**="" regulatory="" remains="" repairs="" returns)="" revisions.="" risks="" robust="" santos="" santos’="" setback,="" sheet="" shocks.="" short-term="" sign,="" six="" startup="" storing="" takeaway**:="" targets="" targets,="" the="" tj="" to="" tonnes="" treasury="" trends="" two="" validate="" vs.="" weigh="" while="" with="">Historical Cooper Basin gas production volumes (2010–2025)

<h3>Conclusion: A Test of Resilience</h3>The 15% production drop and delayed Cooper Basin recovery are significant, but Santos’ financial flexibility and strategic projects (Barossa, Pikka) position it to recover. However, investors should monitor two key metrics: 1. Water Recession Speed: A timeline for full well restoration could be announced by Q4 2025. 2. Winter Gas Supply Adequacy: AEMO’s forecasts will reveal if Santos can meet demand without material guidance cuts.

With 30% production growth by 2027 still on the horizon, the next six months will determine whether the flood crisis is a temporary setback—or a warning of deeper operational vulnerabilities. For now, Santos’ stock (STO) offers a high-reward, high-risk bet on its ability to navigate the outback’s whims.

Data Sources: Santos Q1 2025 Report, AEMO Gas Supply Forecasts, Beach Energy FY25 Q3 Update, Newport Exploration Press Releases.</us$35>

Santos Flood Crisis: Navigating the 15% Production Drop and Recovery Challenges

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