Santos to consider paying dividend

OIL and gas major Santos has flagged plans to pay its first dividend in three years as part of a new policy linking payouts to earnings.

It comes after two years of cost-cutting and productivity measures at the energy group and as oil prices strengthen.

In a statement to the Australian Securities Exchange yesterday, Santos said that if market conditions remained appropriate, it was likely to issue a dividend after releasing its first-half results.

Under the new policy, Santos will look to pay dividends of between 10 per cent and 30 per cent of free cash flow, no matter what oil prices are.

“Given the cyclical nature of the industry, the board will also consider additional returns to shareholders above the ordinary dividend when business conditions permit,” the company said.

The move comes less than a month after the Santos board knocked back an $11 billion buyout offer from private equity house Harbour Energy because it did not reflect the value the board saw in the company.

“Should market conditions remain supportive and the company continues to make good progress to its debt reduction target ahead of plan, the board will look to restore dividends to shareholders,” Santos said. It comes as Santos closes in on debt reduction targets in its second half — more than a year ahead of schedule.