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First oil creeps up
Santos: Pikka Phase 1 development is 91% complete, on 22nd well
Kay Cashman Petroleum News
On Aug. 27 mid-morning Alaska-time, Santos Ltd hosted a live webcast providing an overview of its half-year 2025 results. Led by Santos Managing Director and CEO Kevin Gallagher, the webcast revealed the latest news about the company's Pikka Phase 1 development in northern Alaska.
(See slide in the online issue PDF)
Gallagher said the project is "progressing well" and that Santos has brought first oil guidance forward from mid-2026 to first quarter 2026, with the ramp-up to plateau expected in the second quarter.
"This is another outstanding example of Santos' self-execution project delivery model in action," Gallagher said. "The pipeline was completed a year ahead of schedule and the challenging logistics of river-lifting key processing modules from Canada and barging the seawater treatment plant from Indonesia have been executed flawlessly. Our drilling and completions team have just finished the 21st well, the first combination well with a 10,000-foot-long horizontal section that replaces two wells with one single well."
Combination wells together with "deployment of other innovative drilling technologies and techniques are delivering real cost savings and faster job completion times," he said.
"This represents a significant value upside opportunity for future developments in Alaska. We're now drilling the 22nd well, which will be the longest well in the field with an expected total depth of 27,000 feet," Gallagher said.
Six wells have been "flowed back" in 2025, including three producers, bringing average expected flow rates per well to 7,000 barrels per day at start-up.
End of 2025 In March, Santos Executive Vice President and President Alaska Bruce Dingeman said the company was in a good position to accelerate first oil to the end of 2025. This, he said at the time, will be "dependent on logistics and weather allowing for the mobilization of key production models by barge up the Hay River."
All the modules made it to Alaska in August, so it remains to be seen whether end of 2025 or first quarter 2026 will be the ultimate first oil date.
Acquisition delayed On June 16 Santos announced it had received a non-binding indicative proposal from a consortium led by XRG P.J.S.C., a subsidiary of Abu Dhabi National Oil Co., or ADNOC, which is looking to grow a global gas business. ADNOC, through its investment arm XRG, with Abu Dhabi Development Holding Co. and U.S.-based private-equity firm Carlyle, made the US$18.7 billion proposal for the acquisition of all of the ordinary shares on issue in Santos. The cash offer of US$5.76 per share, represented a 28% premium to the Australian company's close on June 13.
The Santos board confirmed that, subject to reaching agreement on acceptable terms of a binding scheme implementation agreement, or SIA, it "intends to unanimously recommend that Santos shareholders vote in favor of the potential transaction, in the absence of a superior proposal and subject to an independent expert concluding, and continuing to conclude, that the potential transaction is fair and reasonable and in the best interests of Santos shareholders."
"Credit to Gallagher for extracting such a premium offer -- he will have earned the payout of his ensuing incentives in doing so," Saul Kavonic, an energy analyst at MST Marquee, said in a note after the offer was announced. "Gallagher has found his escape parachute and it's made of gold."
The proposal is subject to the satisfactory completion of confirmatory due diligence by the XRG Consortium and the negotiation and execution of an SIA with Santos on customary terms and conditions, Santos said in its June 16 release. Later Santos agreed to an exclusive extension until Aug. 22.
In the Aug. 27 live webcast, Santos said it has agreed to a further extension of the exclusivity period for a potential acquisition by the consortium. They have until Sept. 19.
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