Australian oil and gas producer Santos forecast higher 2026 production on Thursday, as it ramps up output at its Barossa liquefied natural gas project and starts producing oil from its Pikka project.

The country's second-largest independent gas producer expects output of between 101-million and 111-million barrels of oil equivalent for the 12 months ending December 31, compared with its 2025 output of 87.7-mmboe and Visible Alpha's consensus estimate of 108.5-mmboe.

Shares of the company rose 2.3% to A$6.195 by 2353 GMT, while the broader S&P/ASX 200 benchmark index advanced 0.7%.

Santos said its Pikka phase 1 project in Alaska was 98% complete at the end of the quarter. The project is on track to produce first oil late in the first quarter of 2026 with an initial oil rate of about 8 000 barrels of oil per day.

The company added its share of capital expenditure for Phase 1 of the project had increased by $200-million, mainly reflecting inflationary pressure on labour and materials.

Santos added it was focusing on increasing gas production from its Barossa LNG project in Darwin, with the first cargo currently being loaded.

"Once at full rates, Barossa LNG and Pikka phase 1 together are expected to lift Santos' production by around 25 to 30 per cent by 2027 compared to 2024 levels," CEO Kevin Gallagher said in a statement.

The Adelaide-based company also posted a 9% sequential rise in fourth-quarter revenue to $1.23-billion, due to higher LNG and condensate sales volumes. That was largely in line with Visible Alpha's consensus estimate of $1.25-billion.

Sales volumes were higher than in the September quarter, driven by improved production at Cooper Basin as it recovered from flood-related disruptions. Meanwhile, gas production from Western Australia rose after planned shutdown activities during the prior quarter.

The fourth-quarter revenue, however, was 12% lower than last year mainly due to lower prices. Its average realised crude oil price fell nearly 16% to $66.66 per barrel, and the realised LNG price fell to $10.33 per million British thermal units (mmBtu) from $12.39 per mmBtu the prior year.

Santos' quarterly production of 22.3 million barrels of oil equivalent missed the Visible Alpha consensus estimate of 23.1 mmboe.