The Santos Ltd (ASX: STO) share price is having a positive session on Thursday.

In morning trade, the energy giant's shares are up 1.5% to $7.24.

This follows the release of the company's fourth quarter and full year update before the market open.

Santos share price higher on Q4 update

For the three months ended 31 December, Santos revealed that it achieved a 10% increase in sales revenue to more than US$1.4 billion.

Management notes that this reflects improved PNG LNG and GLNG production together with higher Western Australian crude and condensate sales, due to timing of Varanus Island and Pyrenees cargoes.

This means that sales revenue was approximately US$5.4 billion for the full year, which represents a 5% decline year on year.

Underpinning this result was a 1% decline in production to 21.5 mmboe for the fourth quarter and a 5% decline in full year production to 87.1 mmboe.

Strong cash flow

The good news is that things were positive for the company's cash generation. Santos reported strong fourth quarter free cash flow from operations of ~US$430 million. This took its free cash flow from operations to US$1.9 billion for the full year.

Management notes that its free cash flow breakeven price was less than US$33.50 per barrel for the full year unhedged.

Commenting on its cash generation, CEO Kevin Gallagher said:

The fourth quarter brought free cash flow for the full year to US$1.9 billion which positions the company well to deliver shareholder returns, backfill and sustain our existing business, complete our major projects, Barossa and Pikka, and progress our decarbonisation plans.

Outlook

Santos has provided guidance for FY 2025. It is expecting:

• Production volumes of 90-97 mmboe
• Sales volumes of 92-99 mmboe
• Unit production costs of US$7.00 to US$7.50 per barrel

The company's CEO appears optimistic on the year ahead. He adds:

Our operational focus for 2025 will be to deliver our Barossa and Pikka projects within cost and schedule guidance. I am very pleased that we are making excellent progress towards first gas at Barossa in the third quarter of this year and first oil at Pikka in Alaska in 2026. The Barossa Gas Project is almost 90 per cent complete and advancing to its final stages. The Pikka project is almost 75 per cent complete, with the second winter season pipelay activities underway and strong progress achieved to date. For both projects, well results are in line with pre-drill expectations.

In 2025 we will continue to focus on safety, delivering our development projects, decarbonising our operations and building a commercial carbon management services business, as well as becoming a leaner and more efficient organisation.