The company made a loss of $US1.05 billion in 2016.
Excluding the significant items, underlying profit in 2017 jumped nearly five-fold to $336 million, as gas prices improved and Santos reduced its operating costs.
Chief executive Kevin Gallagher said the results demonstrated a significant turnaround in performance for Santos.
“We have removed substantial costs, reported a material increase in underlying profit, generated significant free cash flow and reduced net debt,” he told analysts.
Production and sales volumes were slightly lower in 2017, though sales still beat guidance of 79 to 82 million barrels of oil equivalent.
Revenue rose 21 per cent from 2016 to $US3.2 billion, driven by a 25 per cent improvement in average realised oil prices, and a ramp-up at the Gladstone LNG project.
The company has maintained its previously outlined guidance for 2018, including sales of between 77 and 82 mmboe.
Santos said it cut net debt by 22 per cent during the year to $US2.73 billion, and its board had decided not to pay a final dividend, given its focus on debt reduction.
Gallagher said the board will consider capital management strategies to return value to shareholders if market conditions remain supportive and the company achieves its debt reduction target ahead of plan.
Santos shares were down 13 cents, or 2.5 per cent, at $5.05 at 1150 AEDT.
SANTOS NARROWS ITS FULL-YEAR LOSS
NET loss of $US360 m vs $US1.05b loss
REVENUE up 21pct to $US3.2b
NO final dividend, unchanged
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