Ousted Santos exec Sherry Duhe raised concerns about valuations as tension with the CEO grew
Santos’ departed executive, Sherry Duhe, challenged the energy giant’s financial modelling before her dramatic exit amid claims leadership tensions were the ‘tip of the iceberg’.
Ousted Santos executive Sherry Duhe raised concerns about the oil and gas producer’s valuation and modelling assumptions, coinciding with a move to shift key parts of the chief financial officer remit to strategy chief Tracey Winters.
Sources said the explanation that Ms Duhe’s exit was triggered by her speaking out over the leadership style of chief executive Kevin Gallagher was only the “tip of the iceberg”.
Ms Duhe questioned Santos’s asset valuations and model input assumptions at a time when the company’s finances and operations were under the spotlight after it recommended a $30bn takeover from Abu Dhabi’s XRG in June.
A plan to “lift and shift” the planning and economic part of the finance function to the strategy unit, led by Ms Winters, was floated in June.
Ms Duhe raised concerns over the move on the grounds it obscured the finance team’s ability to provide assurances for areas including corporate valuations, writedowns and both decommissioning and remediation provisions.
The issue was raised with Mr Gallagher, Ms Winters and people executive Kim Lee but remained unresolved. Members of the finance team also expressed concerns over the restructure, according to sources.
The official transfer of the function to Ms Winters was due to take place on November 1.
Asked about the allegations, a Santos spokeswoman said: “We have no further comment to make on Sherry Duhe’s resignation beyond what was said in the ASX announcement.”
Ms Duhe, widely viewed as a potential successor to Mr Gallagher, announced her unexpected exit last week, with Santos explaining she resigned to “pursue other interests”.
MST Marquee analyst Saul Kavonic said an initial explanation of a leadership or cultural clash may mask deeper issues at the company.
“There are signs the Santos governance debacle may extend beyond style or cultural issues to the point of calling into question the integrity of Santos audit and risk processes, disclosures, and the effectiveness of the board in exercising director duties.”
The former CFO sent a three-page letter to chair Keith Spence outlining a list of grievances.
“I gave Santos my best shot, but in the end just couldn’t reconcile my leadership style to Kevin’s,” Ms Duhe wrote in an email to colleagues last week.
The experienced executive, who previously worked at Newcrest Mining and Woodside Energy, said both Mr Gallagher and Ms Lee urged her to reconsider her decision to resign.
However, Mr Spence stepped in and said she should leave.
Mr Gallagher, who has led Santos since 2016, thanked Ms Duhe for her “significant contribution”, citing her leadership in driving cost reductions and operational improvements.
One ex-employee said a culture of fear – “it was the Kevin way or the highway” – had stunted a succession pipeline from senior to middle management, while a series of organisational changes every few years had put the company in a state of constant churn.
The messy departure of a senior executive who had been tipped as part of the succession plan has sharpened investor concerns over governance and continuity at the Adelaide-based producer.
Santos has faced a steady drain of senior talent in recent years. In 2024, long-serving executive Brett Woods left to become chief executive of Seven Group-backed Beach Energy, while Jane Norman left the previous year to take the top job at Cooper Energy.
Several other exits have eroded the ranks of potential internal successors. The company has long insisted that movement reflects the strength and depth of its leadership bench.
The leadership reshuffle comes as Santos faces mounting investor pressure to lift its share price and restore confidence after the failed merger.
Mr Gallagher has highlighted two new projects expected to significantly expand production, but the company remains under intense domestic scrutiny over its gas exports and environmental strategy.
The collapse of the XRG takeover was triggered after Mr Spence laid out details on a surprise withholding tax charge in Papua New Guinea that ADNOC was expected to pay.
He also addressed the issue of holding off sending the scheme booklet to shareholders until Foreign Investment Review Board approvals had been given. And an expected FIRB condition for the new owner to develop and supply gas to the domestic market also received an airing.
From the Santos side, these were classed as “risk allocation” issues it had repeatedly raised with ADNOC’s bidding vehicle, the XRG consortium, but had been ignored. For Abu Dhabi, the issues raised by the Santos chair raised a new risk threshold.
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