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Santos Limited
(Sydney:STO)
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Rating:64Neutral
Price Target:
AU$10.00
▲(22.70% Upside)
Action:Reiterated
Date:08/19/26
The score is driven primarily by mixed financial performance (still profitable, but weakening revenue/returns with higher leverage and pressured free cash flow), partially offset by strong technical uptrend signals. Valuation is moderately supportive via the dividend but not outright cheap on P/E, while the latest earnings call adds a constructive outlook for stronger H2 production and cash generation despite near-term balance-sheet and commissioning/ramp-up risks.
Positive Factors
Production growth projects
Barossa and Pikka provide visible production growth beyond the current period, with both projects already operating and defined ramp targets. Higher volumes should expand revenue and operating cash generation, helping Santos improve scale and support debt reduction over the next several quarters.
Negative Factors
Revenue and earnings decline
The multi-year contraction in revenue and earnings indicates weakening recent earnings power despite still-healthy margins. Unless production growth offsets the decline, lower scale can constrain reinvestment, reduce returns on equity, and make future cash generation more dependent on commodity prices.
Read all positive and negative factors
Positive Factors
Negative Factors
Production growth projects
Barossa and Pikka provide visible production growth beyond the current period, with both projects already operating and defined ramp targets. Higher volumes should expand revenue and operating cash generation, helping Santos improve scale and support debt reduction over the next several quarters.
Read all positive factors
Santos Limited (STO) vs. iShares MSCI Australia ETF (EWA)
Market Cap
AU$29.58B
Dividend Yield3.37%
Average Volume (3M)10.63M
Price to Earnings (P/E)28.2
Beta (1Y)0.13
Revenue Growth-8.49%
EPS Growth-31.47%
CountryAU
Employees4,028
SectorEnergy
Sector Strength52
IndustryOil & Gas Exploration & Production
Share Statistics
EPS (TTM)0.23
Shares Outstanding3,247,773,000
10 Day Avg. Volume10,612,986
30 Day Avg. Volume10,634,858
Financial Highlights & Ratios
PEG Ratio-0.75
Price to Book (P/B)1.28
Price to Sales (P/S)3.80
P/FCF Ratio31.11
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
AU$9.37Price Target Upside14.97% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
EPS Forecast (FY)0.54
Revenue Forecast (FY)AU$7.08B
Santos Limited Business Overview & Revenue Model
Company Description
Santos Limited explores, develops, produces, transports, and markets hydrocarbons in Australia and Papua New Guinea. The company’s assets are located in the Alaska, Cooper Basin, Queensland and New South Wales, Papua New Guinea, Northern Australia...
How the Company Makes Money
Santos makes money primarily by producing and selling hydrocarbons—natural gas (including LNG), crude oil, condensate, and natural gas liquids—generated from its operated and non-operated assets. Revenue is earned through (1) domestic gas sales: l...
Santos Limited Earnings Call Summary
Earnings Call Date:Aug 18, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Feb 23, 2027
Earnings Call Sentiment Positive
The call presents a constructive and forward-looking picture: Santos brought major growth projects online (Pikka, Barossa), delivered strong plant reliability and safety, declared a dividend, and set clear targets (breakeven $45–$50/bbl, $2.5bn net debt reduction by 2030). Near-term H1 cash generation was constrained by expected commissioning costs, cargo timing and an underlift position, and gearing remains above target, but management expects these effects to unwind and for materially stronger cash generation in H2 as Barossa and Pikka ramp towards plateau and realized LNG pricing improves. Overall the positives (project starts, rising H2 guidance, operational reliability, pricing tailwinds and disciplined capital framework) outweigh the near-term lowlights tied largely to timing and commissioning.Positive Updates
Revenue, EBITDAX and Dividend
Sales revenue of $2.6 billion, EBITDAX of $1.6 billion and declared interim dividend of USD 0.116 per share; free cash flow from operations was $378 million (affected by commissioning and timing items).
Negative Updates
H1 Free Cash Flow Impacted by Commissioning and Timing
Free cash flow from operations of $378 million in H1 was reduced by commissioning costs at Barossa and Pikka, timing of cargo receipts (around $300 million of Barossa/PNG cargo proceeds received after period end) and a PNG LNG underlift of ~1.3 million boe that will reverse in H2.
Read all updates
Q2-2026 Updates
Positive
Negative
Revenue, EBITDAX and Dividend
Sales revenue of $2.6 billion, EBITDAX of $1.6 billion and declared interim dividend of USD 0.116 per share; free cash flow from operations was $378 million (affected by commissioning and timing items).
Read all positive updates
Company Guidance
The guidance from the call was that Santos expects materially stronger H2 cash generation with second‑half production ~20–30% higher than H1, supported by July’s stronger performance, and the Board declared an interim dividend of USD 0.116/share; H1 results were sales revenue $2.6bn, EBITDAX $1.6bn and free cash flow from operations $378m, with H1 production 45.6 million boe (up 3% y/y). Key operational targets include Pikka ramping from ~23,000 bbl/d gross in H1 to an ~80,000 bbl/d gross plateau by end‑Q3 (first cargo 450,000 barrels lifted), Barossa’s six wells at ~300 mmscfd each with Barossa production ~550 mmscfd rising to ~600 mmscfd by quarter‑end and an ~8‑day cargo cadence, LNG sales 7.7 Mt gross, H1 LNG realized $10.95/MMBtu and crude realized ~$92/bbl, unit production cost $7.53/boe (target < $7/boe over time) and LNG upstream unit cost $6.80/boe. Balance sheet and risk metrics: net debt ≈ $6bn, liquidity $3.8bn, gearing 28.1% incl leases (23.2% excl) with no maturities before Sep‑2027, target gearing 15–25% and $2.5bn net‑debt reduction by 2030; free‑cash‑flow breakeven $45–50/bbl to 2030 (operational breakeven < $35/bbl) and sensitivity that each $10 Brent above breakeven lifts FCF from ~ $400m today to ~$550–600m at plateau. H2 hedges: 11.5m bbl zero‑cost collars (floor $67.10, avg cap $98.59); FX hedges AUD975m at $0.643 (H2) and ~AUD1.5bn at $0.658 (2027).Santos Limited Financial Statement Overview
Summary
Income Statement
63
Positive
Balance Sheet
60
Neutral
Cash Flow
52
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.10B | 5.26B | 5.40B | 5.89B | 7.79B | 4.71B |
| Gross Profit | 1.25B | 1.62B | 3.70B | 2.22B | 5.64B | 1.59B |
| EBITDA | 2.07B | 3.46B | 3.81B | 4.15B | 5.28B | 2.70B |
| Net Income | 735.89M | 846.53M | 1.22B | 1.42B | 2.11B | 658.00M |
Balance Sheet | ||||||
| Total Assets | 30.52B | 32.05B | 29.63B | 29.76B | 28.86B | 31.02B |
| Cash, Cash Equivalents and Short-Term Investments | 1.13B | 1.72B | 1.86B | 2.28B | 2.46B | 2.97B |
| Total Debt | 7.36B | 7.54B | 6.69B | 6.16B | 5.52B | 8.02B |
| Total Liabilities | 14.82B | 16.37B | 14.10B | 14.48B | 14.01B | 16.40B |
| Stockholders Equity | 15.70B | 15.68B | 15.54B | 15.28B | 14.84B | 13.57B |
Cash Flow | ||||||
| Free Cash Flow | 256.65M | 642.66M | 449.00M | 889.00M | 2.15B | 1.07B |
| Operating Cash Flow | 1.85B | 2.65B | 2.85B | 3.26B | 4.56B | 2.27B |
| Investing Cash Flow | -1.61B | -1.99B | -2.69B | -2.90B | -1.67B | -137.00M |
| Financing Cash Flow | -978.11M | -818.58M | -206.00M | -860.00M | -3.40B | -481.00M |
Santos Limited Technical Analysis
Positive
8.15
Price Trends
8.63
Positive
8.05
Positive
7.68
Positive
Market Momentum
0.17
Positive
58.68
Neutral
55.36
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:STO, the sentiment is Positive. The current price of 8.15 is below the 20-day moving average (MA) of 8.96, below the 50-day MA of 8.63, and above the 200-day MA of 7.68, indicating a bullish trend. The MACD of 0.17 indicates Positive momentum. The RSI at 58.68 is Neutral, neither overbought nor oversold. The STOCH value of 55.36 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AU:STO.
Santos Limited Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | AU$62.17B | 14.49 | 8.55% | 4.98% | -9.52% | -0.68% | |
67 Neutral | AU$76.14M | 5.53 | 13.95% | 2.84% | -45.07% | 297.79% | |
65 Neutral | $15.17B | 7.61 | 4.09% | 5.20% | 3.87% | -62.32% | |
65 Neutral | AU$1.20B | 7.17 | 12.15% | 2.51% | -19.58% | -39.27% | |
64 Neutral | AU$29.58B | 28.17 | 4.69% | 3.37% | -8.49% | -31.47% | |
63 Neutral | AU$2.12B | 7.61 | 8.74% | 3.23% | -8.77% | ― | |
43 Neutral | AU$361.93M | -15.86 | -9.91% | ― | ― | 28.92% |
* Energy Sector Average
AU:STO
Santos Limited
9.13
3.01
49.28%
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AU:WDS
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Santos Limited Corporate Events
Santos Issues Over 2.3 Million Unquoted Employee Share Rights
Oct 14, 2026
Santos Limited has notified the market of the issue of 2,336,181 unquoted share acquisition rights under an employee incentive scheme. The rights, which are not intended to be quoted on the ASX, were issued on July 14, 2026 and reflect ongoing use...
Santos Issues New Shares After Conversion of Unquoted Securities
Oct 14, 2026
Santos Limited has notified the market of the issue of 9,627 ordinary fully paid shares following the conversion or exercise of previously unquoted equity securities. The new shares, tied to unquoted options or convertible instruments exercised on...
Santos Reports Lapse of Share Acquisition Rights Under Sharematch Plan
Oct 14, 2026
Santos Limited has notified the market of the cessation of a tranche of share acquisition rights under its Sharematch plan. A total of 37,855 Share Acquisition Rights, trading under the code STOAZ, have lapsed because the conditions attached to th...
Santos Issues Over 900,000 Unquoted Employee Share Rights
Oct 14, 2026
Santos Limited has notified the market of the issue of 907,313 unquoted share acquisition rights under its employee incentive scheme. The rights, classified as STOAZ SHARE ACQUISITION RIGHTS SHAREMATCH, were issued on 14 July 2026 and are not inte...
Santos Converts Unquoted Securities Into Ordinary Shares
Oct 14, 2026
Santos Limited has notified the market of the issue and transfer of 598,008 ordinary fully paid shares following the exercise or conversion of previously unquoted options or other convertible securities. The shares, recorded with an issue date of ...
Santos lifts Papua LNG stake as ExxonMobil takes operatorship
Sep 7, 2026
Santos Limited has agreed to acquire an additional 3.3 per cent participating interest in the Papua LNG project from TotalEnergies for about US$189 million, conditional on regulatory approvals and the project reaching final investment decision. Th...
Santos Hits Key Seawater Injection Milestone at Alaska Pikka Oil Project
Sep 2, 2026
Santos has achieved a key operational milestone at its Pikka oil project in Alaska with the successful start of seawater injection at the Nanushuk Drillsite-B. The seawater treatment plant is now exporting on-specification water through a 75-kilom...
Santos Updates FX Details for 2026 Interim Dividend Conversion
Sep 1, 2026
Santos Limited has updated its notification regarding the 2026 interim dividend on its ordinary fully paid shares, clarifying the exchange rates used to convert the U.S. dollar-denominated payout into various payment currencies. The update relates...
Santos lifts output and cash generation as Pikka and Barossa ramp up
Aug 18, 2026
Santos reported a solid first half of 2026, with production rising 3 per cent to 45.6 mmboe, sales revenue of $2.6 billion and EBITDAX of $1.6 billion, backed by record personal safety performance. Free cash flow from operations was $378 million, ...
Santos Declares Ordinary Dividend for June 2026 Period
Aug 18, 2026
Santos Limited has declared a six-month dividend on its ASX-listed ordinary fully paid shares, reflecting the financial period ended 30 June 2026. The distribution has been set at USD 0.116 per share, underlining continued cash returns to investor...
Santos Half-Year Profit Falls Despite Revenue Growth
Aug 18, 2026
Santos Limited reported revenue from ordinary activities of US$2,620 million for the half-year ended 30 June 2026, a modest 2% increase year on year. However, statutory net profit attributable to members fell 19% to US$355 million, while underlyin...
Santos schedules webcast for 2026 half-year results
Aug 9, 2026
Santos has scheduled the release of its 2026 half-year financial results for 19 August 2026, with a webcast and conference call to brief investors and analysts on the company’s performance. Managing Director and CEO Kevin Gallagher, CFO Lach...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.