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Santos Ltd STO

Rating as of

Morningstar’s Analysis

Valuation
Currency in AUD
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

No-Moat Santos Generates Strong Quarterly Cash Flow Again. No Change to AUD 10.30 FVE.

Mark Taylor Senior Equity Analyst

Analyst Note

| Mark Taylor |

We make no change to our AUD 10.30 fair value for no-moat Santos. Australia’s largest domestic gas producer reported second-quarter 2021 production of 22.5 million barrels of oil equivalent, or mmboe, close to expectations. This was 9% below the first quarter, but only due to flagged sell-down of 25% equity interest in Bayu-Undan and Darwin LNG on April 30, 2021. Otherwise production was marginally higher overall including stronger gas output from Western Australia and Queensland.

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Company Profile

Business Description

Santos was founded in 1954. The company's name is an acronym for South Australia Northern Territory Oil Search. The first Cooper Basin gas discovery came in 1963, with initial supplies in 1969. Santos became a major enterprise, though over-reliance on the Cooper Basin, along with the Moomba field's inexorable decline, saw it struggle to maintain relevance in the first decade of the 21st century. However, the stage has been set for a renaissance via conversion of coal seam gas into LNG in Queensland and conventional gas to LNG in PNG.

Contact
60 Flinders Street, Ground Floor Santos Centre
Adelaide, SA, 5000, Australia
T +61 881165000
Sector Energy
Industry Oil & Gas E&P
Most Recent Earnings
Fiscal Year End Dec 31, 2020
Stock Type
Employees 2,722

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