Energy producers had a tough 18 months since the collapse in the oil price. Santos share price is no exception. The market sentiment has turned against Santos given the lower spot and forward oil prices and the leveraged balance sheet from financing its 13.5% in the PNG LNG project.
We like LNG growth story as a cleaner alternative to coal. Yes there is immediate supply glut but the medium and long term demand is still intact. We hold Woodside and Origin in our portfolio but keep tabs on Santos as a trading comp.
Key points we are focusing on at ASX:STO:
Total net debt of $6.5 billion on balance sheet with capital expenditure trending down after the completion of the LNG train.
Net debt is expected to be flat at US$32 per bbl
STO Share Price Performance
STO and ORG trades closely. The year to date out performance of these two against WPL can be attributed to the under performance it had last year.
Santos Dividend History
STO dividend was cut after the balance sheet impairment. It is not expected to grow unless there is a material recovery in the oil price.