Most analysts remain positive on Santos stock, but a lot rests on securing final approvals for the company’s growth gas project in the Timor Sea.
Santos remains strikingly popular among most energy equity analysts, despite being the target of activist campaigns by green groups and agitated investors.to temporarily prevent the oil and gas producer from starting work on an underwater pipeline that is critical for its $5.8 billion Barossa gas project in the Timor Sea added to the woes at one of its two biggest growth ventures.
Barrenjoey’s Dale Koenders values the Barossa project at 96¢ a share for Santos, taking into account an assumed 12-month delay and a 20 per cent increase in the capital cost. He reiterated the firm’s overweight recommendation on Santos stock late last week, with a price target of $8.70 on the shares.Barrenjoey is one of 11 analysts tracking the stock with a positive call on Santos, with three taking a neutral position. There are no “sells”, with price targets ranging from $7.95 to $12.30.
He also identifies optimism from a rising exposure to LNG spot prices and an increasing weighting in LNG which may start to persuade global investors to consider the stock.Yet, he notes “real problems” in “every single Santos asset”, including a steep drop-off in its West Australian gas production, and all-out efforts being required to prevent declines at its Cooper Basin and GLNG operations.
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