Santos Limited (STO) AI Stock Analysis

• Market Cap: $20.51B
• Dividend Yield: 6%
• Average Volume (3M): 9.42M
• Price to Earnings (P/E): 13.0
• Beta (1Y): 0.83
• Revenue Growth: -5.81%
• EPS Growth: -17.90%
• Country: AU
• Employees: 3,958
• Sector: Energy
• Sector Strength: 52
• Industry: Oil & Gas Exploration & Production
• EPS (TTM): 0.23
• Shares Outstanding: 3,247,773,000
• 10 Day Avg. Volume: 10,558,329
• 30 Day Avg. Volume: 9,424,773
• PEG Ratio: -0.95
• Price to Book (P/B): 0.87
• Price to Sales (P/S): 2.50
• P/FCF Ratio: 30.03
• Enterprise Value/Market Cap: 1.58
• Enterprise Value/Revenue: 6.16
• Enterprise Value/Gross Profit: 9.11
• Enterprise Value/Ebitda: 9.21
• 1Y Price Target: $7.26
• Price Target Upside: 16.49% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 8
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 65 Neutral
• Price Target: AU$6.50 ▲(4.33% Upside)

Santos Limited's overall stock score reflects strong financial and operational performance, as highlighted in the earnings call, and a reasonable valuation. However, technical analysis indicates bearish momentum, and financial performance is challenged by declining revenues and cash flow issues.

Positive Factors

Highly contracted LNG portfolio

A 92% contracted LNG portfolio with ~80% oil linkage through 2025–29 materially reduces volume and price exposure, supporting predictable cash flows and margins. This structural contract coverage underpins medium-term revenue visibility and de-risks capital allocation for projects.

Strong gross and net margins

Sustained gross margins above 60% and a healthy net margin (~22.7% in 2024) indicate durable cost advantages and pricing power in core operations. These margin levels provide buffer against commodity volatility and support long-term cash generation when production and contract coverage are maintained.

Progressing projects and production growth target

Execution on Barossa, Darwin LNG readiness and accelerated Alaska schedules, plus a stated target of ~30% production growth by 2027, point to expanding scale and potential unit cost reduction. Successful delivery would strengthen long-term earnings durability and competitive position.

Negative Factors

Declining revenue trend

An 8.2% revenue drop in 2024 versus 2023 signals slowing top-line momentum that can pressure reinvestment and dividends. If sustained, falling revenue reduces scale economies and raises dependency on asset sales or higher-margin contracts to preserve profitability and cash generation.

Sharp free cash flow decline and missing OCF data

A ~49.5% fall in free cash flow and absent operating cash flow disclosure for 2024 raise concerns about sustainable cash generation and transparency. Weaker FCF constrains capacity to fund growth, service debt, and pay dividends without relying on asset sales or higher commodity prices.

Asset impairments and operational disruptions

Flood-related production hits and a $119m E&E impairment in PNG reveal execution and asset-quality risks. Such one-offs erode reported reserves and capital efficiency, and operational disruptions may recur, undermining medium-term production targets and raising volatility in earnings and cash flow.

Santos Limited Business Overview & Revenue Model

Company Description

Santos Limited explores for, develops, produces, transports, and markets hydrocarbons for homes and businesses in Australia and the Asia Pacific. Its five principal assets are located in the Cooper Basin, Queensland and NSW, Papua New Guinea, Northern Australia and Timor-Leste, and Western Australia. The company also holds an asset in Alaska; and engages in the development of carbon capture and storage technologies. In addition, it produces natural gas, liquefied petroleum gas, ethane, methane, coal seam gas, liquefied natural gas, shale gas, and condensate, as well as oil. The company's proved plus probable reserves include 1676 million barrels of oil equivalent. Santos Limited was incorporated in 1954 and is headquartered in Adelaide, Australia.

How the Company Makes Money

Santos Limited generates revenue primarily through the exploration, production, and sale of oil and natural gas. The company earns money by extracting hydrocarbons from its various projects, which are then sold to domestic and international markets. Key revenue streams include crude oil sales, natural gas sales, and liquefied natural gas (LNG) exports. Additionally, Santos benefits from long-term contracts with major customers, which provide a stable income base. The company has significant partnerships and joint ventures with other energy firms, enhancing its operational capacity and market reach. Factors contributing to its earnings include global oil and gas prices, production efficiency, and strategic asset management.

Santos Limited Financial Statement Overview

Summary

Santos Limited shows strong profitability with high gross profit margins and a solid equity base. However, declining revenues and reduced cash flow generation present challenges, necessitating strategic improvements in revenue growth and cash management.

Income Statement

Santos Limited has shown strong gross profit margins, consistently above 60% in recent years, indicating effective cost management. However, there is a notable decline in total revenue from 2022 to 2024, with a revenue decrease of 8.2% in 2024 compared to 2023. The net profit margin in 2024 is 22.7%, slightly lower than 24% in 2023, showing solid profitability despite revenue challenges. EBIT margin data for 2024 is missing, but EBITDA margins remain healthy. Overall, strong profitability metrics are tempered by declining revenue trends.

Balance Sheet

The company maintains a stable balance sheet with a debt-to-equity ratio of 0.43 in 2024, reflecting manageable leverage. The equity ratio of 52.4% indicates a strong equity base. However, the return on equity has decreased to 7.9% in 2024 from 9.3% in 2023, suggesting a decline in efficiency at generating profits from equity. The balance sheet remains robust, with consistent asset management, albeit with some pressure on equity returns.

Cash Flow

Santos Limited experienced a significant decline in free cash flow from 2023 to 2024, dropping by 49.5%, highlighting potential cash flow management challenges. Operating cash flow data is missing for 2024, making it difficult to fully assess cash generation capabilities. Despite this, the company has maintained positive free cash flow, though at reduced levels, suggesting a need for improved cash flow management to support financial stability.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	5.27B	5.40B	5.89B	7.79B	4.71B	3.39B
Gross Profit	3.56B	3.70B	2.22B	5.64B	1.59B	1.76B
EBITDA	3.52B	3.67B	3.97B	4.97B	2.65B	941.00M
Net Income	1.03B	1.22B	1.42B	2.11B	658.00M	-357.00M
Balance Sheet
Total Assets	29.88B	29.63B	29.76B	28.86B	31.02B	17.66B
Cash, Cash Equivalents and Short-Term Investments	1.83B	1.86B	2.28B	2.46B	2.97B	1.32B
Total Debt	6.79B	6.69B	6.16B	5.52B	8.02B	5.00B
Total Liabilities	14.17B	14.10B	14.48B	14.01B	17.45B	10.43B
Stockholders Equity	15.71B	15.54B	15.28B	14.84B	13.57B	7.23B
Cash Flow
Free Cash Flow	694.00M	449.00M	889.00M	2.15B	1.07B	1.29B
Operating Cash Flow	2.96B	2.85B	3.26B	3.86B	2.14B	1.48B
Investing Cash Flow	-2.47B	-2.69B	-2.90B	-1.67B	-137.00M	-1.46B
Financing Cash Flow	-307.00M	-206.00M	-860.00M	-3.40B	-481.00M	246.00M

Santos Limited Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 6.23
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:STO, the sentiment is Negative. The current price of 6.23 is above the 20-day moving average (MA) of 6.10, below the 50-day MA of 6.33, and below the 200-day MA of 6.73, indicating a neutral trend. The MACD of -0.03 indicates Negative momentum. The RSI at 51.37 is Neutral, neither overbought nor oversold. The STOCH value of 83.84 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AU:STO.

Santos Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WDS	71 Outperform	AU$45.62B	10.01	8.51%	7.16%	17.13%	61.35%
KAR	67 Neutral	$1.18B	5.94	13.85%	4.74%	-17.02%	-35.47%
Sector *	65 Neutral	$15.17B	7.61	4.09%	5.20%	3.87%	-62.32%
STO	65 Neutral	$20.51B	12.97	6.59%	6.00%	-5.81%	-17.90%
BPT	60 Neutral	AU$2.62B	-59.11	-1.02%	7.72%	17.16%	90.79%
TBN	51 Neutral	AU$827.57M	-10.30	-14.41%	―	―	―
STX	50 Neutral	AU$413.93M	-2.09	-42.02%	―	59.48%	-1714.71%

Santos Limited Corporate Events

Santos CEO Kevin Gallagher Receives Unrestricted Shares from Deferred Incentive Plan

Santos Limited has reported a change in the indirect interests of its Managing Director and CEO, Kevin Gallagher, following the release of previously restricted shares awarded under the company’s short-term incentive plan. On 1 January 2026, 146,253 fully paid ordinary shares held on his behalf by the employee share plan trustee became unrestricted at the end of a two‑year restriction period tied to his 2023 deferred short-term incentive, and were transferred to him for no consideration, increasing his total indirect shareholding while leaving his share acquisition rights and other restricted shares unchanged. The move reflects ongoing alignment of executive remuneration with shareholder interests but does not involve any new cash outlay by the company or an on-market share transaction.

The most recent analyst rating on (AU:STO) stock is a Buy with a A$7.25 price target. To see the full list of analyst forecasts on Santos Limited stock, see the AU:STO Stock Forecast page.

Santos Names Long-Serving Executive Lachlan Harris as New CFO

Santos Limited has appointed long-serving executive Lachlan Harris as Chief Financial Officer, effective immediately, following his tenure as Acting CFO since October. Harris brings 15 years of experience with Santos across treasury, finance systems and risk, and has previously served as Deputy CFO and Treasurer, where he led initiatives such as a significantly oversubscribed US$1 billion 10-year bond offering. Chief Executive Kevin Gallagher highlighted Harris’s financial acumen, risk focus and leadership capabilities, positioning him to support Santos in executing its strategy and sustaining its low-cost model to drive long-term shareholder value.

The most recent analyst rating on (AU:STO) stock is a Buy with a A$7.25 price target. To see the full list of analyst forecasts on Santos Limited stock, see the AU:STO Stock Forecast page.

Santos Limited Optimizes Portfolio with Strategic Asset Divestments

Santos Limited has announced the divestment of its 42.86% interest in the Mahalo Joint Venture to Comet Ridge Limited and has completed the sale of its interests in the Petrel and Tern fields to Eni Australia. These transactions are part of Santos’ strategy to optimize its portfolio by monetizing non-core assets, which are not immediate priorities, thereby reinforcing its capital discipline. The divestments are expected to enhance shareholder returns and reduce future decommissioning liabilities, while allowing partners to develop these assets for the Australian domestic gas market.

The most recent analyst rating on (AU:STO) stock is a Buy with a A$7.25 price target. To see the full list of analyst forecasts on Santos Limited stock, see the AU:STO Stock Forecast page.

Santos Limited Secures US$1 Billion Bond to Strengthen Growth

Santos Limited has successfully priced a US$1 billion senior unsecured fixed rate bond in the US dollar Rule 144A/Reg S market, with a 5.75% coupon maturing in November 2035. This transaction, supported by strong debt capital market backing, aims to maintain Santos’ robust balance sheet and liquidity, enabling disciplined growth and strong returns for shareholders.

The most recent analyst rating on (AU:STO) stock is a Hold with a A$6.76 price target. To see the full list of analyst forecasts on Santos Limited stock, see the AU:STO Stock Forecast page.

Santos Limited Reports Strong Q3 Performance and Strategic Advancements

Santos Limited reported a strong financial and operational performance for the third quarter of 2025, with a free cash flow of approximately $300 million and a year-to-date production of 65.4 mmboe. The company achieved significant milestones, including the commencement of the production phase at Barossa LNG and advancements in the Pikka phase 1 project, which is expected to boost production by 30% by 2027. Strategic partnerships and successful project completions highlight Santos’ focus on operational excellence and sustainable growth, positioning it well for future shareholder returns.

The most recent analyst rating on (AU:STO) stock is a Buy with a A$8.20 price target. To see the full list of analyst forecasts on Santos Limited stock, see the AU:STO Stock Forecast page.

Santos Limited Announces CFO Transition

Santos Limited announced the resignation of its Chief Financial Officer, Ms. Sherry Duhe, who played a pivotal role in cost reduction and business improvements. Mr. Lachlan Harris, with extensive experience in finance roles at Santos, has been appointed as Acting CFO, ensuring continuity in leadership and financial strategy.

The most recent analyst rating on (AU:STO) stock is a Buy with a A$8.20 price target. To see the full list of analyst forecasts on Santos Limited stock, see the AU:STO Stock Forecast page.