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Santos Limited (SSLZY)
OTHER OTC:SSLZY
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Santos
(OTC:SSLZY)
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Rating:66Neutral
Price Target:
$5.00
â–²(25.63% Upside)
Action:ReiteratedDate:02/19/26
The score is primarily held back by weakening fundamentals—multi-year revenue declines, softer free cash flow, and higher 2025 leverage—despite ongoing profitability and operating cash generation. Technicals are mildly supportive but mixed, while valuation is helped by the ~4.68% dividend yield. The latest earnings call adds support through constructive guidance and project ramp visibility, tempered by cost/breakeven and execution risks.
Positive Factors
Cash generation & profitability
Santos' sizeable operating cash generation and strong EBITDAX show durable ability to fund capex, service liabilities and pay dividends across cycles. Consistent operating cash supports investment optionality and shareholder returns even if commodity prices fluctuate, underpinning medium-term resilience.
Balance sheet liquidity & funding
Material liquidity and proactive funding actions strengthen financial flexibility, lowering short-term refinancing risk and enabling disciplined capital allocation. This liquidity cushion complements stated gearing targets and supports project commissioning and potential opportunistic investments during 2-6 month horizons.
Project delivery and scale optionality
Reliable delivery of major projects proves execution capability and drives sustainable production uplifts. Successful ramps (Barossa, Pikka) materially increase future volume and cash sensitivity per management, supporting a multi-year production target and strengthening long-term earnings and resource monetization prospects.
Negative Factors
Multi-year revenue decline & weaker FCF
Sustained top-line declines and weakening free cash flow reduce internal funding for growth and de-leveraging. Over a 2-6 month horizon this constrains capital allocation flexibility, increases reliance on liquidity or markets for funding, and limits the firm’s buffer against commodity downturns.
Rising leverage
Higher debt levels weaken financial flexibility in a cyclical industry, increasing refinancing and covenant risk if prices soften. Even with sizeable liquidity and targets to reduce gearing, elevated leverage limits ability to fund new projects or accelerate shareholder returns without weighing on credit metrics.
High all-in breakeven and execution sensitivity
A high all-in breakeven point makes cash generation highly sensitive to commodity prices; combined with commissioning snags and Pikka cost pressure, execution and cost overruns can quickly erode margins. This elevates near-term cash volatility and complicates de‑risking and return targets.
Santos (SSLZY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$15.10B
Dividend Yield5.38%
Average Volume (3M)7.15K
Price to Earnings (P/E)18.6
Beta (1Y)0.65
Revenue Growth-7.44%
EPS Growth-19.13%
CountryUS
Employees3,958
SectorEnergy
Sector Strength52
IndustryOil & Gas Exploration & Production
Share Statistics
EPS (TTM)0.12
Shares Outstanding3,247,773,000
10 Day Avg. Volume9,345
30 Day Avg. Volume7,151
Financial Highlights & Ratios
PEG Ratio-0.47
Price to Book (P/B)0.85
Price to Sales (P/S)2.61
P/FCF Ratio21.37
Enterprise Value/Market Cap1.49
Enterprise Value/Revenue4.50
Enterprise Value/Gross Profit14.02
Enterprise Value/Ebitda7.15
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Santos Business Overview & Revenue Model
Company DescriptionSantos 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 MoneySantos generates revenue primarily through the sale of hydrocarbons, including natural gas, LNG, and crude oil. The company benefits from long-term contracts and spot market sales, which diversify its revenue streams. Key revenue streams include domestic gas sales to power generators, industrial users, and gas retailers, as well as international LNG exports primarily to Asia. Additionally, Santos has strategic partnerships and joint ventures with other energy companies, enhancing its operational capabilities and market access. Fluctuations in global commodity prices and demand dynamics also significantly impact its earnings.
Santos Earnings Call Summary
Earnings Call Date:Feb 17, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Aug 25, 2026
Earnings Call Sentiment Positive
The call conveyed a largely positive tone: Santos demonstrated strong cash generation, robust balance sheet metrics, industry-leading safety and reliability, successful delivery of major projects (Barossa, Moomba CCS), and clear mid-term growth optionality (Beetaloo, Bedout, Papua). Operational setbacks (Barossa commissioning issues), regional disruption (Cooper flood), higher-than-expected costs on Pikka, and sensitivity to commodity prices and all-in breakeven in 2025 were acknowledged but framed as manageable within a disciplined capital framework. Overall, the highlights notably outweigh the lowlights.Q4-2025 Updates
Positive Updates
Strong Cash Generation and Profitability
Free cash flow from operations of $1.8 billion, EBITDAX of $3.4 billion and underlying profit after tax of $898 million. Product sales revenue exceeded $4.9 billion and gross profit margin was 33.7%.
Disciplined Balance Sheet and Liquidity
Gearing finished the year at 26.9% including leases (21.5% excluding leases). Approximately $4.3 billion of liquidity (cash + undrawn facilities). Early repayment of PNG LNG project financing and successful $1 billion 10-year bond issuance strengthened funding profile.
Shareholder Returns and Dividend Growth
Total dividends of $770 million for 2025; final dividend declared $0.0103 per share (equivalent to 48% of H2 free cash flow from operations). Total returned to shareholders $0.0237 per share, representing 43% of free cash flow from operations. Compound annual dividend growth >13% over the last 7 years.
Low-Cost Operating Model and Unit Cost Improvement
Record low unit production cost of $6.78 per BOE (lowest in a decade). Overall unit production costs improved by ~5% year-on-year. Company targeting sub-$7 per BOE ongoing and an all-in free cash flow breakeven target of $45–$50 per barrel.
Operational Reliability and Safety
Outstanding safety outcomes with personal/process safety in top quartile; lowest lost time injury rate and record low TRIR. High facility reliability: GLNG plant >99.5% reliability, PNG LNG plant at capacity and averaging 8.6 mtpa run rate, Varanus Island ~99% reliability.
Delivery of Major Projects and Decarbonisation Progress
Barossa delivered within ~6 months of original planned start date without additional budget contingency and has started production (ramping to full rates). Moomba CCS Phase 1 delivered >900,000 ACCUs and Santos has already achieved its 2030 emissions target. Pikka Phase 1 achieved mechanical completion in January with ramp to plateau expected mid-year.
Operational Scale and Drilling Performance
296 wells drilled globally in 2025. Exceptional Alaska drilling performance (26 wells to date), record 10,000-foot horizontal section and combination wells delivering cost/time efficiencies. 20 development wells flowed back with expected average start-up rates ~7,000 bpd per well; one well showing ~8,000 bpd.
Portfolio and Growth Optionality
Diverse inventory: ~4.7 billion boe of reserves & contingent resources, 17-year 2P reserves life (10-year 1P). Appraisal programs planned in Beetaloo and Bedout with potential material resource additions; company expects production between 100–120 mmboe in near term and ~25% production uplift by 2027 from Barossa + Pikka.
Cost Savings and Efficiency Targets
Delivered ~$50 million of savings in 2025 and targeting an annual savings run rate of $150 million. Operational initiatives (e.g., IROC) expected to deliver recurring savings (~$5.5 million p.a.) and other maintenance/supply chain initiatives contributed incremental savings.
Negative Updates
Lower Commodity Prices and Impact on Underlying Profit
Underlying profit of $898 million was lower than prior year, primarily reflecting weaker commodity prices and a higher effective income tax rate.
High All-in Breakeven in 2025 and Need to Improve
All-in free cash flow breakeven was $58.90 per barrel in 2025 (operational breakeven $27.43 per barrel). Management is targeting an improved all-in breakeven of $45–$50 per barrel going forward, indicating current sensitivity to price.
Barossa Early Commissioning Issues and Temporary Production Limits
During commissioning Barossa experienced software and utility connections issues and compressor seal concerns. Management intentionally operated at ~half rates while changing compressor seals, delaying ramp to full rates by a few weeks.
Cost Pressure on Pikka Phase 1
Pikka Phase 1 experienced higher-than-expected costs due to inflation and high regional activity, leading management to acknowledge cost outcomes were worse than intended despite strong execution.
Cooper Basin Flooding and Operational Disruption
Record flood (since 1974) impacted >200 wells and several upstream compressor facilities; ~70% of impacted wells and facilities reinstated, >2,500 km of roads restored, but recovery work and delayed connections (30 wells ready for early 2026 connect) were required.
Ongoing Decommissioning Liability and Required Spend
Although ~$600–$700 million of decommissioning liability has been liquidated in recent years, ongoing decommissioning activity is expected at ~$200–$300 million per year and requires continued management and spend with limited direct return.
Workforce Reduction Headcount Impact
Company expects ~10% reduction in headcount across the business (from 2024 levels) in 2026 as projects transition to operations and as part of right-sizing, with associated human capital impacts.
Some Unit Cost Improvements Linked to FX Tailwinds
Record low unit costs were supported partly by FX tailwinds in addition to cost discipline, implying some portion of the improvement may be temporary if FX reverses.
Company Guidance
Management guided to an all‑in free cash‑flow breakeven of $45–50/boe (2025 all‑in was $58.90/boe; free‑cash‑flow breakeven from operations $27.43/boe), a unit production cost target of <$7/boe (2025 unit cost $6.78), an annual savings run‑rate target of $150m (c.$50m delivered in 2025), and a minimum 60% shareholder return of cash in excess of the all‑in breakeven (40% for de‑gearing/increased returns); near‑term operational guidance includes Barossa to reach full rates in the coming weeks and Pikka Phase 1 to hit plateau in Q2‑2026, a ~10% headcount reduction from 2024 levels in 2026 (included in the $150m savings), Beetaloo appraisal in 2026 targeting ~5 Tcf 2C, up to 3 Bedout wells in 2027, Bayu‑Undan CCS FEED‑complete and FID‑readiness by ~2H‑2027, and a Papua LNG FID target around mid‑2026 (costs cited ~$14–15bn); financial framework targets gearing of 15–25% (26.9% incl leases at FY25), liquidity ~ $4.3bn, free‑cash‑flow sensitivity rising from ~$400m to ~$550–600m per $10 Brent once Barossa and Pikka are online, and production sustained at 100–120 MMboe (FY25 production 87.7 MMboe) supported by ~4.7 billion boe resources and a 17‑year 2P life.Santos Financial Statement Overview
Summary
Solid profitability and consistently positive operating cash flow are positives, supported by a meaningful equity base. Offsetting these strengths are multi-year revenue declines, weaker/normalizing earnings versus the 2022 peak, weakening free cash flow, and a notable debt increase in 2025 that reduces flexibility in a cyclical commodity business.Income Statement
Profitability remains solid, with positive EBIT and net income through 2021–2025, and strong earnings power in 2022–2024. However, growth has turned consistently negative: revenue declined in 2023, 2024, and again in 2025, alongside a clear step-down in net income from the 2022 peak. Margins were very strong in 2022–2024, but the 2025 profile looks weaker (lower gross profit versus prior years), suggesting less favorable pricing/realizations or cost pressure.74
Positive
Balance Sheet
The balance sheet is supported by a sizable equity base (equity is roughly half of total assets in 2023–2025), which provides resilience for a cyclical commodity business. The key concern is leverage trending higher: total debt rose materially in 2025 versus 2024 and is also above 2023 levels, which reduces flexibility if the operating environment softens. Returns on equity were healthy in 2022–2024, but profitability has cooled in 2025, which makes the higher debt load more noteworthy.63
Positive
Cash Flow
Operating cash flow is consistently positive and sizeable, indicating the core business is generating cash even as revenue slows. That said, free cash flow has weakened versus prior years (down sharply from 2022 and negative growth again in 2024–2025), pointing to either higher spending needs or lower cash generation after investment. Cash conversion also looks less compelling than in 2022–2023, reducing the cushion for debt reduction or shareholder returns.60
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 5.09B | 5.40B | 5.89B | 7.79B | 4.71B |
| Gross Profit | 1.57B | 3.70B | 2.22B | 5.64B | 1.59B |
| EBITDA | 3.35B | 3.67B | 3.97B | 4.97B | 2.65B |
| Net Income | 818.86M | 1.22B | 1.42B | 2.11B | 658.00M |
Balance Sheet | |||||
| Total Assets | 32.03B | 29.63B | 29.76B | 28.86B | 31.02B |
| Cash, Cash Equivalents and Short-Term Investments | 1.72B | 1.86B | 2.28B | 2.46B | 2.97B |
| Total Debt | 8.74B | 6.69B | 6.16B | 5.52B | 8.02B |
| Total Liabilities | 16.36B | 14.10B | 14.48B | 14.01B | 17.45B |
| Stockholders Equity | 15.66B | 15.54B | 15.28B | 14.84B | 13.57B |
Cash Flow | |||||
| Free Cash Flow | 621.65M | 449.00M | 889.00M | 2.15B | 1.07B |
| Operating Cash Flow | 2.56B | 2.85B | 3.26B | 3.86B | 2.14B |
| Investing Cash Flow | -1.92B | -2.69B | -2.90B | -1.67B | -137.00M |
| Financing Cash Flow | -791.83M | -206.00M | -860.00M | -3.40B | -481.00M |
Santos Technical Analysis
Positive
3.98
Price Trends
4.38
Positive
4.32
Positive
4.50
Positive
Market Momentum
0.14
Positive
62.78
Neutral
64.15
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SSLZY, the sentiment is Positive. The current price of 3.98 is below the 20-day moving average (MA) of 4.79, below the 50-day MA of 4.38, and below the 200-day MA of 4.50, indicating a bullish trend. The MACD of 0.14 indicates Positive momentum. The RSI at 62.78 is Neutral, neither overbought nor oversold. The STOCH value of 64.15 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SSLZY.
Santos Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $30.38B | 63.20 | 37.15% | 0.72% | 12.48% | 6.24% | |
77 Outperform | $27.36B | 10.65 | 17.60% | 2.64% | 11.14% | -21.32% | |
74 Outperform | $23.87B | 14.52 | 11.86% | 3.39% | 26.13% | 31.42% | |
69 Neutral | $13.91B | 53.78 | 2.26% | 3.16% | -8.07% | -87.88% | |
68 Neutral | $23.70B | 13.15 | 10.07% | 2.87% | 246.16% | 82.62% | |
66 Neutral | $15.10B | 18.56 | 6.58% | 5.38% | -7.44% | -19.13% | |
65 Neutral | $15.17B | 7.61 | 4.09% | 5.20% | 3.87% | -62.32% |
* Energy Sector Average
SSLZY
Santos
4.79
0.88
22.43%
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30.75
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13.76%
DVN
Devon Energy
43.67
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20.31%
OVV
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50.83
8.61
20.39%
TPL
Texas Pacific Land
502.85
74.18
17.30%
EXE
Expand Energy
103.18
2.46
2.44%
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.