Santos has outperformed its peers in 2025, only declining 12.5%, still not good, but we often prefer to buy strength in a particular sector. The companies’ trading update in mid-April was well received by the market, aided by STO reiterating 2025 guidance—no negative surprises is good news. The company’s production exceeded estimates due to higher throughput at PNG. Importantly, they reiterated that growth projects Barossa and Pikka remain on schedule and budget, which are key to driving a significant “Free Cash Flow” (FCF) inflexion from 2026. In line with the Shell-BP rumours, M&A activity is possible for STO, with Saudi Arabia and the UAE touted as potential suitors.
- We like STO into dips, believing it’s already bottomed for the year.
MM is neutral to cautiously bullish toward STO
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