Santos Limited
(ASX: STO)Share Price and News
About Santos
Santos is one of the ASX's major oil and gas producers. operates primarily in the exploration, development, production, and marketing of oil and natural gas. The company has a strong presence in Australia, including key basins such as the Cooper Basin, and significant projects in the Asia-Pacific region, including Papua New Guinea and East Timor.
It has best estimate contingent resources of just under 5MMboe (millions of barrels of oil equivalent). Santos produces energy and sells it to energy companies that provide it to consumers. Santos sells into the domestic energy market and export markets such as South Korea, Japan and China.
Santos' Company History
Santos was founded in 1954 in South Australia, made its first significant discovery of natural gas in the Cooper Basin in 1963. It has remained there to this very day and has picked up additional projects over the years.
Over the decades, it developed significant infrastructure, including pipelines and processing facilities to expand LNG exports. The acquisition of Queensland Gas Company in 2011 added the GLNG project.
In 2021, Santos acquired Oil Search, significantly increasing LNG capacity and presence in Papua New Guinea, positioning Santos as a major LNG supplier to Asia. The company has adapted to fluctuating oil prices and evolving policies while focusing on sustainable growth and shareholder returns.
Future Outlook of Santos (ASX: STO)
Santos’ future hinges on its ability to deliver steady production and capitalise on LNG demand, especially from Asia’s growing energy markets. According to its latest financial report, Santos forecasts production growth targeting approximately 97–102 million barrels of oil equivalent (mmboe) for the 2025 financial year.
LNG is perceived to be part of the solution to decarbonisation as it is less carbon intensive, and is a like-for-like replacement for traditional oil. Demand for LNG in the Asia-Pacific is expected to grow 69% over the next decade, and although it is being driven by China now, developing nations are expected to account for an ever increasing share of the market.
How is Santos different from its competitors? Because its assets are close to key Asian markets. A typical oil tanker can reach Asia from Australia in just a week while it would take more than 2 weeks to reach it from Qatar and more than 3 weeks from North America. This provides lower emissions before nations even receive their gas. Moreover, the company has a capacity of ~7.7Mtpa right now, and this could increase as it increases production. Key customers for its Australian LNG assets (at Darwin and Gladstone) include Mitsubishi, Kogas and Petronas.
Is Santos a Good Stock to Buy?
For investors considering Santos, the oil price stands out as the most crucial factor.
The company is less risk than a company at ethe exploration phase. It offers an attractive dividend yield, supported by robust free cash flow from LNG operations and disciplined capital management.
But investors should weigh risks related to oil price volatility and regulatory uncertainties in the energy transition era.
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Frequently Asked Questions
Santos offers a dividend yield generally ranging between 5-7%, supported by stable cash flows from LNG operations and a focus on returning capital to shareholders.