Santos (STO) Shares Update

Submitted by Craig Strzelecki on 15 May, 2007 - 19:07

Santos (STO) shares have a Neutral 2 broker call and a price target of $11 from stockmarket analyst UBS. A$300m Off Market Share Buy-Back: Capital management initiative: Santos has announced an off market buy-back for approximately A$300m of its ordinary shares. We look at this announcement as a positive capital management initiative that improves the efficiency of Santos capital structure. EPS and ROE enhanced: The analyst estimates the buy-back enhances Santos EPS outlook by around 2% to 3% per annum, and improves Santos return on equity by around 1 percentage point (adds 8% to ROE). Santos Board believes the buy-back will also not affect the capacity of Santos to pay fully franked dividends in the foreseeable future. Standard & Poor's has maintained its 'BBB+/Stable/A-2' corporate credit rating on Santos Ltd. Neutral 2 rating maintained: The buy-back furthers the encouraging momentum seen in Santos' share price recently after announcing on 1 May that the South Australian Government was undertaking a review of Santos' 15% shareholding restriction (to be completed by Sept 2007). Their Santos share price target is A$11.00 based on our NAV estimate, plus new potential project developments / expansions.

Santos Limited is listed on the Australian Stock Exchange (ASX) under stock code STO. You can view their investor website here. STO was listed on the ASX on 1 October, 1954. Stephen Gerlach is the chairman of Santos and the managing director is John C Ellice-Flint. The energy company is involved in gas and petroleum exploration and the production, treatment and marketing of natural gas, crude oil, condensate, naphtha and liquid petroleum gas; transportation by pipeline of crude oil. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade STO. Check your charts and good luck with your share trading!