Santos (STO) Stock Trading Recommendation

Submitted by Craig Strzelecki on 26 May, 2007 - 18:15

Santos (STO) has a Neutral 2 broker call and a share price target of $11 from sharemarket analyst UBS. Released March '07 quarter results is in line with 2007 / 2008 forecast is up. Sales revenue down 13% from Dec '06 quarter: Sales revenue of A$580.9m was in line their latest forecast that was revised up after the WPL quarterly, and 13% below the Dec ’06 quarter. Overall, production fell 6% over the qtr and sales volumes fell 9%, broadly in line with the analyst's forecast. Santos also realised an excellent oil price of A$81.1/bbl (unhedged). EPS forecast changes: '07 +4.5%, '08 + 3.2%, '09 -3%: The analysts have updated our March ’07 qtr forecasts with actual data and revised their Santos production outlook. As a result, they have boosted our Santos (STO) 2007E EPS forecast by 4.5% and their 2008E EPS forecast by 3.2%. Their 2009E EPS forecast has been lowered by 3% after assuming Kipper starts up in 2010 (we previously assumed a 2009 start up). The analyst sees a 50 cps of risk weighted exploration upside (in our share price target) from a combination of lower risk Australian and higher risk Asian / Australian exploration prospects. Resolution of the Banjar Panji mud flow (STO 18%) cost sharing would also remove an existing unquantifiable contingent liability. Longer term, Hides LNG offers further potential upside. Their STO share price target is A$11.00 (prior A$10.25) based on their 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. A past recommendation for Santos (STO). Check your charts and good luck with your share trading!

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