Barossa has achieved a final investment decision which de-risks the project. Santos has an agreement to sell 25% of Darwin LNG and Bayu-Undan on achieving FID at Barossa. This sale should now occur at the end of April and result in net funds of around $200m.
UBS lifts its risk weighting to 85% from 75%. Santos remains the broker’s preferred exposure across the energy sector as it is trading with the lowest implied oil price.
There are also near-term growth catalysts such as FEED for Dorado in the first half of 2021 and FID on Moomba CCS in the second half. UBS retains a Buy rating and raises the target to $8.35 from $8.20.
Target price is $8.35.Current Price is $7.13. Difference: $1.22 – (brackets indicate current price is over target). If STO meets the UBS target it will return approximately 15% (excluding dividends, fees and charges – negative figures indicate an expected loss).