Citi has reaffirmed its Buy rating for Santos shares, highlighting that the reduction in execution risk across the company’s key projects now outweighs a slightly softer production outlook for 2026. This positive assessment suggests further potential upside for the stock, according to the broker’s analysis. Santos shares experienced a jump of approximately 5 per cent on Thursday.
The surge followed Santos’ announcement of its 2026 production guidance, which is around 2 per cent below consensus estimates, and a capital expenditure forecast roughly 4 per cent higher. Citi suggests that the market’s positive response indicates relief that the Barossa project is navigating the most difficult stage of commissioning, alongside continued progress at the Pikka project in Alaska. Santos is a major Australian oil and gas producer. They are engaged in the exploration, development, production, and marketing of hydrocarbons.
Citi analyst Tom Wallington noted that the market is now appropriately rewarding execution progress over near-term production forecasts. According to Citi, the removal of Santos’ execution risk premium is a significant catalyst for the stock. The broker views Santos’ trading at approximately 4.5 times its next-twelve-months EV/EBITDA as a substantial discount compared to its peers, especially considering the scale of risk reduction across its growth portfolio.
Despite the revised production guidance, Citi has maintained its Buy recommendation for Santos with a price target of $7.00. This target reflects confidence in the company’s ability to deliver on its projects and capitalise on its growth opportunities.
