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Why the Santos (ASX:STO) share price is in focus

The Santos Ltd (ASX: STO) share price is one to watch this morning after the Aussie energy giant’s latest quarterly report.
The post Why the Santos (ASX:STO) share price is in focus appeared first on The Motley Fool Australia. –

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The Santos Ltd (ASX: STO) share price is one to watch in early trade after the Aussie oil and gas giant’s latest quarterly result.

Why is the Santos share price in focus?

Santos provided an operational and financial update for the quarter ended 31 March 2021 (Q1 2021). The energy group reported “strong base business,” which helped generate US$302 million in free cash flow for the quarter.

Santos produced 24.9 million barrels of oil equivalent (mmboe) for the quarter, up 39 per cent on Q1 2020. That was largely thanks to the ConocoPhillips acquisition completed in May 2020, which helped boost capacity.

Production was down 2 per cent from the previous quarter thanks to lower gas demand in Western Australia and unplanned maintenance in PNG. First-quarter revenue of US$964 million was up 5% on the December quarter and 9% on Q1 2020.

Average realised liquid natural gas (LNG) prices were up 14.6% to US$6.12 per metric million British thermal units. Realised prices across crude oil, condensate, domestic gas and LPG all climbed higher on Q4 2020 figures.

The Santos share price is one to watch in early trade following the quarterly update. Shares in the Aussie energy group are up 7.9% and currently outperforming the S&P/ASX 200 Index (ASX: XJO). 

On the balance sheet side, Santos reported net debt of US$3.6 billion after the US$104 million final dividend. S&P Global Ratings reaffirmed Santos’ investment-grade credit rating with a Stable outlook, with Fitch assigning an inaugural BBB rating during the quarter.

Importantly, Santos reaffirmed all guidance for FY2021. That includes production of 84 to 91 mmboe with sales volumes of 98 to 105 mmboe. Base capital expenditure of ~$900 million and major growth capex of $700 million is expected for the year. Full-year upstream production cost estimates were maintained at $8.00 to $8.50 per barrel of oil equivalent.

Foolish takeaway

All eyes will be on the Santos share price following today’s update, with revenue climbing higher despite lower overall production.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the Santos (ASX:STO) share price is in focus appeared first on The Motley Fool Australia.

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