Why one Aussie energy giant is outperforming its rival in 2021.
The post Why the Santos (ASX:STO) share price is outperforming Woodside in 2021 appeared first on The Motley Fool Australia. –
The Santos Ltd (ASX: STO) share price has been on something of a run in the last year. Shares in the Aussie energy giant have climbed 34.2% higher in the last 12 months after closing at $7.06 per share on Thursday.
That means Santos now boasts a market capitalisation of $14.7 billion and is starting to approach its $7.84 52-week high. However, Santos isn’t the only Aussie oil and gas share doing well right now.
Shares in Woodside Petroleum Limited (ASX: WPL) are up 11.2% in the last year. Keen-eyed investors, however, will note that the Santos share price has been outperforming Woodside in 2021. Here’s why.
Why the Santos share price is outpacing Woodside right now
Woodside shares have actually edged 0.4% lower in 2021 to $22.97 per share. A pullback in oil prices combined with a softer second quarter update saw the company’s value fall 1.0% in Thursday’s trade.
Woodside reported a 4% decline in quarterly production to 22.7 million barrels of oil equivalent (MMboe) yesterday. The company cited scheduled maintenance and adverse weather impacts as key mitigating factors during the quarter. It wasn’t all bad news, however, with Woodside reporting a 15% quarter-on-quarter increase in sales revenue to $1,285 million.
At the same time, the Santos share price climbed 0.1% higher yesterday. The group is yet to release its own second quarter report which investors will be watching closely.
However, Santos was recently assigned a BBB credit rating with a “stable” outlook from Fitch Ratings. Fitch cited the company’s long-term, fixed-price domestic gas contracts as providing portfolio diversification against its oil-linked revenues. Fitch also said the company has “some flexibility over timing and expenditure” with the ability to manage leverage.
The company generated US$302 million in first-quarter free cash flow with higher commodity prices boosting revenues. These numbers and a focus on a diverse range of growth projects has had investors driving up the Santos share price 2021.
Santos has been focused on capital investment in recent years and this focus on new and expanded assets has increased its potential production output in the short to medium term.
Of course, 6 months is a very short-term perspective in investing. The Santos share price has performed well to start the year but rising crude oil prices is good news for both major Aussie operators.
It’s worth keeping an eye on both Woodside and Santos as the commodities landscape continues to take shape in the post-COVID recovery phase.
Should you invest $1,000 in Santos right now?
Before you consider Santos, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Santos wasn’t one of them.
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*Returns as of May 24th 2021
Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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.