## santos jeruk broker downgrade article! ##

Australasian Investment Review


Things Got Worse For Nigel No-Mates

Friday August 12, 2005, 9:56 am


UBS has downgraded its rating on Santos (ASX: STO.ax) to Reduce 2 from Neutral 2 following the initial drilling results at the company’s Jeruk project.
The broker suggests the initial results from Jeruk-2ST4 have been disappointing, as the upper reservoir failed to flow a reasonable volume of oil and lower sections flowed oil and water.

This has seen the broker increase its risk weighting on the field to 50% as it now sees significant downside risk.

UBS has gone so far as to suggest the potential downside is below the company’s pre-drill estimate of 170mmboe in recoverable reserves.

The broker has cut its EPS estimates, with the 2005 forecast down to $1.03 from $1.14 and 2006 down to $0.94 from $1.12.

This has seen the broker’s target price fall to $9.89 from $11.15, while its valuation has fallen to $9.13 from $9.77.

The last closing price for STO was $11.42.

Santos is among the lowest recommended stocks in the Australian market with ratings of ten major equity specialists showing seven Sell recommendations and three Neutral ratings.


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