Interesting article in Morningstar's weekly newsletter regarding oil whereby they reviewed the position of the major players. I thought I should share some of the commentary regarding Santos for the forum.
We project STO’s ROIC could exceed our assessed 9.7% weighted average cost of capital by as soon as 2025. However, this reflects the Barossa to Darwin LNG project, and then the likely prolific Dorado oil project, coming on-line, rather than Gladstone. Our base case does not now canvass Gladstone expansion. We project cumulative capital expenditure of $4.0bn, beginning 2022 on the Dorado oil project and the Barossa to Darwin LNG upgrade. But this is excellent near-term bang-forbuck expenditure, increasing group production by 65% to 125mmboe by 2026. Capital efficient development and fast up-front cash flows from Dorado’s oil should combine to ensure leverage ratios continue to decline from current levels despite outgoings.
CVN Price at posting:
26.5¢ Sentiment: Buy Disclosure: Held
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