Citi raises Santos price target, sees Pikka disruption as temporary
Citi maintained its buy rating on Santos and raised its price target 2% to A$9.80 per share. September-quarter production of 26.3 million barrels of oil equivalent missed Citi's estimate by 4%, while the brokerage said lower Pikka output temporarily reduced CY26 guidance.
1. Target raised despite disruption
Citi said the temporary production disruption at Pikka did not change its investment thesis, which focuses on higher shareholder returns in CY27 through Santos' new capital management framework. It cited temporary reservoir pressure maintenance and water injection activities for lower Pikka output, and said CY26 production and sales guidance was modestly reduced. Citi kept its CY26 and CY27 core net profit forecasts broadly unchanged.
2. Quarterly production miss
September-quarter production was 26.3 million barrels of oil equivalent, 4% below Citi's estimate and 2% below Visible Alpha's. Citi said, “As production ramps up and oil prices hover around US$110/bbl, STO offers significant leverage to a stronger commodity price environment.”
