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Highlights

  • Macquarie Research maintains OUTPERFORM rating on Santos with a price target of AUD 8.85, indicating 15.23% upside.

  • Santos signs mid-term LNG contract with QatarEnergy Trading LLC, boosting its Asia-Pacific gas portfolio.

  • Company enters exclusive negotiations with ADNOC-led XRG Consortium over potential AUD 8.89 per share acquisition.

Santos Ltd (ASX:STO), a leading Australian oil and gas producer, has received continued analyst support, with Macquarie Research maintaining its OUTPERFORM (equivalent to a BUY) rating on the stock. The investment bank set a 12-month target price of AUD 8.85, implying a 15.23% upside from the current market price of AUD 7.66 as of 4 July 2025.

This comes as Santos strengthens its global LNG footprint and remains in the spotlight for a potential acquisition.

Strategic LNG Agreement

On 4 July, Santos announced the signing of a two-year LNG supply agreement with QatarEnergy Trading LLC (QET), under which it will supply 0.5 million tonnes of LNG annually starting from 2026. The LNG will be delivered from Santos’ portfolio on an ex-ship basis, aligning with its strategy to maximise flexibility and commercial returns.

CEO Kevin Gallagher described the deal as an extension of the company’s longstanding regional partnerships and an opportunity to leverage its destination-flexible volumes through chartered LNG vessels. The agreement complements existing contracts across a portfolio that is now 90% contracted and 85% oil-linked between 2025 and 2029.

Takeover Talks Add Further Upside Catalyst

Adding further upside potential is a takeover proposal from the XRG Consortium, led by Abu Dhabi National Oil Company (ADNOC). On 27 June, Santos confirmed it had entered an exclusivity deed with the consortium regarding a potential acquisition valued at AUD 8.89 per share, a premium of approximately 15.76% to the last traded price.

The consortium, which includes Abu Dhabi Development Holding Company and Carlyle, now has a six-week exclusivity window to conduct due diligence and negotiate a formal scheme implementation deed.

The OUTPERFORM recommendation by Macquarie, coupled with acquisition interest and expanding LNG supply deals, points to potential price gains of over 15% in the coming months.