This report is an updated version of the report published on 27 January 2026 at 1:20 PM AEDT. 

Santos Limited (ASX: STO) 

Company Overview: Santos Limited (ASX: STO) is an Australian oil and gas exploration and production company headquartered in Adelaide, South Australia. Founded in 1954, it is one of Australia’s largest domestic suppliers of natural gas and liquefied natural gas (LNG), with operations across Australia, Papua New Guinea, Timor-Leste, and the United States. Santos owns and operates oil, gas, and LNG assets both onshore and offshore, supplying domestic markets and exporting LNG primarily to Asia. 

Recommendation Rationale – SELL at AUD 6.695

• Technical Standpoint: STO share price has surpassed the R1 level recommended on 7 January 2026, while RSI (around 66.68 level) is approaching the 70 level, signalling the stock is near overbought conditions. Historically, such readings in STO have preceded short-term pullbacks, especially when occurring within a broader weak trend.
• Operational Risks: Delays or disruptions in start-up and ramp-up of major projects such as Barossa LNG and Pikka phase 1, including technical issues or safety incidents, could impact production and cash flow.
• Profit Decline: In H1 FY25, STO reported 4.35% and 28.35% YoY decline in revenue an EBIT, respectively. It was driven by lower realised energy prices and operating leverage, compounded by higher unit costs and an unfavourable production mix.
• Overvalued Multiples: On a forward 12-month basis – key trading multiples (EV/Sales, Price/Earnings and Price/Cash Flow) are higher than the Oil & Gas industry.

Daily Price Chart

 (Daily Technical Chart; Source: REFINITIV)

Valuation Methodology: Price/Cash Flow Approach (Illustrative)

The stock might trade at a slight premium to its peers given the targeted structural cost savings, tier-one LNG assets, strategic proximity to Asian buyers, ability to self-fund growth projects, among others.

For conducting the valuation, following peers have been considered - Woodside Energy Group Ltd (ASX: WDS), Karoon Energy Ltd (ASX: KAR), and Beach Energy Ltd (ASX: BPT).

Given the stock has surpassed its R1 level, recent rally in the share price, and risks associated, it is prudent to sell the stock at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 6.695, as of 27 January 2026, at 12:55 PM AEDT.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 27 January 2026. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Note 5: Dividend Yield may vary as per the stock price movement.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.