Santos Investor Day 2023

Santos, No Plan B

Santos’ investor day made it clear that Santos is positioning itself for one future, an environment of growing oil and gas, reinforcing our view of the vulnerability of its strategy.

If oil and gas peaks earlier than the 2040’s, Santos has little alternative paths, and without clear cost advantages to peers it will likely need to shrink.

Our key takeaways:

01 Santos is holding firm on oil and gas with no material changes to medium term production guidance, ~10% growth FY22-28 pre new projects, and up to ~36% growth into the 2040’s including new projects.

02 The company’s oil and gas outlooks are more bullish than the IEA announced pledges (APS). Santos expects Asia Pacific LNG to grow to the 2040’s, compared with the IEA APS expectations for Asia Pacific of a -44% reduction between 2030-50.

The company expects strong oil demand to 2040, while the IEA expects Asia Pacific oil demand of -42% between 2030-50 under the APS.

03 Santos projects little change to its revenue mix by FY28 continuing to be 100% driven by fossil fuels. The company’s low carbon fuels still circle back to methane and CO2, linked to an unclear picture of customer needs, uncertainty regarding size and longevity of demand.