What happened to the Santos share price?
At the time of writing, shares of Santos Ltd [ASX:STO] were down by 3.67% to $3.41 on Friday.
Why did Santos shares do this?
Santos’ shares have surged in the past month, after hitting a low of $2.46 on 20 January. That was when Brent crude hit a low of $27.83 per barrel. Following the recent stellar run, the shares dipped a little after Santos announced a major AU$2.7 billion full-year loss today. Major write-downs and the crude oil price collapse were to blame.
Unfortunately, the result has hit the dividend. This shouldn’t be a surprise. Management announced the final dividend will be cut to 5 cents per share, down from 15 cents a year ago. Spending has been cut to a quarter of its 2013 peak.
What now for Santos Ltd?
Santos has an extremely leveraged balance sheet. Shareholders really need to see a turnaround in crude oil price. If the crude oil price doesn’t turn around, the company could make a new low in the foreseeable future. My analysis — showcased frequently in Money Morning — shows the crude oil price is due for new lows. That doesn’t bode well for Santos shareholders in the near term.
Resources Analyst, Money Morning