Why Did the Santos Share Price Fall Today?

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.

Jason Stevenson,
Resources Analyst, Money Morning

Money Morning is Australia’s most outspoken financial news service. Your Money Morning editorial team are not afraid to tell it like it is. From calling out politicians to taking on the housing industry, our aim is to cut through the hype and BS to help you make sense of the stories that make a difference to your wealth. Whether you agree with us or not, you’ll find our common-sense, thought provoking arguments well worth a read.

Money Morning Australia is published by Port Phillip Publishing, an independent financial publisher based in Melbourne, Australia. As an Australian financial services license holder we are subject to the regulations and laws of Corporations Act and Financial Services Act.

Money Morning Australia