The Santos Ltd Share Price is Up 9% Today. Is It a Buy? (ASX:STO)

ASX STO - Santos Share Price

The Oil & Gas behemoth Santos Ltd’s [ASX:STO] share price is up 9% today.

This is a company with a market cap of over $7 billion.

That’s quite the daily move up…

But before you get giddy and jump in, there are a few things we should talk about…

But first…


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Who is Santos Ltd [ASX:STO]?

Santos Ltd is an Australian oil and gas company.

The company call themselves ‘leading independent oil and gas producer in the Asia-Pacific region.

The company started in the Cooper Basin.

It’s located in northeast South Australia and southwest Queensland.

This basin is most important on-shore oil and gas deposit in the country.

And Santos is the largest producer out of this area.

Santos produce natural gas (LPG, ethane, methane, CSG, LNG, shale gas, condensate) and oil.

In the company’s 2019 annual report the company said the following…

It had ‘records free cash flow of $1,138 million.’ And ‘record sales volume’, along with ‘record production volumes’.

It also reported a profit after tax of $719 million.

Of course, at the time the company reported these earnings. These resources were much higher priced than they are today.

And that’s something investors need to keep in mind moving forward.

Lower resource values will impact Santos’ bottom line.

And as you can imagine, this is going to impact the share price.

So, can a stellar year for Santos in 2019 make for an excellent buying opportunity today?

Well, maybe.

Let’s take a look at the chart to find out a bit more, though.

See the chart below…

Are Santos shares now a buy?

ASX STO - Santos Share Price

Source: Optuma

[Click to open in a new window]

What you’re looking at above is the weekly chart of Santos.

As you can see, I’ve placed a few lines on the chart.

Let’s first start with the black striped line on the right-hand side.

This show us the magnitude of the recent decline.

The Santos share price has fallen around 70% in the last 77 days.

The yellow and blue lines.

Well they show us that around that level Santos has found support in the past.

Traders often look at these levels for areas to buy shares.

With Santos up 9% today, you too may be thinking of jumping in.

But it may pay to hold off a little. It’s too early to tell if the downward move for Santos is over just yet.

We’ll have to see how this one plays out. Maybe you can put it on your watchlist, too.

As always, this is not a recommendation to buy or sell Santos Ltd. It is an update only. I hope you found it useful.

Until next time,

Jonathan Evans Signature

Jonathan Evans,
Analyst, Profit Watch

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