As at Monday, 1 December 2025, Santos Limited (ASX: STO) is back to being a stand‑alone Australian gas champion rather than a takeover trophy.
The Santos share price is trading around A$6.44, giving the group a market capitalisation of roughly A$21 billion. Intraday, the stock has been moving in a tight A$6.43–A$6.48 range, and sits near the lower half of its 52‑week range of A$5.20 to A$8.06. [1]
That means Santos now changes hands at a near‑20% discount to the average 12‑month analyst price target of about A$7.7, and at an even steeper discount to the A$8.89 per share all‑cash takeover proposal that fell over in September. [2]
For investors, the story on 1 December 2025 is a mix of:
- A failed A$18.7 billion ADNOC‑led takeover that reset expectations. [3]
- Near‑term production and earnings headwinds, largely tied to the Barossa LNG ramp‑up and Cooper Basin flooding. [4]
- Medium‑term growth catalysts as Barossa LNG and Alaska’s Pikka project come online. [5]
- A high and rising dividend yield, as Santos commits to returning at least 60% of free cash flow from 2026. [6]
Below, we unpack the key moving pieces for Santos stock as of today.
Santos share price snapshot on 1 December 2025
- Last price: ~A$6.44
- Day range: ~A$6.43–A$6.48
- Market cap: ~A$20.9 billion
- 52‑week range: A$5.20–A$8.06
- 12‑month total return (price only): roughly ‑3%. [7]
On common valuation metrics:
- Santos trades on a trailing P/E around 11–13x, depending on the source and exact earnings window used. [8]
- Price‑to‑book is around 0.9x, below peers that cluster closer to 1.1–1.2x. [9]
- The forward dividend yield sits around 6%, based on the latest A$0.21 per share interim dividend and consensus forecasts. [10]
In simple terms, the market is pricing Santos as:
- cheaper than many global LNG peers on book value,
- but not as cheap as some smaller, more distressed E&P names,
- with a “value plus yield plus growth projects” profile.
The ADNOC bid that failed – and what it tells us about valuation
The big 2025 story for Santos has been the back‑and‑forth over a proposed A$18.7 billion takeover led by Abu Dhabi National Oil Company (ADNOC), through its XRG investment arm and partners ADQ and Carlyle. [11]
Takeover timeline in brief
- June 2025:
- Santos confirms receipt of a non‑binding, all‑cash proposal at A$8.89 per share, a 28% premium to the pre‑bid price and implying an enterprise value of about A$36.4 billion. [12]
- The board indicates it is willing to back the deal, subject to due diligence, a binding scheme and regulatory approvals in Australia, Papua New Guinea and the US. [13]
- Santos shares jump sharply but still trade below the offer, reflecting perceived regulatory and execution risk. [14]
- August 2025:
- Santos extends the exclusivity period to 19 September to allow the consortium more time to finalise a binding bid. [15]
- At the same time, it reports a 22% drop in first‑half underlying profit to US$508 million but slightly ahead of analyst expectations, and declares an interim dividend of 13.4 US cents per share. [16]
- The share price rallies towards A$7.81, still more than A$1 below the indicative offer. [17]
- September 2025:
- The XRG consortium withdraws its A$8.89 per share proposal, saying that a combination of factors had changed its risk‑reward assessment and that acceptable commercial terms could not be agreed. [18]
- Santos, for its part, says the bidders would not accept what it saw as a fair allocation of regulatory and domestic gas‑supply obligations. [19]
Analysts note this is now the third failed bid for Santos in seven years, following earlier approaches and the aborted mega‑merger talks with Woodside in 2023–24. [20]
The failed ADNOC deal has two important implications:
- It sets a valuation marker.
A$8.89 per share – a roughly 38% premium to today’s price – is a real‑world data point showing what a strategic LNG buyer was once prepared to contemplate, even if it ultimately walked away. [21] - It has hurt confidence in management and the asset base.
Two would‑be partners (Woodside and ADNOC/XRG) have now stepped back after extensive due diligence. ABC’s coverage highlights concerns raised by analysts around asset quality, upcoming tax liabilities in PNG and emissions performance at assets like Darwin LNG. [22]
For now, Santos is again independent by default, and Woodside’s CEO has emphatically ruled out revisiting any merger. [23]
Earnings under pressure, but growth projects near the finish line
2024 full‑year result: profit down, projects almost ready
For the year to December 2024 (reported in February 2025), Santos posted: [24]
- Underlying profit of about US$1.2 billion, down ~16% and below consensus.
- A final dividend cut by 41% to 10.3 US cents per share.
- Production of 87.1 million barrels of oil equivalent (mmboe).
The drop in earnings reflected:
- lower realised oil and gas prices,
- weaker demand from China, and
- declining volumes from mature assets such as Bayu‑Undan. [25]
Despite the weaker year, management framed 2025 as an “inflection point”, with major growth projects almost at the finish line:
- Barossa gas project (backfilling Darwin LNG) – around 90–91% complete, expected to deliver first gas in the September quarter, later nudged towards first LNG cargo in the December quarter of 2025. [26]
- Pikka Phase 1 (Alaska oil) – more than 70% complete, with first oil now guided for Q1 2026, slightly earlier than the previous mid‑2026 timing. [27]
Management has repeatedly said that Barossa plus Pikka should lift group production by more than 30% by 2027 compared to 2024 levels, while allowing capital expenditure to fall and free cash flow to rise. [28]
2025 first half and Q3: guidance cuts and operational noise
The first half of 2025 confirmed the tougher backdrop:
- H1 2025 underlying earnings: US$508 million, down 22% year‑on‑year, driven by softer LNG and oil prices.
- Interim dividend: 13.4 US cents per share, modestly up on the prior year but representing around 40% of free cash flow. [29]
More recently, the Q3 2025 trading update has been the sore point:
- Santos cut full‑year production guidance for a second time, now expecting 89–91 mmboe versus 90–95 mmboe previously.
- Sales revenue fell 11% to about US$1.13 billion, missing consensus expectations.
- Shares nevertheless closed slightly higher at A$6.38, as investors looked through what management called non‑structural issues. [30]
The main problems:
- A two‑week unplanned shutdown at Barossa’s BW Opal FPSO due to safety‑system software issues, which slowed the production ramp‑up. [31]
- Slower‑than‑expected recovery from flooding in the Cooper Basin, with more than 150 wells still offline deep into the fourth quarter. [32]
The good news is that:
- Santos still expects Barossa to ship its first LNG cargo in the December quarter and
- Pikka remains on track for first oil in early 2026. [33]
In other words, the short‑term numbers look messy, but the core growth projects are described as intact.
Carbon capture, Moomba CCS and the ESG debate
No modern Santos story is complete without carbon capture.
Santos’ CCS growth pitch
Santos’ flagship Moomba Carbon Capture and Storage (CCS) project in South Australia started injecting CO₂ in late 2024. Management positions it as: [34]
- Phase 1 capacity: up to 1.7 million tonnes of CO₂ per year.
- A proof‑point for building a 14 million tonne per year third‑party storage business by 2040, roughly half of Santos’ 2023 equity Scope 3 emissions.
- A cornerstone of a strategy to turn Australia into a regional carbon storage hub for industrial emitters in Japan, Korea and elsewhere.
By November 2025, the project had: [35]
- Sequestered around 1.3 million tonnes of CO₂‑equivalent in total.
- Received a record 614,133 Australian Carbon Credit Units (ACCUs) from the Clean Energy Regulator, the largest allocation yet under the country’s safeguards regime.
Santos argues that at full capacity, Moomba can capture more CO₂ in four days than 10,000 electric vehicles avoid over an entire year – a comparison designed to highlight its scale relative to consumer‑level actions. [36]
Critics are unconvinced
Environmental groups and some analysts are much less impressed.
- An Australia Institute analysis of government emissions data found that Moomba captured only about 0.5 Mt of CO₂ in Q1 2025, which the think‑tank framed as roughly a few days of Santos’ total emissions and a tiny fraction of national fossil‑fuel emissions. [37]
- ABC’s coverage of the project pointed out that, while 340,000 tonnes stored early in 2025 sounds large, experts describe it as “hardly a drop” in the context of Australia’s ~500 Mt annual emissions and highlight the energy intensity of CCS itself. [38]
So for investors:
- Positively, Moomba CCS and other planned storage hubs could create a new, capital‑efficient fee‑for‑service business aligned with global decarbonisation policy. [39]
- Negatively, CCS remains controversial, with critics arguing it can entrench fossil fuel use and may expose Santos to political and reputational risk if targets are missed or accounting rules tighten. [40]
Dividends and capital returns: yield is a big part of the thesis
A key shift in the Santos equity story is its capital allocation framework.
Following an investor day in late 2024, Santos committed to: [41]
- Returning at least 60% of “all‑in free cash flow” to shareholders from 2026, once Barossa and Pikka are online.
- Potentially returning 100% of free cash flow when balance sheet gearing is below 15–25%, via a mix of dividends and buybacks.
Recent numbers suggest this is already translating into attractive income:
- The latest paid dividend (October 2025) was A$0.21 per share, with the next forecast at A$0.16 in March 2026. [42]
- Sites tracking payouts estimate a forward dividend yield of roughly 5.8–6.4% at the current share price, with a three‑year dividend growth rate near 30%. [43]
Broker commentary has become increasingly yield‑focused:
- Ord Minnett sees a 2025 yield around 6%, rising to a double‑digit range (10–16%) between 2027 and 2030 as project capex rolls off and free cash flow swells. [44]
- Macquarie estimates 6.9–7.5% yields in 2026–27, with franking gradually increasing. [45]
In plain terms, Santos is trying to reposition itself as a cash‑return machine post‑Barossa and Pikka, assuming commodity prices and operations co‑operate.
What analysts are forecasting for Santos shares
Despite the takeover hangover and guidance cuts, broker sentiment is broadly constructive.
Consensus ratings and price targets
Across multiple aggregators:
- Consensus recommendation:“Buy”.
- One dataset shows 9 Buy, 4 Hold and 1 Sell rating out of 14 analysts. [46]
- Average 12‑month price target: about A$7.7–A$7.8, implying roughly 20% upside from A$6.44. [47]
- Target range:
- Low: ~A$6.1–A$6.2 (close to current price),
- High: around A$9.3–A$10.4. [48]
Several notable broker views:
- Macquarie maintains an Outperform rating, with various notes over 2025 setting price targets between A$8.15 and A$8.85, implying 25–35% upside from current levels. [49]
- Coverage tracked by outlets like FNArena notes that Santos still screens undervalued on earnings multiples relative to larger peers, and that the revised capital return policy should support higher total returns from 2027 onwards. [50]
- SimplyWall.St highlights that average price targets have actually ticked up slightly from A$7.77 to about A$7.82 after the ADNOC bid collapsed, as focus swings back to project delivery rather than M&A. [51]
Put together, the street view looks roughly like this:
Santos is no longer a takeover arbitrage play; it’s a leveraged bet on Barossa and Pikka executing more or less on time and on budget, plus a high‑yield LNG infrastructure story.
Key risks to watch
For all the apparent upside on broker spreadsheets, Santos is far from risk‑free.
1. Barossa start‑up and ramp‑up risk
Barossa is the single largest near‑term driver of production, cash flow and valuation:
- Multiple delays, technical issues and legal challenges have already hit the project. [52]
- The recent Q3 shutdown due to FPSO software problems shows that early operations can be lumpy, and further hiccups could trigger additional guidance downgrades. [53]
2. Alaska execution and oil price exposure
Pikka Phase 1 in Alaska is progressing, but:
- Arctic operating conditions are inherently challenging, and
- the project’s economics are more sensitive to oil prices than Santos’ core LNG portfolio, which is more heavily linked to long‑term contracts or JCC‑linked pricing. [54]
3. ESG and regulatory risk
- CCS projects like Moomba are under intense scrutiny. If regulators tighten rules on offsets or if CCS underperforms expectations, Santos’ “low‑carbon LNG” narrative could weaken, potentially affecting access to capital or customer contracts. [55]
- Domestic gas‑supply obligations and community concerns (including earlier Barossa legal challenges from Traditional Owners) remain longstanding sources of risk in Australia. [56]
4. PNG fiscal and political risk
The ADNOC/XRG due diligence process reportedly flagged potential tax liabilities in Papua New Guinea and broader concerns over the age and emissions of some assets. Those same issues don’t vanish simply because a bidder walks away. [57]
5. Commodity and macro risk
Santos’ cash flows remain tied to:
- global LNG prices, which have normalised from the 2022 crisis highs, and
- broader oil price cycles.
A deep cyclical downturn could quickly erode the free‑cash‑flow base underpinning the promised 60% payout policy. [58]
Bottom line: what 1 December 2025 tells us about Santos stock
Standing on 1 December 2025, Santos Limited looks like a reset story:
- The takeover premium has evaporated, leaving a business trading materially below the price a strategic buyer once tabled. [59]
- The near‑term financials are messy, thanks to production downgrades and weaker commodity prices. [60]
- Yet the medium‑term path is clearer than it has been for years: if Barossa and Pikka deliver broadly on schedule, Santos’ production should step up by around a third and free cash flow could surge, supporting both higher dividends and potential buybacks. [61]
At today’s price, investors are effectively being asked to decide whether:
- the operational headaches, ESG controversy and PNG/regulatory complexity justify a structurally lower valuation than the ADNOC offer and analyst targets, or
- the market has become too pessimistic, turning Santos into a high‑yield LNG and CCS play with asymmetric upside once the construction dust settles. [62]
Either way, Santos is now firmly back in fundamentals‑first territory. For portfolio builders, that means the usual homework: stress‑testing oil and gas price assumptions, reading the fine print on CCS and climate scenarios, and weighing a ~6% yield and potential 20–30% capital upside against the very real execution risks in the years ahead.
References
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