Australia's Santos more compelling investment for Citi than Woodside Energy

STO

16/06/2023 03:41

** Australia's no.2 independent oil and gas explorer Santos
Ltd  STO.AX  has more compelling revenue growth and return on
invested capital expansion than larger rival Woodside Energy
 WDS.AX : Citigroup
    ** Brokerage hikes PT for STO to A$8.00 from A$7.75,
upgrades to "buy" from "neutral"
    ** Says market has overpriced WDS growth and underpriced STO
    ** "Find STO has the more compelling resilience to the
energy transition based on its CCUS (carbon capture storage)
plans and growth projects being lower on the cost curve" - Citi
    ** Says STO will grow revenue by 20%, while WDS will "stand
largely still" by CY28
    ** Adds, while both have "strong balance sheets", STO has
relative headroom to enable it to return more surplus capital in
late 2020s or diversify new revenue streams
    ** Trims PT on WDS to A$33.00 from A$33.50, retains
"neutral" rating
    ** Adds both STO and WDS could spend more on speculative
projects and maintain credit ratings, especially after strong
commodity prices

 (Reporting by Sameer Manekar in Bengaluru)
 ((Sameer.Manekar@thomsonreuters.com; Twitter: https://twitter.com/sameer_manekar))