Santos (ASX:STO) Could Be 14% Undervalued After Firmer Oil And LNG Prices
Santos (ASX:STO) is back in focus after a recent share price move, linked to firmer global oil and LNG prices, supported by progress on its Barossa LNG development and firm domestic gas demand.
See our latest analysis for Santos.
At the current A$7.62 share price, Santos has seen a strong year to date share price return of 23.9%, even though the 30 day and 90 day share price returns are slightly down. The 1 year total shareholder return of 4.26% points to more modest long term progress.
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Santos looks like a solid LNG and oil producer with global pricing and Barossa progress behind its recent move, but the real question for investors now is whether A$7.62 reflects that strength or overstates it.
Most Popular Narrative: 14.3% Undervalued
The most followed narrative on Santos currently points to a fair value of A$8.89 per share, compared with the last close at A$7.62, implying meaningful upside in that narrative.
Santos (ASX: STO) experienced a sharp share price drop after the failed A$36 billion takeover by a consortium led by ADNOC. While the deal’s withdrawal removed a near-term premium, it highlighted the strategic value of Santos’ LNG and gas assets. The offer implied a potential upside of approximately 30 to 35% from pre-bid levels, suggesting the market may still be underpricing the company. At the time of writing (6/3/2026), Santos has recovered to A$7.42, reflecting renewed investor confidence and the market’s recognition of its strong fundamentals despite past volatility.
Want to see what sits behind that A$8.89 fair value for Santos? The narrative hinges on resilient profitability, project driven volume gains and a firm view on future margins. Curious how those assumptions combine into that valuation call? The full narrative lays out the numbers and tension points in detail.
Result: Fair Value of A$8.89 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, Santos still faces key risks, including commodity price swings and potential delays or restrictions on projects like Barossa LNG, which could challenge this undervalued thesis.
Find out about the key risks to this Santos narrative.
Next Steps
With Santos presenting both appealing strengths and clear pressure points, do not wait on others to decide for you. Review the full mix of potential upsides and concerns through the 2 key rewards and 1 important warning sign
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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