Praise be!

The price of oil is slowly creeping back up and Brent crude is now sitting just short of US$40 a barrel. This is obviously good news for energy producers like Santos Ltd (ASX:STO) and Origin Energy Ltd (ASX:ORG), but before hitting the trigger on buying Santos, here are three things you must know today:

1. Dividend potential

Santos has revised its dividend policy after the company’s strategic review last year. The company’s production will remain strong over the short term and the new policy will aim to pay out a minimum of 40% of underlying net profit after tax.

According to Santos this will “better reflect the Company’s exposure to oil-linked LNG pricing“, a gamble which has so far been a loser for investors. For the 2015 financial year underlying profit was just $50 million, compared to $533 million in 2014.

2. The company looks a lot like it did 10 years ago

Believe it or not, back in 2006 Santos produced 61 million barrels of oil equivalent (mmboe). The company was just setting out on its LNG journey then, but that number is similar 10 years on with annual production of 57.7 mmboe in 2015.

The average price received by Santos was also just slightly lower in 2015 at $74 per barrel compared to $89 back in 2006.

160308 RP - STO

Even the company’s current market capitalisation of $6.8 billion is not far off where it was in 2006 at $5.9 billion, and today’s market capitalisation includes the company’s recent $2.5 billion Entitlement offer.

One thing that has changed is Santos’ total asset count which has ballooned from $7 billion in 2006 to almost $22 billion as of 31 December 2015.

3. Reserves have been slashed

Santos’s 2P (proven plus probable) energy reserves, which the company has carefully accumulated over the last 10 years, have been a costly victim of the fall in oil price.

Heading into 2016 Santos has claim to 2P reserves of 945 mmobe. This is 22% up on 10 years ago, but is down a lot on the 1,245 mmboe that the company declared at the start of 2015. The decrease is the result of 2015’s strong production which ate up 58 mmboe, while asset sales to help stabilise the company’s balance sheet sunk the count further.

Based on the company’s 2015 full year production, Santos has a 2P reserve life of 16 years. This could prove to be problematic given the current cuts to exploration budgets.

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Motley Fool contributor Regan Pearson has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.