The Santos Ltd (ASX: STO) share price has struggled on the charts since we commenced the month of August.
Whereas the S&P/ASX 200 Index (ASX: XJO) has climbed around 1.4% this month, Santos shares are approximately 8% in the red.
Let’s peel back the layers to uncover why this may be so.
What headwinds has the Santos share price faced in August?
Although potentially positive for the Santos share price, the market did not embrace its FY21 half-year results.
To illustrate, although the company grew revenue, net profit after tax (NPAT) and free cash flow considerably from the year prior – and increased its dividend by 162% – its share price sunk on the day of the earnings announcement.
Moreover, oil spot prices have undergone a correction towards the end of last week. The majority of the ASX-listed hydrocarbons basket saw selling pressures last week, Santos included.
With WTI crude oil trading at around US$62 a barrel, this signifies a 2% drop on the day and another sequential decline over the entire month of August.
Some pundits estimate the volatility in oil prices stems from fears regarding the successful reopening of economies around the globe.
Furthermore, the Intergovernmental Panel on Climate Change (IPCC) released its scathing report on the state of global warming. In it, the IPCC was critical of fossil fuel producers and their contribution to climate change.
Undoubtedly, the Santos share price has faced selling pressures since the report’s release on 6 August.
In addition, Santos shares started the month off under this downward pressure. To illustrate, reports surfaced in early August that the company was preparing to sell its share in the Dorado project in WA.
It was reported that Mitsui and Mitsubishi were both interested in acquiring 20% of the project, diluting Santos’ holding to 60%.
Moreover, the acquisition may extend to the company’s Van Gogh and Pyrenees sites as well, according to media reports.
Together, these three factors have coincided with a decline in the Santos share price since August 1.
Santos share price snapshot
The Santos share price has had a choppy year to date, posting a loss of 5% since January 1. Despite this, Santos shares are still 3% in the green over the last 12 months.
However, these returns have lagged the broad index’s gain of around 25% over the past year.