That's the view of analysts at Citi, which continue to rate the energy producer as a top option in the sector with plenty of upside potential.
What is the broker saying about Santos shares?
According to a recent note out of the investment bank, its analysts have a buy rating and a $9 price target on its shares.
Based on the latest Santos share price of $7.42, this implies potential upside of 21% for investors over the next 12 months.
In addition, with the broker forecasting a 25 cents per share dividend in FY 2024, this represents a 3.3% dividend yield, which boosts the total potential return to almost 25%.
Citi has been looking at Santos' Pikka project in Alaska and believes that recent actions demonstrate the potential of its assets in the region. It said:
The designation of core vs non-core for Alaska is a semantic argument in our view. STO's actions are speaking louder than words with STO appearing very much committed to the asset: Phase 1 is US$1.3bn capex net to STO, the farm down target is only for a minority share as opposed to a complete disposal, and phase 2 "optionality" is being touted.
This detailed site trip note should help investors gauge why we have, for the first time, confidence in STO's capabilities as an operator in Alaska, what signposts to look for to ascertain phase 1 execution risks, why there's a risk of negative surprise to SIB capex, and an assessment of capex synergies and returns for phase 2 expansion. From a valuation perspective, higher phase 1 opex and capex is largely offset by a higher phase 2 valuation; retain A$9/shr target price. Buy.
Santos shares are down over 4% since this time last year.