The Santos Ltd (ASX: STO) share price has gained 7.2% year to date as we near the final few trading days of 2023.
Shares in the S&P/ASX 200 Index (ASX: XJO) oil and gas stock kicked off 2023 trading for $7.08. In Friday afternoon trade, shares are swapping hands for $7.59 apiece.
The past year also saw Santos deliver 36 cents per share in unfranked dividends. That sees the stock trading at a trailing yield of 4.7%.
That's the year almost past.
The question now is, what can ASX 200 investors expect from the Santos share price in the year ahead?
What's ahead for the Santos share price in 2024?
There are numerous factors that could send the Santos share price higher or lower in 2024.
For the purposes of this article, we'll narrow our focus to three of the biggest ones.
First, the company has three major projects under development. Namely its Pikka Phase 1 project in the US state of Alaska; its offshore Barossa project near the Northern Territory; and its Moomba carbon capture and storage (CCS) project in South Australia.
In late November, management reported that its Alaskan project is 29% complete.
The Moomba CCS project is 75% complete, with the first CO2 injection expected in the first half of 2024.
And Barossa was said to be 64% complete, "despite the challenging approvals, regulatory and third-party litigation environment in Australia".
What happens with the legal issues holding up the Barossa project, meant to supply Santos' LNG plant in Darwin, could have a material impact on the Santos share price in 2024.
Earlier this week the company stated:
Santos has conducted further extensive consultation with Tiwi Island people and other relevant persons consistent with the applicable regulations, NOPSEMA's guidelines, and guidance provided by the decision of the Full Federal Court in the Tipakalippa proceedings.
Santos is proceeding with applications for all remaining approvals for the Barossa Gas Project.
We'll likely learn of the legal outcome in early 2024.
The volatile oil price
Another big factor that will influence how well the Santos share price performs in 2024 is the oil and gas price it receives.
Brent crude is trading for US$79.55 per barrel today. That's up from the recent lows of US$73.24 per barrel on 12 December. But it's still well down from the US$96.55 per barrel Brent was fetching on 27 September.
The oil price is notoriously hard to forecast.
On one hand, demand is expected to remain robust. Despite slowing growth, the International Energy Agency (IEA) expects global oil demand to increase to a record annual high of 102.9 million barrels per day in 2024.
And OPEC+ recently extended its production cuts into the first quarter of 2024 in an effort to prop up prices.
There's also the big unknown of what may or may not happen in the crucial oil route through the Red Sea, where Houthi rebels have been causing havoc with crude oil shipments.
On the other hand, potentially supressing the oil price in 2024 and throwing up headwinds for the Santos share price, is ongoing record production out of the US, the world's top oil producer.
With that in mind, and barring a major escalation of the conflicts in the Middle East, I expect we won't see Brent crude top US$100 per barrel next year. But with OPEC's cuts in place and global demand likely to remain strong, I also don't see the average crude price slipping much below today's levels.
Santos' production guidance for 2024 is in the range of 84 to 90 million barrels of oil equivalent (mmboe). That's slightly below its 2023 production guidance of 89 to 93 mmboe.
What else could impact the Santos share price in 2024?
Another big development ASX 200 investors should keep an eye on is the potential merger with Woodside Energy Group Ltd (ASX: WDS).
On 8 December, Santos and Woodside confirmed that merger talks have been taking place.
There are no guarantees a merger will eventuate in 2024. But if it does progress it could be a boon for Santos shareholders, with many analysts noting that Santos stock trades at a significant discount to Woodside stock.
"For a merger to proceed, Woodside must be willing to recognise and pay up for that value, which represents the biggest risk to a merger proceeding in our view," UBS analyst Tom Allen said of the potential merger.
The Santos share price closed up 6.2% on the day the merger discussions were confirmed.
