Santos Ltd (ASX: STO) shares are marching higher today.
Shares in the S&P/ASX 200 Index (ASX: XJO) energy stock closed yesterday trading for $7.66. In late morning trade on Tuesday, shares are changing hands for $7.70 apiece, up 0.5%.
For some context, the ASX 200 is up 0.1% at this same time.
As you're likely aware, Santos received a big boost on 16 April. Shares closed up 10.9% on the day amid news of a potential takeover offer from the XRG Consortium.
The Consortium is led by Abu Dhabi National Oil Company, Abu Dhabi Development Holding Company, and private equity firm Carlyle.
XRG lobbed a bid of around AU$8.89 per share, valuing Santos at around AU$30 billion.
Now, there's no certainty that the takeover proposal from the XRG Consortium will go through. And with Santos shares now up 14.3% year to date, and up 44.9% from the recent 9 April closing lows, is the ASX 200 oil and gas stock one to buy today?
Are Santos shares a buy right now?
Seneca Financial Solutions' Arthur Garipoli had a look into the outlook for Santos shares amid the looming potential takeover (courtesy of The Bull).
Garipoli summarised the current scenario:
This oil and gas company recently received a non-binding, indicative proposal from a consortium led by XRG P.J.S.C, a subsidiary of the Abu Dhabi National Oil Company and including Abu Dhabi Development Holding Company (ADQ) and Carlyle (the XRG Consortium).
Garipoli isn't recommending Santos stock as a buy right now, but he's not recommending selling your shares either.
"The cash offer price is US$5.76 or AU$8.89 for every Santos share," said Garipoli, who has a hold recommendation on Santos shares. "The Santos board intends to unanimously recommend shareholders accept the offer in the absence of a superior proposal."
He noted that the XRG Consortium's Santos takeover offer remains "subject to approval from the Foreign Investment Review Board, the Australian Securities and Investments Commission (ASIC) and other government agencies".
As for why investors may do well to hold onto their stock, he added:
Trading at AU$7.645 on June 26, STO shares were considerably below the offer price. Investors may want to consider holding the stock to see what transpires with this potential transaction.
A more bullish take
The analysts over at Macquarie Group Ltd (ASX: MQG) have a more bullish outlook on Santos shares.
The broker noted that stockholders "remain exposed to any superior/competing proposal, likely known after four weeks of XRG's due diligence (25 July)".
Macquarie has an outperform rating on the ASX 200 oil and gas stock with an $8.85 12-month price target. That represents a potential upside of almost 15% from current levels.
