Santos Ltd (ASX: STO) shares spent much of 2025 under a cloud.
By Friday's close, Santos shares sat at $6.15, down 20.4% in the past 6 months. Takeover drama, environmental criticism and regulatory headaches have all taken turns knocking the energy stock lower.
Still, some analysts reckon the selling may have gone too far. This begs the question, whether the ASX energy share is good value at this level.
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Takeover chaos
Last year delivered no shortage of fireworks for Santos shares. A failed takeover attempt from an ADNOC-led consortium put Santos firmly in the spotlight. It exposed how quickly governance and regulatory hurdles can derail big-ticket deals and send the share price south.
Behind the noise, though, Santos continues to generate solid cash flow. Management is pushing ahead with LNG expansion plans while talking up carbon initiatives designed to keep the company relevant in a transitioning energy system.
Projects like Barossa are central to that strategy. Once online, Barossa is expected to lift LNG volumes to Asian markets that still want reliable, high-calorific gas. Santos has also locked in mid-term LNG supply contracts this year, a sign demand for its product hasn't evaporated.
If those gains hold, stronger cash flow and more flexibility for shareholder returns should follow.
Size and geographics matter
Scale remains one of Santos' biggest advantages. Alongside Barossa, the company's projects in PNG and Alaska add geographic diversity and reduce reliance on any single asset.
Santos is also leaning hard into low-emissions technology, arguing it can keep producing gas while lowering its carbon footprint. Whether critics are convinced is another question, but the strategy matters as regulators and investors sharpen their focus on emissions.
Analyst's takeout
This is no free kick. Operational disruptions from weather and outages, volatile gas prices and ongoing scrutiny of emissions programs keep Santos firmly in the risk column. Oil prices just experienced their worst year since 2020.
The failed takeover attempt also showed just how sensitive the stock can be to external shocks.
Despite the risks, analysts remain cautiously constructive. Santos offers exposure to a large, cash-generating gas producer with production growth ahead and a stated plan for lower-carbon operations.
The average 12-month price target sits near $7.30, implying 19% upside. Some analysts are significantly more optimistic and think the share price could climb to $8.73 next year. That represents an impressive 42% upside from the current trading price.
UBS is one of the brokers that rates the Santos share price as a buy, with a price target of $8.10. The broker said it thinks the company could generate US$1.5 billion of net profit in FY26 and US$1.7 billion in FY28.
