STO - UBS rates the stock as Neutral
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ExxonMobil, operator of the PNG LNG project, has stated that it may take eight weeks to repair and restore production from upstream operations following the earthquake.
UBS anticipates a slow ramp up in oil output as individual field wells are assessed and brought back on line. As further after-shocks continue, the broker envisages downside risk for the start up of PNG LNG.
Santos has a 13.5% stake in the project and this is one of the company's key long-life gas assets. The impact, UBS calculates, is a -2% reduction in the company's total production and a -9% decline in 2018 earnings per share. UBS reduces valuation slightly. Target is $5.20. Neutral.
Target price is $5.20.Current Price is $4.89. Difference: $0.31 - (brackets indicate current price is over target). If STO meets the UBS target it will return approximately 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).
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