Santos Rally Capped At Six, As Shares Make Decade Highs

Santos shares (ASX:STO) briefly touched its highest share price in a decade on Friday before easing into the close, capping another positive week that keeps the stock near the top of the outperformers on the ASX 200.

The Santos share price hit an intraday high of A$9.24 during Friday’s session, a level not seen in over ten years, before profit-taking trimmed the advance and the stock settled 0.87% lower on the day at A$9.11. While the negative close snapped a six-consecutive-session winning streak, Santos finished the week 3.88% higher and has now extended its year-to-date gain to an impressive 48.13%.

That performance comfortably outpaces fellow ASX-listed energy heavyweight Woodside Energy (ASX:WDS), which has itself delivered a solid 40% gain over the same period. The gap between the two underlines a growing market conviction that Santos carries superior leverage to prevailing energy prices.

From a technical standpoint, the Friday pullback could well be healthy for the long term picture, as the RSI eased from overbought territory above 70 down to 68.04, giving the stock a little more room to breathe.

The Latest Driving Santos Shares Higher

On the macro front, Brent crude has climbed further, propelled by escalating geopolitical tensions and heightened maritime security concerns in the Middle East. Santos, which operates with comparatively high exposure to unhedged oil and LNG spot pricing, benefits disproportionately from elevated benchmarks. Rising crude prices translate with unusual directness into expanded margins and stronger cash generation for the company relative to more hedged domestic peers.

At the project level, Santos is transitioning from capital-intensive construction to revenue-generating production. Its Barossa LNG development offshore the Northern Territory is commissioning at approximately 97% of planned capacity, progressively backfilling the Darwin LNG plant and establishing a reliable cargo delivery schedule. Simultaneously, the Pikka Phase 1 project in Alaska has commenced continuous production, with seawater injection established and output ramping toward a plateau target of around 80,000 barrels of oil per day.

The completion of these two major capital projects is central to Santos’ revised shareholder returns framework. Once plateau production rates are sustained, the company has committed to returning at least 60% of free cash flow to shareholders, a policy that has attracted considerable institutional interest.

Beyond operations, Santos has been active on the commercial front. The company signed a 10-year LNG supply agreement with South Korea’s POSCO Holdings, commencing in 2030 and 2031, providing long-dated revenue visibility into a key Asian market.

It also executed a 20-year Heads of Agreement with Western LNG to purchase 1 million tonnes per annum of LNG from the proposed Ksi Lisims project in British Columbia, Canada, diversifying its supply portfolio geographically. Perhaps most strategically, Santos acquired an additional 3.3% equity stake in Papua LNG from TotalEnergies for approximately US$189 million, lifting its total interest to 21% and consolidating its position ahead of a Final Investment Decision on that project.

What Next?

The path ahead for Santos hinges on crude and LNG pricing, alongside the smooth operational ramp-ups at both Barossa and Pikka. Technically, the key support zone to watch sits between A$8.90 and A$9.00, the former resistance band that Santos broke through convincingly during its recent run. A failure to hold above this level on any further pullback could invite mean reversion toward the 50-day moving average near A$8.38.

Santos heads into the new week as one of the top performing stocks on the index. Whether the shares can continue to build on the decade-high will depend as much on the path of global oil prices as anything else in the near term. The cooling of the RSI gives a little leeway if conditions prove supportive, and with oil jumping into the weekend to $109.50 and $101, that may just be the case come Monday.

Bull Case: