Santos earnings watch: 4 things to consider before half-year results

When will Santos release its results?

Santos Ltd (ASX: STO) is set to release its 2019 half-year results this Thursday, August 22 at 11:00 AEST.

Santos share price: details in demand

Even though Santos Ltd has already released first and second quarter activities reports to the market, investors will likely be keen to gain a more in-depth understanding of the company’s financial performance, as well as its full-year outlook.

Previously, the company reported record first-half production figures of 37MMboe – which represents a 32% increase year-over-year.

In addition to this, Santos saw its sales volume hit 45.2MMboe, while its sales revenue also increased significantly, rising 18% to A$2 billion in 1H19.

Speaking of these results, Santos's Managing Director and CEO, Kevin Gallagher said:

'Our disciplined operating model and approach to capital allocation has delivered a strong first half result.’

The company however did not release earnings figures in its recent activities reports, something that current and prospective investors will likely be keen to gain further clarity on this Thursday.

Furthermore, in its latest activities report, the company reported that it generated an impressive $300 million in free cash flow in the second quarter – taking Santos’s first-half free cash flow to over $600 million.

Indeed, as the company was rightfully proud to point out:

‘Santos has now delivered positive free cash flow for thirteen consecutive quarters.'

Investors will also likely be keen to see further information on the company’s Dukas-1 project.

This project has previously faced delays, but nonetheless looks to be a promising venture.

2019 full-year guidance

Though the broader picture of Santos’s half-year results are mostly known – thanks to its Q1 and Q2 activities reports, investors will likely want to see further commentary regarding 2019 full-year guidance.

Santos’s CEO gave some indication on where FY19 performance may be heading when he noted that following planned maintenance works in Q2:

‘We currently expect stronger production in the second half.’

What this ‘stronger production’ means in more concrete terms will likely be of great interest to investors as we edge closer to the half-year results.

What do analysts think?

As it stands, Santos (ASX: STO) looks to be well liked by analysts.

According to the Wall Street Journal, the stock currently carries an overweight rating: with seven buy recommendations and five hold recommendations.

Santos has no sell recommendations.

The wealth management firm Morgans for example, even though they retain a hold rating on Santos, has pointed out that they, ‘are expecting much higher pcp 1H earnings from STO of A$468m.’

Year-to-date, Santos’s shares have outperformed the ASX 200 benchmark by a wide margin, rising 27% in that period.