ADNOC’s Santos Bid Sparks Undervaluation Debate as ASX200 Energy Players Attract Global Interest

June 20, 2025 12:11 PM AEST | By Team Kalkine Media

Google News:

ADNOC’s Santos Bid Sparks Undervaluation Debate as ASX200 Energy Players Attract Global Interest — Image source: shutterstock

Recent News

Brambles Ltd (ASX:BXB) Performance Insights Across ASX 50 and ASX 100

Oil Surge and Familiarity Bias in ASX 200 Portfolios: A Look at Woodsi...

Downer EDI Ltd ASX 200 Industrial Stock Linked to Dividends

Wesfarmers Shares: Retail Exposure in ASX 50 and ASX 200

Highlights

ADNOC’s offer for Santos (STO) seen as below true value

Long-term gas demand trends offer sector resilience

Woodside (WDS) may emerge as another key acquisition candidate

A bold move by the Abu Dhabi National Oil Company (ADNOC) to acquire Santos Ltd (ASX:STO) for nearly US$30 billion has drawn fresh scrutiny from analysts, with many suggesting the offer fails to capture the intrinsic value of the Australian energy firm. Despite appearing generous on the surface, deeper financial insights paint a different picture.

Market analysts observe that Santos’ long-standing share price stagnation does not align with its actual earnings performance. In fact, the company once traded at a much stronger multiple during the China-led commodity boom—approximately 10 times EV/EBITDA—compared to just five times today. This collapse in valuation multiples is not necessarily due to business fundamentals but rather a reflection of broader sentiment trends across the energy sector.

Several factors have weighed on the sector, including decarbonisation efforts and institutional divestments. However, long-term projections for natural gas consumption remain solid, especially in Asia-Pacific markets. This disconnect between operational performance and market sentiment appears to have been a key motivator behind ADNOC’s opportunistic approach.

Morningstar analysts estimate Santos’ fair value at around A$10 per share, significantly above ADNOC’s A$8.89 offer. The current trading price of A$7.74 suggests that the market remains uncertain about the deal's success. Regulatory approval also remains a major hurdle, with only a 50% chance of clearance estimated by analysts.

This evolving situation around Santos also places a spotlight on Woodside Energy Group Ltd (ASX:WDS), another major player in the ASX200 index. Woodside’s asset base, strong cash flow, and underappreciated valuation make it a compelling candidate for similar acquisition interest. The company’s recent trading price of A$25.63 sits below its estimated replacement cost, further highlighting potential upside.

As global energy players look for strategic assets to enhance their portfolios, undervalued Australian companies in the ASX200 could attract heightened attention. With resilient demand trends in liquefied natural gas and a shifting M&A landscape, this wave of interest may just be beginning.

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.