The Santos Ltd (ASX: STO) share price gained 2.5% over the month of May.
Santos shares closed on 29 April trading for $8.00 and ended yesterday trading for $8.20.
As for the S&P/ASX 200 Index (ASX: XJO), it went the other direction, falling 3.0% over the course of May.
So, why did the Santos share price beat the benchmark?
Rising oil prices and new agreements
If you filled up your car over the last month, you’ll be all too aware of the continuing surge in energy costs.
While those costs are hitting consumers’ budgets, they’re also providing some welcome tailwinds to the Santos share price.
We’ll take international benchmark Brent crude oil as an example.
Brent kicked off May trading for US$109 per barrel. By the end of the month that same barrel was trading for US$123. An increase of almost 13%.
Santos costs for pumping oil and gas out of the ground are essentially fixed. Meaning any increase in the price for their commodities goes straight to the bottom line.
Should energy costs remain elevated, it also means Santos’ shareholders could look forward to some healthy dividend payouts in the financial year ahead. The ASX 200 energy giant currently pays a 2.4% dividend yield.
Atop the premium prices its receiving for oil and gas, the Santos share price also looks to have gotten a boost from several new deals announced in May.
First, Santos reported it will farm-in and take operatorship of Cooper Basin oil and gas permit Authority to Prospect (ATP) 2023 from its wholly owned subsidiary Leigh Creek Oil and Gas Pty Ltd.
And on 17 May, Santos reported its joint venture partner State Gas Ltd (ASX: GAS) was appointed Preferred Tenderer of two gas exploration sites in Queensland. The sites border on projects already held by Santos.
Santos share price snapshot
Atop beating out the ASX 200 in May, the Santos share price has trounced the benchmark returns in 2022.
Year-to-date Santos shares have gained 24.1% compared to a 4.7% loss posted by the ASX 200.
The post Why did the Santos share price beat the ASX 200 in May? appeared first on The Motley Fool Australia.
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More reading
- 5 things to watch on the ASX 200 on Wednesday
- ASX 200 midday update: Beach, Santos rise but EML, Zip tumble
- Want to invest in energy? This is ‘our most preferred’ ASX share: Wilsons
- 5 things to watch on the ASX 200 on Tuesday
- Why is the Santos share price sliding on Monday?
The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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