The eastern states explorer had its credit rating downgraded by Standard & Poor’s last month from BBB+ to BBB, while concerns of a second downgrade are now circulating.

Assuming oil prices of $US55.2 ($A68.4) a barrel, and an exchange rate at US80.6c, Credit Suisse analysts found that Santos has a negative net present value of negative A13c.

According to the ABC, Credit Suisse director and energy analyst Mark Samter said that while he did not expect the oil price to remain at current lows for the long term, his research pointed to Santos and rival Origin Energy having a hard time if they persisted for the next two to three years.

Both Santos and Origin have invested billions in LNG facilities on Curtis Island.

“On Monday, Credit Suisse estimated that, at the current exchange rate, it would take oil prices of $70 a barrel for Oil Search to be worth its present market value, $81 for Woodside, $83 for Santos and $84 for Origin,” the ABC reported.

With the analysts’ assumption in place, Woodside’s net present value is calculated at $18.74 a share, while Oil Search’s come to $3.70 per share.

Oil Search remains as the investment bank’s “clear top pick” amongst the Australian energy firms analysed.

Oil prices have continued to drop since the bank released its research, with West Texas crude trading at $47.93 a barrel yesterday.

Initial response

While ENP has not seen the Credit Suisse report, it has received some response from the widespread media coverage of it so far.

“It is a pretty extraordinary comment in the first place, and then to go so public with it in the second place,” an industry commentator told ENP.

“I am very cynical about investment banks. Perhaps they have a client who is eager to bid for Santos, so Credit Suisse is doing its best to get the value down.”