RBC Capital Markets analyst Ben Wilson says Anthony Neilson, the former CFO and current CEO of Chinese-controlled ROC Oil Company, is stepping into a "tough role" as Santos' new CFO to start in December.

His predecessor Andrew Seaton announced his intention to step down in July, but he will stay on until December.

Neilson, the last major member of the refreshed executive team, "will need to manage rating agency expectations as well as consider whether the company needs to protect itself through introducing oil price hedging, attempting to sell more assets, or the extreme case of another equity raise," Wilson said yesterday.

He and Seaton are likely to be asked to help oversee another found of staffing reductions, reportedly up to 600 workers, and non-core asset sales.

"His strong financial and risk management skills will further enable Santos to reduce costs, increase operating cash flow and manage its balance sheet to create value for its shareholders," Santos CEO Kevin Gallagher said yesterday.

But where RBC remains cautious on Santos despite its recent, material share price re-rating, UBS is more favourable, saying the worst could be over the Adelaide-based oiler.

Santos is on track to meet its 2016 output target of 57-63 million barrels of oil equivalent.

UBS said Santos' share price, which has dropped 31% over the past month, was underperforming the oil price, the ASX200 and peers since it released its half year result in August, driven by a range of issues including concerns about Gladstone LNG, its largest shareholder and concerns it will need to raid equity markets again to pay down debt.

The firm said while the cost-out guidance in the half year was underwhelming the company should be able to turn a dollar at a breakeven price of $35-40/barrel and while there are concerns about the Roma CSG acreage and a slower ramp up of Gladstone LNG Train 2, the biggest risk is Santos' credit rating.

UBS says the reliance on Fairview equity gas supply into GLNG will lead to additional investment in the future as GLNG increases output and Fairview, which is providing around 90% of GLNG current equity gas supply, declines.

With an expectation LNG production will be just 6MMtpa of 7.6MMtpa in 2019 Santos could lose its investment grade rating unless it reduces debt by more than $2 billion.

"If Standard & Poor's does decide that Santos needs to take further action to maintain its investment grade credit rating (even after further cost-out), we find it difficult to believe Santos would again undertake a large dilutive equity raise or sell key assets such as PNG LNG," UBS said.

Dissent

Yet analysts at Macquarie took a diametrically different position. They suggested that Santos should do exactly that, and sell PNG LNG or raise a bucket of cash to lighten its debt load before Standard & Poor's brings out the calculator to set its 2017 expectations.

Without such a radical move, Macquarie predicts Santos may be forced into another dilutive raise, this time in the order of $US3.5 billion.

Macquarie said it failed to see how Santos could manage cost cuts deep enough to protect its rating, while the oil price would have to average $US72 a barrel to meet S&P's targets.

"However, the raising could be justified as new management clean the decks in one large hit, giving the company a clean slate," Macquarie said Thursday morning.

"Cost cutting aside, a raising of $US3.5 billion (A$4.6 billion) would be necessary to repay Santos subordinated note and ECA facility to achieve an FFO-to-debt ratio within S&P's range."

Strength

With no debts maturing until 2019, UBS expects Santos can meet its $US1.2 billion payment from liquidity.

"Santos remains the most leveraged large cap E&P stock to oil price movement (primarily due to US$4.5 billion net debt), but after the recent share price decline we see more reward than risk and move Santos to a buy," UBS said.

It expects to see further cost cutting measures, fuelling the rumours that Gallagher is preparing for sweeping job cuts and a clear-out of its smaller, non-core assets 23 of its 28 operating assets account for just 5% of the company's value.

Among assets likely to be readied for sale are its 50% interest in the Casino gas project, off Victoria's Otway Basin, where partner AWE has recently been making noises about additional exploration and appraisal drilling.

Mitsui, which is also named as a buyer of Origin Energy's Perth basin assets, has been mentioned as being interested given it is already a Casino partner and last year it snapped up Santos' interest in the Kipper field in the Gippsland Basin.

Also up for sale is the interest in the decade old Mutineer-Exeter, offshore WA, which is tipped to fetch less than $20 million.

UBS values the company at $4.50, down from $4.90. Yesterday it traded at $3.59.