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Is the Santos (ASX:STO) share price a turnaround pick?

Santos Ltd (ASX: STO) has just upgraded its 2020 guidance. Is the Santos share price a turnaround pick on this news?

Santos is one of the biggest oil producers on the ASX.

Upgraded 2020 guidance

Santos increased its 2020 production guidance to 87 million to 89 million barrels of oil equivalent (MMboe) and also lowered its production cost guidance to $8 to $8.50 per barrel.

The previous guidance was 83 MMboe to 88 MMboe. The growth would be 15% to 18% on the previous year.

Its production costs have come down in response to COVID-19. Capital expenditure is still expected to be around $900 million, which is consistent with the 38% reduction announced in March,

Its 2020 forecast free cash flow breakeven boil price is less than US$25 per barrel before hedging.

Santos also announced today a roadmap to net-zero emissions by 2040 and new emissions targets, including a 26% to 30% reduction in scope 1 and 2 emissions by 2030.

Are Santos shares are turnaround idea?

Oil plunged earlier this year as demand dried up. But the Santos share price is recovering, as is the oil price.

The vaccine news is a positive for the direction of the oil price because it could mean more of a return to ‘normal’ life, particularly in the northern hemisphere. There could be more flights, more travelling, more shipping, more driving to work (and school) and so on.

There could be a short term play here, but I’m not confident about the long term future of oil. There are other businesses I’d rather invest in. For example, for a somewhat similar idea, APA Group (ASX: APA) is a solid business.

Other turnaround favourite ideas of mine are businesses like Brickworks Limited (ASX: BKW) and EML Payments Ltd (ASX: EML).

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