Santos has been downgraded to Neutral from Outperform by UBS and Credit Suisse, citing the second quarter update released last Friday. Investors also reacted negatively to the news, with Santos falling 3.6% to $13.74. The brokers note production issues in the Vietnam, Bangladesh and Carnarvon basins which contributed to the cut in production guidance for FY13. Despite this, both the PNG LNG and GLNG projects are progressing well with both on track for completion on schedule. However, risks remain especially for cost overruns given difficulties to date encountered during construction of LNG projects in Australia.