STO Santos Limited

[AMR]

Darn, we don't have a Santos thread? It's only one of the largest ASX gas companies

Looking like a reasonable point to enter here. Support just underneath at $16, could be a nice longer term hold. Any fundamentalist opinions?

[Huang Chung]

Huntley's have them as a 'buy' at these prices.

They see CSG becoming STOs new cornerstone asset (replacing Cooper Basin).

A big unknown is their liability to the Sidoarjo mud disaster in Indonesia.

[shasta]

Huntley's have them as a 'buy' at these prices.

They see CSG becoming STOs new cornerstone asset (replacing Cooper Basin).

A big unknown is their liability to the Sidoarjo mud disaster in Indonesia.

STO Half year results out (various anns)

Half Year Financials
http://www.stocknessmonster.com/news...E=ASX&N=167825

2008 Results
http://www.stocknessmonster.com/news...E=ASX&N=167826

Interim Results Presentation
http://www.stocknessmonster.com/news...E=ASX&N=167828

Capital Management Strategy
http://www.stocknessmonster.com/news...E=ASX&N=167831

Share buyback
http://www.stocknessmonster.com/news...E=ASX&N=167832

Proposal for gas fired power station in Western Victoria
http://www.stocknessmonster.com/news...E=ASX&N=167833

[mark100]

STO looking very attractive at prices under $11. Flogged of 40% of the QLD CSG for US$2b paid off debt, bought back shares etc

Short term production growth is low but STO holds valuable stakes in PNG LNG and QLD CSG LNG. Now trading on a EV multiple of under 4 on my numbers. And WPL is trading on an EV multiple under 5.

When you can buy highly cash generative businesses on these multiples and get exposure to longer term LNG growth I don't know why anyone would bother playing the spec CSG companies in this market. The specs are going to find it impossible to raise cash for drilling and the ones with good ground will probably be bought up by the majors for SFA

[mark100]

True but if the majors have enough reserves to keep them happy for a few years then they could just lets the specs die and then pick over their ground. It's happened all before. As one newsletter I read occasionaly has said, some resource companies that had market caps of almost $1b at the peak are now back to $200m. But before the boom their market caps were $10m. If their funding does dry up they will head back to $10m

[shasta]

not all the sml specs are underfunded

remember a few can call on there new big brothers for funding


and for example ESG, is fully funded for all its drilling

there is still the good old JV if minnows have good ground and need funding in different ways

eg PES and BUL

Remember the CSG fairway is in Queensland/Gladstone...

ESG is in NSW & is a different kettle of fish..

Has dropped somewhat from when i exited at 67c

[mark100]

Regarding STO, it should also be noted that the 15% shareholding cap is lifted next month. When I read articles that say ExxonMobile is holding US$30b cash and may start looking for acqusitions I think STO could be on the radar. STO have 17% of PNG LNG which would enable Exxon to up their stake whilst also getting a foothold of some of QLD's CSG assets, keeping BG and Connoco at bay

WPL also a potential target now I reckon. Shell's previous bid was rejected on national interest grounds as they wanted to see the North West shelf development proceed. Now that is happening combined with a new LNG industry in QLD a bid for WPL may be looked upon in a different light

[winner69]

STO for years has on 'fundamentals' always looked a better buy than Woodside. Many have said that IF Santos was valued in line with Woodside than you could expect a significant rerating of Santos. That has never happened ... the WPL shareprice generally outperforms STO, over many different timeframes

Woodside appears to have this 'premium' because the market is saying it does business better ..... better strategy? better leadership? more consistent performance? .... hard to put a finger on it but whatever the market memory (perception) is / has been that Woodside is better

I don't see anything changing in this respect and will stick to WPL over STO. Even though the shareprice of each will follow the same sort of pattern history / market memory suggests that WPL is more likely to outperform STO than the other way around

[mark100]

STO for years has on 'fundamentals' always looked a better buy than Woodside. Many have said that IF Santos was valued in line with Woodside than you could expect a significant rerating of Santos. That has never happened ... the WPL shareprice generally outperforms STO, over many different timeframes

Woodside appears to have this 'premium' because the market is saying it does business better ..... better strategy? better leadership? more consistent performance? .... hard to put a finger on it but whatever the market memory (perception) is / has been that Woodside is better

I don't see anything changing in this respect and will stick to WPL over STO. Even though the shareprice of each will follow the same sort of pattern history / market memory suggests that WPL is more likely to outperform STO than the other way around

Yes true STO has always been the poor cousin. My attraction has grown to STO recently though following the Pertronas deal. STO now has net cash on the balance sheet while WPL's balance sheet is going to be getting a good work over funding Pluto etc. Also STO is bound to attract some corporate interest in the next 12 months. I like both but am still going to put more on WPL than STO

[airedale]

STO has pulled back from recent lows below $11.0 to finish the week at $13.49. Perhaps there has been a hint of more corporate activity since the Petronas deal.