STO Santos Limited

[winner69]

You could be right there mark ..... good luck to you if it is the case.

I think the outperformance of WPL over STO is mainly around valuations and to some extent earnings performance .... both important components of market sentiment

While this has persisted WPL has always traded at higher multiples than STO ... which has for years made many lament the 'cheapness' of STO relative to WPL ... and made many wonder why the STO shareprice isn't much higher than what it 'should' or 'could' be ... and so has been seen by the market as an underperformer.

That may be all changing eh .... at least it has since just before Christmas

[macduffy]

Santos up 5% as I type, outperforming other large cap oilers. I smell corporate activity

Not so sure about that. More a case of a slightly better outlook for oil I reckon.

BPT, though not a large cap in the same class as STO, is up 5.5% today. STO now up 2.9%

[mark100]

Perhaps I am reading to much into STO's rise. However when I look at the other oilers on my list, OSH, WPL and AWE they only finished up 0.5-1% while STO was up 3.4% in the end. STO's shart has also broken out.

I think BPT is strong because the market is expecting them to get a good price for their Tipton West stake.

Winner69, true WPL has always traded at a higher multiple of Market Cap to Reserves. I think maybe the removal of the 15% shareholding cap in Nov has allowed a takeover premium to get built into the price over the past few months

[bermuda]

Perhaps I am reading to much into STO's rise. However when I look at the other oilers on my list, OSH, WPL and AWE they only finished up 0.5-1% while STO was up 3.4% in the end. STO's shart has also broken out.

I think BPT is strong because the market is expecting them to get a good price for their Tipton West stake.

Winner69, true WPL has always traded at a higher multiple of Market Cap to Reserves. I think maybe the removal of the 15% shareholding cap in Nov has allowed a takeover premium to get built into the price over the past few months

Hi Mark,
Went to a meeting tonight. Santos is hot. I dont own any but got the feeling that this could go past $20...and more quickly. They have heaps of CSG.

But not enough to get me out of BOW and VPE.

[mark100]

Hi bermuda, yeah STO is never going to give you the leverage of BOW and VPE but I don't have the guts to back the truck up on the spec plays like you have, not in a bear market anyway. I obviously sold BOW too early and am now one of the punters hoping for a pullback.

On STO, the CEO has said Santos is ready to dance in the consolidation game. I thought page 20 of Origins presentation today was good. It showed Origin and BG are the 2 dominant CSG reserve holders in Australia now. If you have the view like me that only 2 LNG plants will get built in Gladstone then you would have to say any of the smaller parts of the pie chart on page 20 are up for grabs in the consolidation game. Of the bigger plays that would include the Santos and Arrow and then of course the smaller fry like BOW, VPE etc. If Shell is serious about a Curtis Is plant they have to get serious soon because they are being left behind. I also read on Bloomberg this week that BP is interested in Australian CSG as it wants to expand its LNG business.

Also remember that STO has a decent size stake in the PNG LNG project, potentially quite valuable to a predator. Exxon is behind this project and with their wads of cash and credit rating I expect PNG LNG to obtain project finance.

[mark100]

Well my theory that something was brewing was smashed today. Down almost 7% today vs 4.5% down for WPL. Makes that chart look a bit ugly now

[mark100]

There has been almost daily speculation in the media regarding a large oil deal involving STO these past few weeks. Where there is constant smoke there is fire?

Today the speculation suggests Shell is preparing to sell its 35% stake in WPL with BHP a possible bidder considering the cash its has raised recently. The theory is that Shell would then look to take out STO. Shell has recently selected Petronas as a partner in another LNG project so Shell should be comfortable with STO's JV with Petronas.

Personally I would like to see STO remain majority Aust owned but can't see that happening unfortunately so hopefully any bidder overpays me for my shares

[macduffy]

http://www.theaustralian.news.com.au...-36418,00.html

I'm increasingly attracted to STO these days and bought back in, in a modest way, recently.
Question is, do I now sell the rest of my BPT and load up on STO?

[mark100]

http://www.theaustralian.news.com.au...-36418,00.html

I'm increasingly attracted to STO these days and bought back in, in a modest way, recently.
Question is, do I now sell the rest of my BPT and load up on STO?

Hi macduffy, my view on BPT is that there are too many assets spread all over the place. Maybe that reduces project risk through diversification but it also causes a lack of focus I reckon. STO appear to be moving the other way, increasing their focus on just their prime assets and selling off the other stuff

[macduffy]

Hi macduffy, my view on BPT is that there are too many assets spread all over the place. Maybe that reduces project risk through diversification but it also causes a lack of focus I reckon. STO appear to be moving the other way, increasing their focus on just their prime assets and selling off the other stuff

Thanks, mark.
That's pretty well my take on the situation. I like the concentration on prime assets, especially PNG LNG project, GLNG project and their position on CSG. Might be said to be big, risky projects but they have strong partners there in Exxon and Petronas.
BPT on the other hand have sold their CSG interest and are placing a lot of emphasis on their foreign interests, particularly Egypt.