STO - Santos Limited

[qldfrog]

Re: Potter

Comment above posted on the 28th Sept so you paid about $13.50, shocking timing, personally i only get interested in Santos when its under 12 bucks...STO trading down another 9% today at $9.20...clearly an opportunity in the making.

The Monadelphous thread has pages of bargain hunter comments etc as MND fell like a stone, yet Santos gets nothing. :dunno: Monadelphous down 6% today as well.

started accumulating 12.7 outch, more at 9+
if history is of any help STO has played yoyo between 10 and 14 for years
IMHO a good opportunity to get in if you can wait a bit before selling, I also expect some proper dividend when the trains start producing

 

[Miner]

This is a very bullish call on oil from Continental's CEO, the article is from Businessweek:



http://www.businessinsider.com/r-us-oil-ceo-hamm-goes-out-on-a-limb-scraps-hedges-2014-11

Article from Seeking Alpha about Santos (STO), Beach (BPT), Senex (SXY) and Drillsearch (DLS), see the middle of the article:


http://seekingalpha.com/article/2566285-petroamerica-my-additional-take

Hi Tradernor

I am curious what Alpha and Continental CEO would be telling on STO?
If for a change I am not wrong, oil shares will plunge quiet a lot. Not gossip - just see behaviour of OPEC. They are doing like what miners are doing. Flooding market with production making small players unsustainable. Unfortunately some of the high priced CAPEX of STO now yielding the result with market price. So the scrip got flogged.
Do not hold - disclaimer

 

[skc]

If for a change I am not wrong, oil shares will plunge quiet a lot. Not gossip - just see behaviour of OPEC. They are doing like what miners are doing. Flooding market with production making small players unsustainable. Unfortunately some of the high priced CAPEX of STO now yielding the result with market price. So the scrip got flogged.

Interesting isn't it how most miners and oilers make bullish mistakes... the commodity cycle has happened repeatedly over many years, yet it never fails to suck in a new generation of bullish executives who invest heavily, knowing full well that such investment will require the high point of the cycle to be sustained to generate any returns.

I also find it interesting that the oilers often get priced at "spot" when clearly they are a 20-30 year asset. Their market price should really behave more like a long dated option...

 

[Wysiwyg]

Santos broke 2007 low of $8.17 today when hitting $8.13. WTI has stabilised so there must be a forecast of further drops in crude or crude has bottomed out and it is a shake out for professionals to buy in (if that is a reality).

 

[So_Cynical]

STO traded under $7.50 today down 8.5% .. a real spanking .. im still waiting but will once again try and buy some cheap long dated calls.

 

[moXJO]

STO traded under $7.50 today down 8.5% .. a real spanking .. im still waiting but will once again try and buy some cheap long dated calls.

how far out you looking at going?

 

[JTLP]

Directors went hard after close today, with 4 x notices issued with them snapping up around 49,000 shares at $7.14-19.

Is this a vote of confidence for the market? Or them spotting an opportunity for the long term.
You can also snap up a little yield on these too...sits around 4.3%. Capital gain + yield potential in the long run perhaps?

I did read on Bloomberg that Andrew Hall (considered God of oil trading) sees oil as low as $50 a barrel before recovering in the 1st half of 2015.

 

[shouldaindex]

Reached the first support level much sooner than I thought today, and given the trajectory and how long left there is to play out, I've had to add further support levels and think the bottom one is not only in play after today, but has become the most likely.

STO $7.10, OIL $60
STO $5.80, OIL $55
STO $3.80, OIL $40

 

[skc]

Directors went hard after close today, with 4 x notices issued with them snapping up around 49,000 shares at $7.14-19.

Is this a vote of confidence for the market? Or them spotting an opportunity for the long term.
You can also snap up a little yield on these too...sits around 4.3%. Capital gain + yield potential in the long run perhaps?

I did read on Bloomberg that Andrew Hall (considered God of oil trading) sees oil as low as $50 a barrel before recovering in the 1st half of 2015.

Think carefully about buying resource stok for the yield, especially one that has yield (seemingly) rising. It's almost guaranteed to disappoint.

Reason being: yield% is a function of the share price, and the lower the share price, the higher the historical yield number. Yet the fundamental reason for share price falling is that the price of the commodity is falling. A falling commodity price doesn't support the cash required to pay out dividend.

STO is under balance sheet pressure. To shore up the financial positions, they can raise equity, cut opex/capex (announced today), borrow more debt (which they pulled last week) and cut dividend. So don't count on the dividend being there at all.

You'd only buy STO if you believe that oil will recover (or a takeover offer), but I would be careful about the yield consideration.

 

[notting]

It's still trading at a multiple of 16 which should be halved in the current environment.
If only WPL hadn't bought itself!
You'd think there would be some Asian interest in STO regardless.
The hard work is largely done and it would make a good purchase for someone who could swallow the debt in the transaction.

On the over all picture. Had OPEC cut, the market was hoping for a cut of around 3.33%. OPEC supplies around 30% of the market.
So we have had a massive drop off on the back of about a 1% cut not done.
How fricken mental!
If OPEC got together with the Russians and co they could all cut about .5% and cause the price to bounce back to $100. This would massively offset the losses being incurred with the 40% drop in price.
Do you think they are going to cut at some point soon?
Now let me think...........................

 

[Smurf1976]

Do you think they are going to cut at some point soon?
Now let me think...........................

Drilling rates are starting to come down in the US and Canada.

With the (very rapid) rate at which shale wells deplete, it's only a matter of time until that brings about a cut in production. They have to keep drilling to keep production up, drilling faster and faster as the number of producing wells increases, and at this price they're not going to do that for too much longer.

I'm confident that oil will come back up in the medium term. What happens in the short term is anyone's guess given the politics and potentially speculation involved.

 

[skc]

Drilling rates are starting to come down in the US and Canada.

With the (very rapid) rate at which shale wells deplete, it's only a matter of time until that brings about a cut in production. They have to keep drilling to keep production up, drilling faster and faster as the number of producing wells increases, and at this price they're not going to do that for too much longer.

I'm confident that oil will come back up in the medium term. What happens in the short term is anyone's guess given the politics and potentially speculation involved.

Personally I think driving US shale out of business is only a secondary objective or an indirect consequence of what OPEC (and its allies) is trying to schieve.

Yes US shale is greatly impacted, but the moment oil price goes back up, the drill rigs will go back in and it won't take long to ramp up production. It will put US shale on "sleep" mode for a while, but it won't ultimately stop them.

Other potential objectives, like bringing down the Russian government, however... can be achieved with a low oil price over the medium term.

Back to STO...

I am of the opinion that oil price will go back up some time in the future. But it's completely anyone's guess on when that will take place. Individual companies may or may not survive the low price period in their current forms. It's one thing to predict that the flu epidemic will pass, it's quite another to predict whether a weak individual patient will stay alive or not.

 

[skyQuake]

It's one thing to predict that the flu epidemic will pass, it's quite another to predict whether a weak individual patient will stay alive or not.

That's a very nice analogy, I will steal it and pass it as my own personal wisdom.

Also, i think the action in energy stocks (US) tell me a low has been found... Energy equities are reacting very sluggishly to oil weakness. Maybe one more savage stops run on the open then squeeze to green.

I wonder if the oilers 'bust' will play out like the iron ore 'bust' or the goldies 'bust'...

_________________________________

Edit: Lows in boys! Buy buy buy!*

*probably wrong but you should buy anyway so i can get a good exit

 

[CanOz]

That's a very nice analogy, I will steal it and pass it as my own personal wisdom.

Also, i think the action in energy stocks (US) tell me a low has been found... Energy equities are reacting very sluggishly to oil weakness. Maybe one more savage stops run on the open then squeeze to green.

I wonder if the oilers 'bust' will play out like the iron ore 'bust' or the goldies 'bust'...

_________________________________

Edit: Lows in boys! Buy buy buy!*

*probably wrong but you should buy anyway so i can get a good exit

Too funny SQ....I stop by sometimes just to read posts like this!

 

[shouldaindex]

Just had a re-look at the STO chart, and it seems to be more dictated by trend lines than previous support levels. From 2009 to present, there's a downtrend line at about a 10% annual decline.

I see the oil story continuing well into 2015. So we may see some bounces off lows, but if the 10% downtrend continues then low $6 is a target in play for 2015 for the downtrend to continue.

 

[JTLP]

Think carefully about buying resource stok for the yield, especially one that has yield (seemingly) rising. It's almost guaranteed to disappoint.

Reason being: yield% is a function of the share price, and the lower the share price, the higher the historical yield number. Yet the fundamental reason for share price falling is that the price of the commodity is falling. A falling commodity price doesn't support the cash required to pay out dividend.

STO is under balance sheet pressure. To shore up the financial positions, they can raise equity, cut opex/capex (announced today), borrow more debt (which they pulled last week) and cut dividend. So don't count on the dividend being there at all.

You'd only buy STO if you believe that oil will recover (or a takeover offer), but I would be careful about the yield consideration.

Thanks SKC.

I actually thought of that as soon as I wrote it, silly me!
I wonder if we will see a revised guidance on any major oiler numbers due to this drop in oil price? You'd think the lower lows would have to be spelled out eventually?

 

[skc]

I wonder if we will see a revised guidance on any major oiler numbers due to this drop in oil price? You'd think the lower lows would have to be spelled out eventually?

Oilers normally guide their production and capex spend... they don't give guidance to profits or EPS etc for obvious reasons. Some companies will present sensitivity anaylsis... like $Xm NPAT for each 10c drop in oil price, or $Ym NPAT for each 1c movement in the $AUD/USD cross rate.

It's up to the investor to work out. Many analysts still have higher oil price plugged into their valuation model so those price targets will come down. But the market price has already reflected the new reality.

 

[sptrawler]

Thanks SKC.

I actually thought of that as soon as I wrote it, silly me!
I wonder if we will see a revised guidance on any major oiler numbers due to this drop in oil price? You'd think the lower lows would have to be spelled out eventually?

I can't see the oil price staying at this level for long, it just doesn't make sense, Arabs giving away oil.
Therefore I'm in for a flutter on the 15/12 at $7 even, here's hoping.

 

[ROE]

I can't see the oil price staying at this level for long, it just doesn't make sense, Arabs giving away oil.
Therefore I'm in for a flutter on the 15/12 at $7 even, here's hoping.

If Oil stay low for another year, STO will be in need of capital, capital injection via equity raising or debt market
but I reckon it be hard pressed to get decent rate with this oil price so equity injection is more like it.

the share price damage reflect the current oil price but if this drag on, the balance sheet will be hit next and it will be another leg down.

I looked at STO at $9 and I decided not to get involve as their balance sheet look vulnerable for a big dilution.

Safer way to play STO is buy $500 worth and wait for Capital raising , low risk with a decent chance of getting extra 15K on the cheap

 

[sptrawler]

If Oil stay low for another year, STO will be in need of capital, capital injection via equity raising or debt market
but I reckon it be hard pressed to get decent rate with this oil price so equity injection is more like it.

the share price damage reflect the current oil price but if this drag on, the balance sheet will be hit next and it will be another leg down.

I looked at STO at $9 and I decided not to get involve as their balance sheet look vulnerable for a big dilution.

Safer way to play STO is buy $500 worth and wait for Capital raising , low risk with a decent chance of getting extra 15K on the cheap

Good point Roe, I'm just relying on the oil price recovering and will exit. But your idea sounds good, might leave $500 in.