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STO - Santos Limited

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shouldaindex said:
It's been mentioned multiple times that management thinks breakeven cash flow is at about $50 Oil.

So for STO can make enough earnings to get a 20 PE for example, would require (rough estimate) $65 Oil.

So even though Oil is $30, you're buying STO priced for $65 Oil.

That's an awful deal IMO!
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Yea, heard something like $US40, so about $50 AUD, for GLNG operation.

Last quarter its oil sales averages some $60 AUD right? Contract will definitely be lower now given the recent/current crash. But it won't mean STO will bear all the brunt either - it could, for example, buy similarly cheap oil and pass it on to customers.

But thing is, can oil remain at these level for long? STO has enough to pump for 20 years at least... not all of them will be at this level unless oil remains so for another decade. If it couldn't be this low, when oil goes up the profit then will make up for today's losses.

GLNG, from memory, is designed for at least 20 years. We can't take this last and next couple years prices to project its profitability for its entire life.


Brighter side is it's planning to divest certain assets. the pipelines for GLNG could fetch its share to maybe $1B. That would be enough to weather next couple of years low oil prices.
 
luutzu said:
Yea, heard something like $US40, so about $50 AUD, for GLNG operation.

Last quarter its oil sales averages some $60 AUD right? Contract will definitely be lower now given the recent/current crash. But it won't mean STO will bear all the brunt either - it could, for example, buy similarly cheap oil and pass it on to customers.

But thing is, can oil remain at these level for long? STO has enough to pump for 20 years at least... not all of them will be at this level unless oil remains so for another decade. If it couldn't be this low, when oil goes up the profit then will make up for today's losses.

GLNG, from memory, is designed for at least 20 years. We can't take this last and next couple years prices to project its profitability for its entire life.


Brighter side is it's planning to divest certain assets. the pipelines for GLNG could fetch its share to maybe $1B. That would be enough to weather next couple of years low oil prices.
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Why can't oil return to say long term average of $20

cbNNjg5.png

No double there will be violent squeeze along the way... Why not just buy oppies on oil instead?
 
skyQuake said:
Why can't oil return to say long term average of $20

View attachment 65766

No double there will be violent squeeze along the way... Why not just buy oppies on oil instead?
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Adjusted for inflation, maybe we're already there.

I really haven't looked into buying options and all the other financial products beside shares. Still only focusing on equity. One day soon though.


Oil can't be at $20 because only Saudi Arabia and maybe Iraq could make some money at that level. Most every body else will need at least $15 just to get it out off the ground - no margin for transport, storage, exploration and bringing home the bacon. That and if people can sell less for more money, they'd do it.

Why don't they? Geo-Politics and other grand strategies.

Why else? There are more people today than it was a decade or two or three ago. By at least 1B more people. More people need more energy; more cars; more oil etc.

Oil is finite... it will get harder and harder to pump out.

I mean, look at Santos' $26B GLNG project. It will deliver around 69M barrel per year. The world consumes more than that in a single day.
 
If you asked me if Oil will be above $60 sometime in the next 10 years, I'd confidently say yes.

So theoretically STO would be making enough earnings at $60 Oil to be fair value at current price.

The problem is all that does is get you to where every fair valued stock is already.
 
shouldaindex said:
If you asked me if Oil will be above $60 sometime in the next 10 years, I'd confidently say yes.

So theoretically STO would be making enough earnings at $60 Oil to be fair value at current price.

The problem is all that does is get you to where every fair valued stock is already.
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It might be taken over next 12 months. Hopefully it won't sell at normal 25% premium on market price else I'd be in deep poo.

I have no clue where oil price will be next couple years, don't really care since I don't really price STO based on projected oil price and its costs etc. All I work on is that when Iran get itself online, oil glut might be 2M barrel a day over demand.

Demand is some 96M barrel a day. So it'll take some 50 days of these glut to meet demand for one single day.

So flooding at this rate for another two years and maybe it'll take the world a month to dry it all up.

In those few years of overheating the pump, some well may dry up and some maintenance will need to be done... the world would at least average a week's worth of shutting capacity. No new investment and not much exploration meantime to bring much new sources online...

Anyway, I got in a bit too early, as it turned out. Will learn for next time.
 
Santos is moving into more of a LNG company and in my thinking this is significant. Gas and Oil prices have some correlation but it is not clear, the price of gas I understand had been rising against oil which was relatively stable (when it was >$100/bbl). The influence of a drop/rise in oil prices does impact gas however not much vice versa. Oil is global and gas (LNG) has selective markets. LNG is becoming a preferred source for an increasing market as it is cleaner burning than oil and coal.
The cost to create a LNG plant is huge and is a very massive barrier to competition, even more so now with oil pricing as it is. Santos at least now has producing LNG capability, I would hate to see where there price would be if they were still in the middle of construction and production a couple years off.
In my mind STO (and other LNG producers) are being belted more than it should because there is lack of independence between two quite different commodities, but unfortunately that the way it is.
 
that's actually one thing i still haven't figured out... why is it oil prices have affected energy companies? it'd be a bit like getting rid of white because black is out of fashion. as far as i know, oil isn't a major energy producing commodity and hasn't been for a while, so i'm lost to that link.

on track with STO and OPEC again, OPEC needs the oil prices to be at least 30 a barrel to stay afloat, at least that's the general report that's floated around. i'd say it's true as suddenly they want to talk about curbing off the production numbers. i'd give it about a year and a half, and oil should start to recover. not sure whether it'll be a conflict, or if OPEC finally figure out they stuffed up by opening the valves to full. would be nice to actually see cheaper petrol, they don't have an excuse for that one now lol.
 
that's actually one thing i still haven't figured out... why is it oil prices have affected energy companies? it'd be a bit like getting rid of white because black is out of fashion. as far as i know, oil isn't a major energy producing commodity and hasn't been for a while, so i'm lost to that link.
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The problem is that a lot of LNG contracts, and other gas purchasing contracts, are priced with reference to the price of oil. Or so I'm told.
 
So the Crude Oil price is above $40 now.

STO is just above $4 but struggling to move higher.
I had a long term sell order/plan to sell at $4.48..... $4.23 if I didn't think it would make it.
I am now thinking that I won't pass $4.12.

Might be better off selling here $4.08 and possibly buying back in a $3.75 and selling again at $4.08. LOL
 
luutzu said:
Yea, heard something like $US40, so about $50 AUD, for GLNG operation.

Last quarter its oil sales averages some $60 AUD right? Contract will definitely be lower now given the recent/current crash. But it won't mean STO will bear all the brunt either - it could, for example, buy similarly cheap oil and pass it on to customers.

But thing is, can oil remain at these level for long? STO has enough to pump for 20 years at least... not all of them will be at this level unless oil remains so for another decade. If it couldn't be this low, when oil goes up the profit then will make up for today's losses.

GLNG, from memory, is designed for at least 20 years. We can't take this last and next couple years prices to project its profitability for its entire life.


Brighter side is it's planning to divest certain assets. the pipelines for GLNG could fetch its share to maybe $1B. That would be enough to weather next couple of years low oil prices.
Click to expand...


Santos gave some figures for Break even 2016, US$32 with the Kipper sale, Without it would have been $47.

This website have a pretty good summary of Santos
http://www.howlinggales.com/
 
I have been watching since the big energy shake out begun, kicked my self a little for not buying that first big dip down below 3.50 so wasn't going to miss this one, in today @ 3.43, sure STO has some issues but they have the assets, the largest onshore producer, 20+ years of gas and direct access to the east market and selling into LNG terminals, exports.

Coincidentally STO was the first stock i ever bought back in 2004, everything comes around, think i paid like $4 something back then after the Moomba explosion.
 
Broker said today that the break even for oil with Santos was 43.50 at the end of June, now closer to 40 targeting 35 per barrel.
Lots of debt to get through before it's an FMG or WHC but trying apparantly.
 
notting said:
Broker said today that the break even for oil with Santos was 43.50 at the end of June, now closer to 40 targeting 35 per barrel.
Lots of debt to get through before it's an FMG or WHC but trying apparantly.
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That's a bit more like it.

First major debt repayments aren't till 2019 so they have time.

Can't see electronic vehicles being much more than a novelty for quite a while but with battery storage technology advancing at an ever increasing rate solar/off-peak power usage may put a dent in Gas.
 
UMike said:
That's a bit more like it.

First major debt repayments aren't till 2019 so they have time.
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They can sell stuff PNG LNG or something else, and anyway debt in the lowest interest rate environment in history shouldn't really be a problem.
 
So_Cynical said:
They can sell stuff PNG LNG or something else, and anyway debt in the lowest interest rate environment in history shouldn't really be a problem.
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As long as they have positive cash flow and look like they can pay it off.

I had a few more grabs at the falling knife. Hopefully I don't need to buy any more dips till the next cycle.
:)
 
Just typing out loud but seriously thinking of taking at least half of my holdings out on this recent run.

Super has done really well on it also.

$4.58 was my target on both but......
 
UMike said:
Just typing out loud but seriously thinking of taking at least half of my holdings out on this recent run.

Super has done really well on it also.

$4.58 was my target on both but......
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STO is making higher highs over the past month.
Don't let fear of loss impact on profit.
Mitigate risk.
Selling prematurely will negate both Risk and Potential profit.
If your buying on the way down this is what your waiting for!!
 
UMike said:
Just typing out loud but seriously thinking of taking at least half of my holdings out on this recent run.

Super has done really well on it also.

$4.58 was my target on both but......
Click to expand...

I have a sell order at $4.25, almost got there last Wednesday and again today, waiting patiently.
 

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