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STO - Santos Limited

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thierry said:
STO have increased their resource estimate the other day..

does anyone know any broker recommendations for this stock?

Seems to be good value at the moment?
Click to expand...

Last upgrade was by UBS on 22nd Jan (neut to buy), no comments from the major IBs after the reserves upgrade. AOE had a reserve upgrade on the 27th Jan but had no ratings upgrade either.
 
Can someone that knows Santos better than i do please explane to me why the SP fell off a cliff yesterday? STO sold 15% of there GLNG project for 650 mill and the SP promptly fell of a cliff...how can the market react so badly to Santos pocketing 650 mill? :dunno: just seems wrong to me.
 
One of the reasons is that when they sold their share to Total for 650 million, it was about 20% lower than the expected value, they also lost the clause in which Petronas pays Santos 500 million when the FID (Final investment decision) on the 2nd train is made. So in effect they sold out their position for 150 million, on top of this, they are using "portfolio gas" or gas that hasn't been found yet on their tenements, to fill up train number 2. On top of all of this it is anticipated that more equity or further sell downs in Santo's interests is required to pay for the capital costs of the project.

All in all, a bad few days to be holding STO.
 

2 main things

1. Market was expecting / hoping $1B so they sold on the cheap
2. Big capital raising pending so people running away from the dilution

Here's a good article on the story.

http://www.businessspectator.com.au...NG-gas-pd20100909-95663?OpenDocument&src=srch

Probably overdone in my opinion but any buyers need to be ready for the cap raising.
 
Thanks for your answers PVF and SKC all makes more sense now...have to admit the whole CSG thing in central QLD based on Gas that isn't actually flowing has always had me a little skeptical....still buying STO at around the $12 level has proved to be profitable over the last few years, probably will prove to be again.

ill pass i think.
 
So, I was having a bit of a play the other day.

Some "people" are limited to buying the ASX20... others largely want to. IE:->ASX20 listing should, pretty much always, increase SP.

Brambles, BXB is in the ASX20.
BXB has a marketcap of $8.8Bn, according to ComSec.

Santos, STO is not in the ASX20.
STO has a marketcap of $10.6Bn, according to ComSec.

If STO goes back to $14 or so, this gap will widen significantly.

I can't be bothered checking the rest of the ASX20 market caps, but, I wouldn't be surprised if STO was greater than one or two more... and I WOULD be surprised if STO wasn't greater than one or two more at $14.

Of course, having a bigger market cap doesn't mean ASX20 inclusion...

But, 20% larger market cap, with $12.50+ or so providing a solid base (albeit, possibly rooted by an equity raising.... but, an equity raising would give it a bigger market cap anyway!)........ really makes me wonder if it is just a matter of time until STO is included in the ASX20... and the SP thanks everyone.

Anyone know how the process works? Does S&P just consider it subjectively every quarter and go, hmm, you know what? STO looks like it will consistently be bigger than BXB... lets swap them?

Is December suddenly looking like quite a possible date?

As to the cap raising...
stolen from HC:
$15Bn proposed cost for Gladstone.
45% ownership = $6.75Bn costs

Apparently STO have $6Bn in 'funded lines' (I thought it was around $4bn.. but, at any rate, its significant)
+ any cash on hand (ComSec says $2.2Bn for FY2009?)
+presume $400m netprofit
 
Oh, and, of course, I forgot to add probably selling a further part of their stake in the project.

I'm torn....

In a lot of ways, I believe this project will be NPV +... so want Santos to keep as much as possible... (sell 5%)

However, if they sold, say, 15%...this would prevent an equity raising (and probably debt raising?)... and may be short-term SP +, giving me a nice time to exit?
 

Interesting thought.

S&P usually rebalances when there is a vacancy. FGL is a potential takeover target so if that happens the door will be open for STO.

However, there are quite a few other viable candidates for ASX20 inclusion: SGP, CCL, AMC, LEI, ORI (each ~9-10B) and FMG (~$15B).

And it is quite difficult to work out how much money is in ASX20 only funds. Will there be enough demand from these funds to drive up the share price substantially?

So all in all I probably would buy STO purely on the chance that it will be included in ASX20 one day.
 
Santos has long been tipped to raise capital to fund their LNG projects, and so they did.
But it's quite disappointing that they didn't bothered with a retail component. I reckon they could have done it easily with a SPP for that $500 million and that will keep us shareholders happy
 
Two reasons for the capital raising in this manner, IMO.

First, the Gladstone LNG plant is expected to be a USD16 billion project, rather hefty for a company of STO's size and strength, I would think.

Second, it's one thing to build the plant but it's another to find buyers for the off-take, at an economic price. A big part of the deal was to tie up agreements for this, which involved selling down a further big chunk of the project. The resultant 30% left to STO is a manageable size.

Why the placement and not a SPP? Probably has to do with assuring certainty to the overall deal and avoid having to wait on the reception from shareholders, many of whom had long been signalling their reluctance to commit more funds to STO.
 
oldblue said:
Successful completion of the $500m institutional placement.

http://asx.com.au/asxpdf/20101220/pdf/31vq8fxdxc2jjw.pdf

Shareprice responds favourably!
Click to expand...

I think the share price movement today has more to do with the KOGAS's off-take agreement and stake purchase, which would add much more certainty to the GLNG project.

Should that have been a SPP instead, we could have comfortably pocketed $20 million!!
 
Yes, it would have been nice!

But let's not feel too hard done by. I see that directors have been buying on market - which is normally a good sign.

 
Both Deutsche and JPMorgan are talking up a t/o of Santos.

This always makes me suspicious.

I have been reviewing charts tonight for my smsf and I would advise ASF STO holders to think about this "news".

The chart looks as if a move down is imminent.

The muppets at the above funds think otherwise

“We suggest if the Santos share price languishes too far below fair value, players seeking to consolidate or establish a meaningful position on the (Australian) east coast may find a way to unlock that value,” JP Morgan analyst Benjamin Wilson said in a client note dated June 6.

http://blogs.wsj.com/dealjournalaustralia/2012/06/07/jp-morgan-deutsche-talk-up-santos-raid/

Here is a chart, it's a pennant/flag, whatever you want to call it , but it looks to me like a down move.

Let us see if Benjamin is on the money.

Why would he let the WSJ know it was a takeover ???

 
Garpal Gumnut said:
Both Deutsche and JPMorgan are talking up a t/o of Santos.

This always makes me suspicious.
Click to expand...

Very good reasons indeed. Santos has been a takeover "candidate" since like 2007 when it's ownership cap was changed.

As expected, the South Australian Government yesterday lifted the restriction on a single shareholder owning more than 15 per cent of the company's stock.
Click to expand...

There has been market speculation that Santos would be a prime target for a break-up after the cap is removed, with the Australian gas assets separated from its international operations.
Click to expand...

http://www.smh.com.au/news/business...7/10/16/1192300768662.html?s_cid=rss_business
 
notting said:
Thanks for heads up on that GG always good to take into account!
Although I'd prefer to call them pigs.
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skc said:
Very good reasons indeed. Santos has been a takeover "candidate" since like 2007 when it's ownership cap was changed.





http://www.smh.com.au/news/business...7/10/16/1192300768662.html?s_cid=rss_business
Click to expand...

Well STO is heading south, lost 0.08% this morning, so the boy wonders at Deutsche and JPMorgan would have offloaded their shares to unsuspecting readers of the WSJ by now.

Anyone for a Porsche?

gg
 
It is always interesting to investigate the suggestions by " advisers " and price action.

The muppets from Deutsche and JPMorgan announced at 10.30 am on 7/6/2012 on the WSJ that STO was probably a near term takeover play.

It has been for some years as posted above, but let us not get too picky.

Below is a chart for the recent price action.

You can see that upwards of $72 million dollars of shares were traded on the day following this announcement.

STO tanked , closing below the previous day, and on the lows for the day.

I just thought I should post this, as I am reporting this to the ASX and to ASIC.

One wonders whether Deutsche or JPMorgan were net sellers or buyers on this golden day. I am too kind.

Watch this space.

gg
 

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A young lady from the ASX just called me on my mobile.

It's Sunday all over the trading world.

Interesting.

I shall keep you, Deutsche and JPMorgan posted.

gg
 
STO's LNG project suffers cost blowout - share falls 6%.

That surely is not unexpected... not when you have 20% worth of the nation's GDP devloping LNG projects at the same time. So what's next? OSH? ORG? WPL?
 
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