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STO, SANTOS LIMITED
wolverine
post Posted: Apr 17 2014, 08:40 PM
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from MS


Santos: Production disappoints
Quick Comment: STO’s production was 12.2 mmboe in Q1 2014 versus 13.1 mmboe in Q4 2013 (MS estimate 12.5 mmboe). Sales revenue was also lower at A$913m in Q1 2014 versus A$1,065m in Q4 2013 and our expectation of A$1069m. Despite oil prices averaging A$128/bbl, oil production was sharply lower, down 15% in Q1 versus Q4. Santos have maintained all guidance, but in our view outcomes are likely to be near the low end. GLNG is 80% complete. 35 wells were spudded in the quarter with Fairview continuing to exceed expectations and Roma in-line with expectations. The gas transmission pipeline is on track for completion in Q2 2014 and on Curtis Island, all train-1 modules have been delivered. The budget guidance remains unchanged. The PNG LNG project is over 95% complete with first LNG cargoes expected by the middle of year. In exploration news, STO made a gas discovery at Mt Kitty-1 in the Amadeus Basin (evaluation is ongoing). The Vanuatu-1 oil prospect in the Carnarvon Basin was unsuccessful. STO is currently drilling the Lasseter-1 gas prospect in the Browse Basin as a follow-up to its large Crown discovery in 2013. Shale gas activities in the Cooper Basin are progressing but technical challenges are evident which is consistent with those presented by Beach Energy. The Langmuir-1 (vertical well) flowed at 1.5mmscf/d and then encountered problems suppressing flow. The fracture stimulation of Van der Waals-1 was suspended during the quarter for operational reasons after two fracs with the Roswell-2 horizontal shale well flowing at 0.75 mmscf/d. We remain Equal-weight. Production declines from existing assets were worse than we had modeled and we have lowered our estimates. Construction activities at GLNG look good but questions remain around reserves for this project.



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nipper
post Posted: Dec 3 2013, 05:20 PM
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Santos (STO)

Top Pick In The Energy Sector

Ahead of Santo's (STO) Annual Investor Day on the 4th of December, Goldman Sachs (GS) released an article outlining potential drivers for the company post Liquefied Natural Gas (LNG) production growth. GS has a Conviction List Buy recommendation on Santos and JBWere's Investment Strategy Group holds the stock in its Growth Portfolio as a key pick for energy exposure


Strong Cash Flow Ahead

Santos is well positioned to deliver strong free cash flow (FCF) growth in the 2014 and 2015 calendar years as Papua New Guinea (PNG LNG) and Gladstone (GLNG) start-up. As a result, GS expects that STO will reward shareholders with rising dividends from calendar year 2014 with a payout ratio of 45-55 percent looking achievable.

Attractive Valuation

Despite recent strong share price performance, STO continues to trade at a 28 percent discount to its net present value ascribed by GS. The market may require greater confidence in Santos' reinvestment strategy beyond GLNG start-up before the valuation gap is fully closed, however GS are of the view that there is still plenty of scope for the stock to outperform in the shorter term.

Potential Upside From Cooper Basin & WA

Santos is assessing the potential of two key areas of exploration (i) WA offshore gas (Santos is now a minor resource player in Browse & Carnarvon, both areas in which GS believes resource aggregation and LNG joint venture alignment will occur) and (ii) Cooper Basin unconventional gas, where Santos is well placed to succeed, and attractive pricing fundamental remain in place.

Four Potential Drivers Beyond LNG Production Growth

1. Development

Within its existing portfolio, Santos has a selection of potential growth options with varying potential rates of return. GS believes projects such as PNG LNG Train 3, NSW Coal Seam Gas (CSG), Cooper Basin Revival and Dua (Vietnam) are all likely to be attractive options.

2. Exploration

Santos has had increased exploration success in recent times, most notably in Vietnam, the Browse Basin and the Cooper Basin. However, given the company's increase in scale, the analyst notes that new acreage entries will be necessary (and should be sought out now). In GS's opinion there is scope to build a portfolio of both unconventional gas plays (where Santos is able to apply existing expertise and lessons learnt in Queensland & Cooper) and conventional exploration in proven basins.

3. Acquisitions

With increased free cash flow, Santos will be increasingly capable of making potential resource or corporate acquisitions in the next 3-5 years, which in some cases could be a more attractive option than exploration.

4. Capital Management

In the event that the above levers are unable to enhance Santos' returns, GS believes that Santos should operate with capital discipline and return excess capital and an estimated A$1 billion in franking credits to shareholders via buybacks or increased dividends.

Key Risks

Decline in the oil price, cost increases/delays on LNG projects, exploration failure.





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"Cause they told me everybody's got to pay their dues
And I explained that I had overpaid them"
- Rodriguez

"What a deplorable existence I lead in this absurd climate and under what frightful conditions! How boring! How stupid life is! What am I doing here?"
- Rimbaud 1884 (Aden)

Said 'Thanks' for this post: wolverine  abner29  
 
wolverine
post Posted: Nov 20 2013, 05:09 PM
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In Reply To: arty's post @ Nov 20 2013, 03:30 PM

thank you....you son of a motherless goat. biggrin.gif



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arty
post Posted: Nov 20 2013, 03:30 PM
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In Reply To: wolverine's post @ Nov 20 2013, 02:28 PM

No need to go all funny, mentally, Wolver. After all, it's only a matter of assessment cool.gif - and it's only money!

Santos has been definitely a Short since it fell through $14.90. Much earlier, if you consider the whole picture, especially the Bearish Divergence and the developing Head & Shoulders.

Attached Image


Funnymentally, all you have to look at is the Energy sector overall and Worley Parsons in particular.
But I trust you figured that out for yourself graduated.gif



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I trade daily, but I am not a licensed adviser. Whether you find my ideas reasonable or not: The only person responsible for your actions is YOU.
I follow two rules: (1) There are no sacred truths. All assumptions must be critically examined. Arguments from authority are worthless. (2) Whatever is inconsistent with observed facts must be discarded or revised. We must understand the Market as it is and not confuse how it is with how we wish it to be. (inspired by Carl Sagan)

Said 'Thanks' for this post: wolverine  
 
wolverine
post Posted: Nov 20 2013, 02:28 PM
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STO seems like it is going to have a breather and retest some lower levels for a while. Interested what the filthy mother hating scum sucking TA'ers have to say.



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I AM THE OTHER WHITE MEAT
 
wolverine
post Posted: Oct 21 2013, 07:31 PM
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from Morgan Stanley

Santos: Quick Comment: GLNG is All that Matters
September quarterly production was 13.4 mmboe (Morgan Stanley expectation 14.6 mmboe) up 8% qoq. Revenue was A$1,027mn (MS A$1,103mn) up 29% qoq due to higher production, higher oil prices and higher third party sales volumes. Our earnings forecasts are updated for this latest data and changes are minor. Production guidance has been lowered to the low-end of the previous range (52-55 mmboe) due to operational issues at Chim Sao and Fletcher oil fields. Our forecast is 51.7 mmboe. Capex guidance for the full year remains at A$4bn with YTD capex A$3.09bn for the first three quarters. LNG execution risks abating, particularly on GLNG. PNG LNG is over 90% complete and on track for first LNG in 2H 2014. GLNG is over 65% complete and on track for first gas in 2015. Importantly construction schedules and capex costs have been reaffirmed and some activities appear to be ahead of schedule. In exploration news, Santos is progressing its NSW CSG Narrabri programme. It plans to drill 15 new wells and re-commence production testing from old wells – momentum appears to be slowly increasing here. Shale gas exploration continues in the Cooper Basin. The Roswell-2 well was fracced and is undergoing preliminary testing. No flow rates have been released yet. Further wells will be drilled and fracced over the coming quarters. We retain an EW rating.



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mercury
post Posted: Oct 6 2013, 02:31 PM
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Everyone keeps saying how the price of gas in Australia is going to stay high. But it America is competing with seliing their product to our buyers....wouldn't this force the price down? And wouldn't it also cause the price to go down here in Australia, making some producers unviable.?



merc

 
flower
post Posted: Oct 6 2013, 02:15 PM
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In Reply To: wren's post @ Oct 6 2013, 08:24 AM

QUOTE
The rise to the top was fuelled by new drilling techniques, such as horizontal drilling and hydraulic fracturing, which have unlocked vast quantities of oil and gas from shale rock formations – especially in North Dakota and Texas.


Texas, the new home of the most derided ASX oiler--SUR which as of 26th August 2013 became the most recent ASX gas/oil stock to produce hydrocarbons, albeit in initial small quantities, out of its Woodbine tight oil play 150km north of Houston, in the prolific Eagle Ford shale fields.



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Combining Fundamental comments with Fundamental charts.
 
wren
post Posted: Oct 6 2013, 08:24 AM
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Something for STO and others to think about......
" The US was on pace to achieve global energy domination on Friday, overtaking Russia and Saudi Arabia as the world's top oil and natural gasproducer.New estimates released on Friday by the Energy Information Administration showed America pulling ahead of both countries in oil and natural gas production for 2013.

The rise to the top was fuelled by new drilling techniques, such as horizontal drilling and hydraulic fracturing, which have unlocked vast quantities of oil and gas from shale rock formations – especially in North Dakota and Texas.

America was on track to produce just under 25m barrels a day of oil, natural gas and related fuels, the EIA said. Russia was just under 22m barrels a day.

America had already surpassed Russia in natural gas production last year, pulling ahead for the first time since 1982."

But this was the first year the US was on pace to surpass Russia in production of both oil and natural gas.




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nipper
post Posted: Sep 24 2013, 01:36 PM
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In Reply To: nipper's post @ Sep 3 2013, 09:45 AM

Citi rates STO as Buy - Citi has updated oil price forecasts and earnings and valuations across the oil and gas sector. The Buy recommendation for Santos is reiterated. The changes have meant that earnings have been upgraded by 10%, 24% and 32% for 2013, 2014 and 2015 respectively. The price target is raised to $18.65 from $18.30.


Citi forecasts a full year FY13 dividend of 30.00 cents and EPS of 70.80 cents .

- estimated dividend yield is 2.02%.

- estimated Price to Earnings Ratio (PER) is 21.0



--------------------
"Cause they told me everybody's got to pay their dues
And I explained that I had overpaid them"
- Rodriguez

"What a deplorable existence I lead in this absurd climate and under what frightful conditions! How boring! How stupid life is! What am I doing here?"
- Rimbaud 1884 (Aden)
 
 


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