SSN 0.00% 1.5¢ samson oil & gas limited

I think this sales is a good outcome for both the Buyer and...

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    I think this sales is a good outcome for both the Buyer and Seller, reason being SSN in the current Scenaria (Low Oil Price and O&G market sentiment) will not generate sufficient cash to continue to develop the NS field and keep up with the other partners if they planned further wells. By moving to FB SSN as operator can have greater control of the pace of development which provides growth at a reasonable cost.

    I seriously doubt a year ago a sale of NS would have realised the NPV10 values reported at that time as sentiment was terrible for all O&G stocks as they faced and reacted to the changed market conditions.

    Over this time the Bank has imo been supportive of the company as demonstrated by several waivers of the covenants and also by increasing the debt for a period of time whilst the company restructures its operations to adapt to changed market conditions. Changing plans takes time and the last few ann's shows the company has been focused on dealing with the challenges faced.

    An alternative plan would be of been to sit tight, continue to reduce costs and spend only sustaining capex whilst waiting for things to improve. Imo it will be a while until things improve therefore this swap provides a good opportunity for SSN. Imo Stockyard Creek is/was a good asset and I'm a little sad it's going and I expect there will be further development by the old partners if prices eventually improve.

    Also the spill motions did not help sentiment here and detracted from a good story surrounding Stockyard Creek which in March quarter had LOE costs of $8.58/boe, Property and Taxes costs of $2.96.
    GLTA and all opinions welcome
    Cheers
 
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Currently unlisted public company.

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