Perhaps someone should ask Santos why it was necessary to get back up to exactly 19.99%, from its slightly lower diluted position - that extra bit was really important to their passive investment was it?
Let's take Santos exactly at their word. Santos does nothing. Okay, what happens next?
- ESG turns their domestic MOUs into GSAs - so, part of ESGs gas is then committed to third parties, and so cannot be used for Santos' own needs.
- ESG decides to go ahead with its NLNG project. Even larger amounts of gas are them committed to third parties. And ESG do a large equity selldown, at a robust metric, demonstrating to the market exactly how much foreign buyers value quality gas resources.
- ESG decides that selling gas northward, to Shell/Petrochina or to BG is the best return for ESG shareholders. Why not? They have the customers, we have the gas, and people are lining up to do deals (and fund the pipeline).
- Pending approvals, Kooragang island settles in January.
So ESG goes off into the sunset. Cashed up due to their equity selldown, access to funding from their rich Japanese partners, and with domestic sales, sales into QLD, and their own scalable LNG project (cutting out Santos, the middle man.)
Can you see it? I can.
Anyone who wants to ride ESG all the way - to truly recognise the enormity of its size, and superior economics of its gas production - HOPES, really HOPES, that Santos do nothing.
Because, by year's end, ESG's gas will be all stitched up, and they cease to be a takeover target. And Santos will have made an excellent passive investment, certainly. They will own a minority holding in a large and growing gas company, who is contributing gas to their competitors' projects.
Onya Santos! :) Bridesmaid again.
And if that is what Santos wants from its passive investment, fine. They might not want to do anything yet. That is their perogative.
But the rest of the world is ready to move on with their own FIDs.
Yaq
ESG Price at posting:
82.0¢ Sentiment: Buy Disclosure: Held
