debunking the 'sto as 'investor' in esg notion

I am not sure why this notion of Santos as a 'pure investor' in ESG still persists, despite all the evidence:

- Santos have no other pure 'investments'. And they are certainly not in the habit of investing $500m. As KingC said, they are not an investment bank.

- Half a billion of investment, and no board oversight. Large investors require some degree of say in the use of their funds and the operatorship of the resource. HGO did in ESG, NHC did in Arrow. It is almost always the case. It strongly suggests that Santos regard their current level of representation and ownership of ESG as temporary.

- Geographical synergies with Santos' own Gunnedah holdings (or, to put it another way, of all the pure 'investments' Santos could have made, they chose one right next door to their own tenements, which are being heavily drilled). This is not a coincidence.

- Santos have established a new regional office in Gunnedah in the last 12 months. It clearly is a focus area for them, and not one that is going to be divested.

- Buying into PEL 238 and ESG. One gives them gas rights, the other does not. But Santos chose to 'invest' in both.

- The fact that Santos had a previously failed attempt at QGC - clearly, they have a desire to own and operate a much larger resource to feed their multi-train ambitions.

- Santos have sought and received State approvals for a 3 train project.

- Santos themselves at the time of acquisition say that ESG controlled a resource that you would "die fighting for". Since then, in Santos' communications, ESG and PEL 238 have all but disappeared. Half a billion spent, barely a mention...

- If you had an 'investment', particularly one you were looking to divest, wouldn't you be spruiking the heck out of it? And yet, Santos barely mention the huge resource at PEL 238 and the subsequent successes there.

- Santos choose not to act as a JV partner in PEL 238, forcing ESG to go it alone. So rather than Santos using its muscle and markets to add value to their investment via commercialisation, they choose not to.Wouldn't you add value to a major 'investment' if you were able to?

- And Santos have an obvious need for extra gas. Extra gas provides certainty of supply to offtake and equity partners, could add significant value to GLNG, and all the benefits of greater economies of scale of multiple trains.

- Santos were somewhat capital constrained at the time of the purchases. So they spent half a billion on an 'investment' that is non-core - 20% of their cash - when the market knows they have a big capex bill in the coming years.. Why would they do that? It is not prudent capital management to dabble in 'pure investments' at such a time.

- And Santos approached HGO to buy their ESG shares, not the other way around.

- Santos, after previously being diluted back to 19.4%, have crept back to exactly 19.99% - unless you had 'acquisitive intentions', there is no compelling reason to have that extra 0.59% again as an 'investment' - except as a launchpad for a full takeover attempt.


And yet despite all this evidence, a few people still persist in maintaining that Santos bought into ESG as an 'investment'?

I guess people will believe what they want to believe. However, the evidence points to a very different conclusion.

Yaq