oh dear, s & p negative outlook for sto , page-10

Hi Buddy,

I have to disagree with you on STO's purchase of ESG.
I remember receiving a note from my broker regarding the purchase.

The Macquarie analyst was scathing on Santos making the purchase at the time as he felt they could not afford to do so.

I do think that STO felt it necessary to gain a stake in ESG. Remember, ESG were years ahead of STO in the region and I think their technical expertise would have been invaluable.

Also, STO obviously have very high expectations of Gunnedah. There were a number of presentations they made which spoke very highly of the huge potential of the Gunnedah region.

So, I do think they felt it important to build up acreage in the area before a major came in and disrupted their longer term strategy.

That same Macquarie analyst came out 6 months ago and said that STO has ESG exactly where they wanted them. There was no urgency for STO to make a takeover for it, and that it will deal with ESG in 'their' own time.

I'll call my broker and ask what the analyst's name is. He seems to call it well even stating at the beginning of the year that STO could look to the Cooper to deliver some gas to GLNG. Although, he has said that they are definitely in need of more gas!