A few more odds and ends to weave in to the story:
1 - Certain resources in the area are facing the burdeon of Martin Ferguson's wrath under "use it or lose it"
2 - CO2 is an increasing burdeon, not just for Evans Shoal, but also for Barossa Caldita and other fields
3 - Tassie Shoal is a likely hub to provide consolidation to achieve critical mass. Shell may be keen to subsidise the economics of FLNG at Prelude, to demonstrate the technology (since sold 17.5% to Inpex to reduce risks), but FLNG is a long way from being highly economic
4 - ENI (through SAIPEM) have some fairly neat offshore construction capabilities
5 - MEO can and will outfox every O&G company in the region because they have flexibility
6 - I've previously shot down ideas like Sunrise, not because they don't make sense, but because Eni will outbid any party interested in TS. Why? Because they did the same with NT/P68, Evans Shoal (I've covered previously) and MEO only list Sunrise in the presentations and have launched the tender process for ES just to extract the maximum price from ENI.
7 - Similar transactions in this sector generally involve an upfront fee (lets call it $50 - $250 million) and a tolling fee, somewhere around $20/tonne of LNG and $10/tonne of Methanol, which would bring in around $60 million a year from the LNG royalty alone. Anyone who understands LNG economics would realise for a ready made commercial solution that shortens development timeframe, reduced capex/opex, deals with CO2, these fees are piidly. But for MEO this sort of revenue/cash would make MEO a plus $1 billion company literally overnight.
8 - This is before we all consider the reality that MEO will probably collect $75 million when ENI make a final investement decision at NT/P68, AND
9 - MEO will actually own 25% of a world-scale integrated LNG/Methanol project where ENI can arrange the debt and MEO will have enough cash to pay their way in terms of equity funding
10 - Only the rest of their portfolio which could company makers in themselves, I am mainly thinking Marina/Breakwater and Seruway where the Arun LNG sale process has some parallels to TS, and the owner is ExxonMobil, so I expect the MEO team may have some "knowledge" of the game here.
It is ridiculous that I could keep going, all this for a company that still has an enterprise value under $50 million and is about to be free carried at Heron.
With the objective of irritating the nay-sayers, let me say this, THIS TIME IT IS DIFFERENT. The only reason, even after Artemis that MEO was smashed was the lack of activity/news, even the traders get this. The rest of this year is going to be completely different. Spudding 3 high impact wells in Q3 is a given. I'm almost holding out for TAP and MEO to hold-hands in Thailand, but that is a story for a different day.
Steady as she goes. If the last week has taught the uncertain a few things, don't expect this to give you too many opportunities to buy on big corrections. I previously argued that now that the stage was set, selling out and hoping to buy back 2c cheaper was a huge risk given the upside, and I think this will only increasingly be the case. The share price has not built any momentum yet (wait a second traders) as all we have is expectation so far, wait until MEO announce that they are negotiating terms with their preferred partner for TS, or we have a rig for Seruway and this will be above 50c while many are still trying to read the announcement.
MEO Price at posting:
24.5¢ Sentiment: LT Buy Disclosure: Held
