I think now is the time for some opportunistic M&A.
Both STX & WGO have taken a SP beating, and unfortunately makes them quite vulnerable to a takeover - most likely a hostile one as IMO neither of the boards would recommend a change of control at their current respective depressed MC's.
Here are some of my thoughts...
We all know that EP469 is an excellent gas find. It is unfortunate that the numerous issues in this drill campaign resulted in NSAI reserves being booked far below what they should have realistically been - 800PJ would have been an excellent number to build a base and push on ahead with aggressive growth plans (for STX anyway).
But instead we will now see STX (and likely WGO too) being circled by perhaps a few predators.
IMO BPT is the most likely to move first (in conjunction with Mitsui). In many ways, it does make a lot of sense. BPT recently took a hit to their Cooper Basin gas reserves. I believe to rebuild credibility, BPT will pivot and allocate more capital to the PB / Waitsia project as this is now clearly a better high growth and long life asset (especially when factoring in the NWS LNG backfill win). Their balance sheet's not too bad, will be generating good free cashflow (ramping up from FY24) and have comparably low debt gearing (below 10%). I imagine their play will be in a consortium with Mitsui as they are already partners with a "strong working relationship" and Mitsui has much deeper pockets to help fund any significant acquisition plays across the PB.
As others have speculated, and I certainly agree, BPT would be well aware of what STX's South Errugulla contains (after all they did share / crossover in the recent 3D seismic). BPT have the large extension of SE spilling into their own permits which they call the "Trigg Prospect". Potential for multi TCF's right there IMO. For this reason I believe BPT/Mitsui will want to move on STX before SE is drilled... which will be early CY22 at this stage. But the TO maneuvering will be starting now IMO.
In terms of maneuvering, has any noticed the numerous larger S3 block trades of late in STX?... I noticed about 7-8m just yesterday. More in days prior IIRC. It could be BPT (or someone else) building a position until they reach 4.99% (to avoid ASX disclosure). At the same time, the same predator would build a similar 4.99% stake in WGO.
Then when ready, they make the move on STX first as most acquirers would want the operator first, plus the attraction of STX's southern tenements. Now, the acquirer would then inherit STX's 8.16% own stake in WGO... and possibly.... agree with Regal to buy out their 6.66% in WGO... which brings them to a very handy ~19.80% stake... perfect to launch a takeover of WGO. At the very least 19.80% would be a handy blocking stake in WGO. But I believe WGO would be take out quickly as it makes sense to consolidate the EP369 acreage and control both West & South Errugulla.
The above is just my leisurely speculation (based on some real life experience). I haven't looked at 30 day VWAP for STX or WGO (perhaps someone could help with those numbers) but assuming a 40-50% TO premium, SP could be 40c for STX and 30c for WGO?? Please note these numbers are very loose. Worth noting that SXY currently have an offer at a 40% premium from POSCO (after 2 previous offers were rejected, around the 19% premium mark).
FWIW, Woodside could be a Darkhorse. Did anyone see that WPL revealed plans to establish a hydrogen and ammonia facility at a Kwinana, south of Perth? - for a cool $1bn and estimated 40TJ p/d gas feed. Cleary WPL are keen to escalate their ESG initiatives. IMO sounds very much along the lines of what STX are proposing with Haber (which is a 80TJ p/d gas feed). I just wonder where WPL are going to source their gas from... PB perhaps? This could also tie in with BPT's ESG goals, as from what I have seen BPT have plenty more work to do to achieve their NET ZERO 2050 target. What better way than to also inherit STX's Haber Project?
Just some thoughts I have been having. Keen to hear anyone else's thoughts... but certainly by my reasoning, we are in for some imminent M&A action.
(20min delay)