GS has cut their STX valuation by 40% from 50cps to 31cps. This...

GS has cut their STX valuation by 40% from 50cps to 31cps. This is premised on:

* The removal of 271PJ of 2C for SE2/3 compartment. Essentially writing off that portion of the field. A thesis that I now agree with from a risked valuation perspective;

* The reduction of SE1 2P from 128PJ to 100PJ citing reservoir quality risks as evident by SE2/3. I don't necessarily agree but this will be confirmed by certifier;



* Downgraded OH by increasing its risk discount from 50% to 75%. In other words, decreased its COS from 50% to 25%. I fully disagree with this as (1) they are two entire separate fields across 2 different plays (OH is Jurassic vs SE is Permian). If we have issues at Walyering, then I'd be more inclined to agree. I guess the sell side analysts have their reputation to protect, so are now all taking the safe route of risking everything for now and adjust upwards later if required.



They have also excluded ED1 and SWE1 from their valuation. ED1 is as far away from SE as it can be, and more on trend with WE3 and LD3 than SE2/3. How does it make any sense to effectively apply a COS of 0%?



At least they agree it is significantly undervalued even against the lowest of expectations reflected in their valuation...



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