Anyone else get the feeling we are in the twilight zone?
It's hard to get a read on what is going on ATM. Seems like the longest period ever between STX's last market sensitive announcement... coming up to 6 weeks of crickets. Makes you think are there activities going on behind the scene... is this the calm before the storm? Ngl it has been hard going last 5-6 weeks since the SE hiccup. It's hard to weather the silence after a 50% drop in SP... I've stepped away to assess options and scenarios, trying to critically weigh up what could be next. Hasn't been easy that's for sure.
VWAP has now bottomed out, hovering around the 23cps mark. Price movement seems directionless, or is it being "managed"? Everyone keenly waiting for the next catalyst... is it a coincidence that it's taking forever for MIN to release the Ensign rig? Is it perhaps a coordinated reason we can't get cracking with the next Walyering drill. tick tock... love a good conspiracy.
And then the potentially significant WA domgas export policy change, just around the corner in May, apparently. But not before all the WA billionaires get their ducks lined up, right?
Anyway, as I said, been mulling things over the past few weeks and I am still inclined to believe STX is being set-up for a TO... and, like others, my money is on our JV partner, Hancock/Gina. It's both a +ve & -ve... Gina has the balance sheet firepower to do it easy, but on the negative it is unlikely to be competitive (IMO) as she has the balance sheet firepower to crush anyone else... who would want to have a stab at STX with Gina standing over you flexing.
I don't think BPT will make a play. They have too much on their plate at the moment. Cutting 30% of their workforce, enduring never ending pain with Waitsia stage 2... a 2 yr delay in gas, ~$600m over budget (50% share to BPT)... plus taking a ~ $65m expense hit due to pre-committing to LNG export thru the NWS... costly delays and has smashed BPT SP. In fact I would not be surprised to see Stokes/SWM move to take over the 70% of BPT they don't own (just like they doing with BLD) before BPT start raking in the super profits from Waitsia stage 2. Probably by end of CY24. Also to jog your memory on this quote from Feb 2024... "Ryan Stokes warms to gas pact with WA billionaires". It's almost like fait accompli... the 3 billionaires all in control of PB gas, has the future already been written?
I don't think MIN/CE will have a go. They are busy enough drilling 10 holes into Lockyer (they seem to have plenty of gas + oil, like a lot of oil, so much they don't want to mention it) plus signaling their pre FID commitment to $850m capex on a gas plant and... flagged they are keen to go it alone on energy, no desire to JV. CE likes to be in control, calling the shots. And CE seems VERY confident on securing domgas export... why wouldn't you with Macgowan on team MIN.... I like to think his chances are better than 50/50. fait accompli?
WDS/STO won't be interested. They have enough on their own plates with mega, high capex offshore fields and ensuring the WA govt stay off their backs thru export controls. They'll leave the PB to the WA billionaires I suspect. You can throw WES & FMG/Twiggy in this bucket too. Too hard politically IMO and they are focused on a "green" future.
So comes back to Hancock/Gina. She's got the balance sheet to do this. We can all see her not combined multi $bn investments into lithium, rare earths etc... and don't forget she established her own private energy pillar only 3 years ago in 2021 and in less than 2 years she's dropped $1bn on securing Senex Energy in QLD and then Warrego (50% WE). She has an experienced ex-Shell guy running the show. It's of no surprise to know her current operations are power hungry and her future operations in the green metals space will make it even more so. She needs to lock in long life, cheap energy. It is a strategic imperative.
Now is an ideal time to make a move. VWAP all time low. Catalysts seemingly so far off... look she is probably already on the register. Hidden behind nominee holdings (HSBC anyone?) likely already just under 5%. Much like how she played it with LYC. Sat at just under 5% for a little while, then moved to 5.82% with a few big buys, having dropped $350m so far. So what is another $1bn to take out STX? To secure her long life, low cost energy needs in WA, the power house of the worlds green metals future. And realistically it most likely won't be just her. She could easily go in a JV with one of her many international partner / customers. It could be one from Japan, India (noting her Indian JVs in the lithium space formed last year) or even Korea (like POSCO wrt the Senex takeover). Many ways this could be structured, to ensure all interested parties get a slice and some guarantees.
Plus I am thinking she can see the likely change coming in the domgas export policy i.e. lobbying the govt. I just can't see her standing by while Stokes/BPT and CE/MIN enjoy the super profits from LNG export. What better way to lock in an incredible ROI, paying off a $1bn gas plant in 5 years from super profits LNG. Just look at what BPT achieved with their first LNG & condensate lifting from Waitsia last qtr. Revenue of $96m for LNG and $66m from condensate. Given their 250TJ/d plant, they could supply an LNG shipment on average every ~16 days. For BPT 50% share that's about $1bn revenue p.a. and If you assume cost of gas is circa $1 GJ or maybe even lower (i.e. STX Walyering is 51c GJ), the profit margins are ridiculous. Why wouldn't Hancock/Gina what a piece of this pie? You know it makes sense.
That's it from me for now.. maybe I am overthinking all of this?... Who knows, but right now, very happy to sit and wait, even adding to my position on days of weakness. I reckon action is just around the corner.
GLTA
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