Hoping all shareholders are ok, both personally and on the markets.
STX is very fortunate, noting all the Covid-19 developments, that it is deep in a technical phase of approvals, engineering, analysis (Trieste/other) and site work pre-planning. All these 'knowledge based activities' should progress with little disruption. It seems likely that we remain on track with a solid 12 months of activities - including of course site works commencing early in H2 - drilling of wells and 3D seismic.
The above compares to offshore mega projects like Scarborough and Browse which are getting hammered from all directions - oil price war, fears of stranded assets (around these massive capex developments with uncertain economics) and in the case of Woodside, difficulty in this environment achieving the sell-downs they need (Scarborough + Pluto) to part-fund their share in these projects. I'd be very surprised if the JV partners on either of these projects will all agree to press the go button in the next two years (if ever).
What a time for Strike to be cashed up and getting stuck into exploration/appraisal of all their Perth Basin permits. The UIL acquisition is looking more and more like a total game changer for Strike shareholders. Sure, the current SP is low but that's hardly a surprise when you see most of the O&G cohort has been smashed. But the Company has plenty of cash to not only ride out this weird time but execute on a bunch of activities over the next 12+ months while other WA projects are stalling.
For those STX holders that also hold WGO, it's hard to be similarly excited about where WGO is at. Had a look through the WGO presentation today. The positive was they at least tried to communicate with their shareholders. IMO it does seem like their management has gone missing. 300m - 400m WGO shares coming out of escrow next week and the requirement for a huge CR (or some magic capital trick) to keep up with the $15m - $20m JV expenditure of their JV partner, STX. With the market environment becoming increasingly dislocated from reality it could get very interesting over at WGO-world, very quickly.
In these times, when liquidity is everything and every business out there is desperately trying to cut costs it seems absolute madness that WGO have exposure to Spanish costs, established a new office and marketing department in Perth, paying for another resource certification and carrying all the corporate overhead costs of a public entity. There seems no rational reason to explain any of the above. Do they really think they can get away a capital raise of any size in this market at a time when liquidity is drying up? Would shareholders really back an entitlement offer at a few cents per share diluting the you-know-what out of the stock. I just can't see it. IMO it could be a rapidly approaching cluster.
One obvious solution, as stated by others is a WGO/STX merger. A day after the merger (it it was to happen) I'd expect Spain to be jettisoned. The EP469 synergies/cost savings would be significant and immediate. It actually defies logic that this hasn't already happened. Or if there is some reason, I can only think of egos, for why it hasn't happened, then I'd be surprised if the WGO Board hasn't already appointed an advisor and sent out sale flyers to the likes of Woodside, Beach or Mitsui. IMO with limited funds and the capital markets so dire, they would want to be getting good advice at Board level. I hope that something happens soon not only for long-suffering WGO shareholders but for STX. It must surely be concerning at the JV level to have a partner with all these potential constraints.
Back to STX really looking forward to future updates into Q2 as WE3 gets closer, Triets analysis continues and plans mature for all the UIL permits.
Stay well and GLTA - strange days indeed!!
Adaltiora
STX Price at posting:
11.0¢ Sentiment: Buy Disclosure: Held
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