KM I think that any reasonable person would be satisfied with progress to date on W7 and in the backdrop of SE2/3, a thorough testing program and conservative annos are understandable.
However, I feel STX has left itself open to speculation due to it's failure to properly articulate it's Walyering strategy. W5 and W6 had taken the plant to above nameplate so there did not appear to be any pressing need to expedite further drilling. W7 is explainable to satisfy MAQ's Ts and Cs for the debt expansion post SE failure, and also to underpin the DBNGP connection. W8 can really only be interpreted as a re-allocation of a rigslot originally intended for SW1 or Wag1 (which now appear at best deferred or at worst redundant) and the slot being unable to be used on the seemingly much higher priority OH2 drill given supposed timing differences. But why W9 and W10? The timeframes don't make sense to me. Maybe they won't be drilled in the timeframe given to DMIRS but the capacity of the plant simply does not necessitate the expenditure. The tin foil hat response would be they are needed to cover for concerns about W5 and/or W6 diminishing ahead of forecast. The commentary about W8 creating sales opportunities post connection to DBNGP doesn't ring true if W5/6/7 are all producing given the current capacity of the plant. Is STX sitting on a Walyering plant upgrade anno? We have inched production up from 24Tj/day to 27Tj/day, still well short of nameplate, should we expect some spot sales annos? I am not subscribing to any one particular theory, there may be other reasons too, and you would expect any problems to have been leaked by now, just as the SE failures hit the market before any official annos. Further elaboration by STX on W8/9/10 would be beneficial IMO.
STX Price at posting:
20.0¢ Sentiment: Hold Disclosure: Held
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