PNG is scary at political level however good news is it is...

PNG is scary at political level however good news is it is outside of Australia and australian politics which for oil and gas for last 4 years have been horrific and intent on value destruction. One stroke of a pen by and Aussie minister and you have retrospective pricing, taxation and looking forward uncertainity. That has hammered STO in comparison to WPL ( protected by paying divs )

WPL need to pay a large premium IMO to account for the upcoming locked in projects that will be spinning off extra cash and a fair bit of upside opportunity along with possibility of instant cash via sell down making it very valuable in current era of projects getting hard to finance due to woke banking system.

Good timing by WDS but hinestly I hope any bid fails unless it is at a crazy number that values STO as it will appear in 12 montsh as so much of STO next 12 months is looking positive and locked in. STO is over the hump of intergrating the OSH projects , finance , staff, contracts , realising Alasks has to move forward not sell down etc. The only hurdle STO has is the opportunistic offer and STO CEO who wants to retire and will get a absolute motza doesn't play hardball for benefit of all shareholders.

STO doesn't need distraction.

As we have seen with current WDS and STO projects govt policy and courts can play havoc with investment timing.

Citi see a opportunity with timing and valuation of projects coming on line along with capital demands hence their pairs trade proposal.

Citi pairs strategy and pricing is interesting. With Woodside now over $31 in their pairs match it is a even bigger short sell proposition putting less risk on the pairs trade as it is considered more overvalued. Many funds leg into pairs positions from a previous short or long position as a hedge to keep exposure to oil / gas where they do not $ match both sides of the transaction so the standard approx buy 3.5 STO @ $7.50 and sell 1 WDS @ $26 to make a pair on any one day they may choose to leg into transaction etc. It is a relative value propostion where they see one as undervalued and one as overvalued and hope that as time progresses the market will move towards average fair valuation of both and they will take margin. Citi will also get free ride on lending fees and execution fees .