The company has pulled off a massive turnaround with their FCF over the last few years.
It came at a cost with dilution from 983 mil shares to the current level (2083 mil SOI) & asset sales, which was necessary to manage their massive debt. So that's bascically steering the ship from a hideous USD -2545mil FCF in 2013 to clearer waters of the Projected USD 1bil FCF for this year (same as 2018).
Asset sales (Stag, Mereenie, Kipper, Sole, Dua, Chim Sao etc) & Bolt-on acquisitions (Apache, Conoco, PNG) along with Organic growth from current projects is all textbook stuff with strong emphasis on keeping costs down.
Makes u wonder why their previous Board couldn't work out an escape plan with the mere basics esp. when the company had weathered the days of USD10/bbl in the late '90's!! I think borrowing for GLNG & PNGLNG got their wheels stuck. So in the current environment of USD60/bbl it seems that Santos have stress tested their 'Costs' & Break Even model which bodes well with their disciplined approach. Anthony seems to emphasis on that.
The presentation yesterday was good especially focussed on Barossa, Dorado & PNG that will be their priority to increase overall growth & value. For this year I think they'll get around USD3.9 to USD 4 bil in revenue (most ever in their history) with USD1b FCF.
FID for Barossa (sale down of DLNG to SK) next year will get the ball rolling. Gross capex is USD4.7bil. So proceeds from selldown to SK will come handy alongwith any Debt finance(?).
FEED for Dorado looks a no-brainer for its liquids phase of 158 mmbbls gross. Flowtest increased their confidence on the modelling from 50k bopd to 75-100 bopd with gas miscibility for lift.
Whilst it may b early days for a concept selection before FFED, Apache & other Operators did this sort of development in the Shallow waters of the NWShlf over the decades. Water depth is 80-100m so they should save on costs by Installing a Platform (either a steel jacket or a concrete gravity structure) with topsides, decks with trees for the planned 8-10 wells & Manifolds, storage tanks, helipad etc. So instead of a typical Deepwater subsea type completion at Doradao they could opt for Dry trees on the Platform for the number of wells planned (eg Stag, Reindeer, Buffalo, Wandoo, North Rankin, John Brookes etc etc). Cost looks allright (ie USD1.9 to 2.2bil gross).
Last major oilfield to come online in 2010 in the Exmouth was BHP-Apache's Pyrenees was USD1.7b with 13 wells (phase-1) and owned FPSO for its 100+ mmbbls Oil. 9yrs later it has pumped out 110+ mmbbls & plan for Phase-4 in 2022. Basically buying an FPSO helps with Depreciation of the asset and keeping the cost base low. Eventually they can move it around in 15 yrs time or sell it for scrap metal once production ceases (e.g: FPSO MV11 from Exeter-Mutineer). Apache (aka Quadrant aka Santos) own the FPSO Ningaloo Vision which is at Coniston, but it is small. Likely option should b something like the bigger Pyrenees FPSO whenever it becomes available after drilling of Phase-4 in 2022 for redeployment or get MODEC to convert another tanker in their yard once they deliver the Barossa FPSO. KG mentioned on not selling down yet as there's more fields in the Bedout to be discovered.
That's the long & short of it.
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