Ann: West Erregulla 2 Update, page-95

Hi all,

I am STX shareholder since 2006 reading hotcopper thread since 2007 and this is my first post. Therefore, first of all: This is the most valuable stock exchange forum I am aware of, thus many thanks to all the well-known contributors (e.g. I know gimo from a German forum, where you can't get any valuable information out of). As I have not worked in O&G industry, the shared knowledge and thoughts are the extra plus to what the company officially announces. You are my morning read - THANKS!

Located in Europa I am bound to trade during your nights using European stock markets. I am glad that daytrading is no option for me as it would have made me loose my hair after all this unpredictable jumps and downfalls. Today, I want to share my thoughts on how I see the odds from a pure investor perspective:

• Strike has 2 major plays (WE2, JAWS) and due to several CR, issued options a relatively high market cap for a pure exploration O&G company with currently 170.5M AUD.
• Considering that market cap was only ~80M AUD several weeks ago when we traded at 5.4 $/share, we saw a decent increase in company rating in only a few weeks which the market needs to digest first, before we move on. Due to the high number of shares, we were valued already with a market cap of ~240M AUD when trading at 0.16$/share after WE2 significant gas discovery was released. Having all this in mind, I am super happy of how things went regarding share price the last weeks. Surely, I would be more happy to see the share price going north only, but dreams lead to empty pockets at stock markets. Thus, everything is going fine here, the discovery at WE2 put a nice foundation beyond the current levels. If someone wonders why we do not trade higher, than you just need to consider that we already trade +100% higher compared to mid June without having any new money in short-term.
• Chances of Success (COS) at Cooper Basin: I would love to see a realistic COS for a commercial outcome of JAWS, but I assume that even management is not capable of doing this today. So all we can do here is believe in it or not. However, as an investor you can try to create your own picture and make some assumptions. And even if COS for JAWS would only be 25% (which I believe is higher, but would love to hear the sophisticated O&G posters to rate COS), the odds are with you considering that a full success in the long run would not only multiply the company value by 4, but by ... (different opinions, but more than 4 from my perspective). Thus, if you are willing to take a risk, JAWS alone is far better than casino. This is the main reason why most of us are holding STX longer than the WE2 agreement was announced.
• COS at WE2: The main goal was to hit KHC with 69% COS. As we already discovered significant gas in the 12% COS Basal Wagina or even above, this well is already highly de-risked from my point of view. Plus, the observations made when drilling down encouraged management to believe in +69% for KHC. Considering that a full commercial success at KHC (+69%) would double or even triple the current market cap (IMO), this is again something favorable which I am not aware of any other stock. Plus, taking into account that KHC may be a duster (<31%), we still have what they discovered some days ago, which need not to be commercial, but is likely to be based on the wording provided by management. This is what I see as a brillant fallback option.
• So all in all, WE2 alone backs the current market cap to a certain extent and the hidden monster JAWS can come in any time.
• Risks are still that JAWS never gets commercial and KHC is a duster and Basal Wagina non-commercial. There is no 100% safe option on the stock market, which is why I see the sum of odds here as very favorable, which is why I added a few ones several times the last weeks to my portfolio.
  

This is all only IMO. I am super thankful for all the educated posters here that bring so much value to the forum and help others like me to paint a picture with many more colors than what the company provides us.