Having just reviewed BPT's FY results, I agree with some others thoughts, that BPT could very well make a play for STX and in fact, might well need to. A few reasons from my POV.
BPT have endured a painful 12+ months... their golden goose project Waitsia has blown out by 2 years and $550m+ over budget (50% net to BPT). They've already taken a $51m hit in FY24 and flagged an additional $59m hit this FY25 due to their commitment to tolling thru the NWS. The GP construction delays have cost them significantly when they should have been printing money from mid 2023.... Yes, they have managed to do some gas swaps for 2 LNG cargoes but $110m is still a material hit to their coffers.
Their SP hit today was mainly driven by significant 2P reserves downgrade, down ~291PJ in 1 year (that's more than STX WE reserves), mainly from BPT's assets in the East Coasts but actually a real concern is also some 2P lost in their PB assets. What is worrying is in FY20 BPT had over 2000PJ in 2P... now down to around 1200PJ. Their coveted reserves replacement ratio is in tatters.
So what this means in they are under immense pressure to replace their 2P reserves...as they only have ~10 years left.... and they have been trying organically but with limited success. If we look at the PB, their no.1 growth asset, they added over the past year about 28PJ thru drilling success but then lost about 57PJ due to reprocessing seismic etc. So a net loss of about 30PJ. They have current 465PJ 2P reserves in the PB. So naturally the only other option for them to grow reserves is M&A and a prime target for them will ofc be STX.
Just like their attempt to secure WGO they would love to secure STX's 211PJ of 2P reserves from WE (+ 45PJ 2P from SE). Plus if ED lands... the potential for another 139 2P... and lets not forget SW Erregulla with 136 2U. But lets not count our chickens just yet... SE 2&3 is a great reality check.
But if BPT choose to make a move on STX, it's going to be a tough one. With a stressed balance sheet ($172m in cash and $265m in undrawn debt) they don't have the $$ for a all cash bid. And with a net debt facility maxed out at over $1bn and with a current MC after today of $2.8bn... not sure gearing covenants would be entertained much further by their banks. Recall WGO was a 20c cash bid for $250m before BPT bowed out.... and if you said hypothetically a 30c bid for STX that's still $850m. BPT can't afford that all cash... but Gina could... anyone else....we will see....
And unlikely a large capital raising will be popular with BPT shareholders with their SP at 52 week lows... so an all scrip bid is the likely only option. What could get the ball rolling do you think? 4:1 ratio... values STX ~31c... 3:1 ~42c.... 2.5:1 is 50c. How much dilution would BPT be prepared to snag probably one of the last Tier 1 PB assets... as SN said... it's not easy to replace the assets that STX has... and drill success is not guaranteed... just ask TEG. Anyway, food for thought.... but fwiw from my POV, a scrip offer is not something I would entertain. I am not convinced with BPT's (newish) management and not convinced their assets are all that great tbh.
So brings us back to Hancock, who are sitting in the box seat, likely to have pre-emptive rights anyway and being cash only, would likely be preferred by majority here. The left field contender could be BPT's Waitsia partner Mitsui. They will also be keen to secure additional 2P reserves to extend the field life and asset life of the Waitsia 250TJ/d GP. After all, having sunk well over $1.3bn into this plant... with current reserves allowing for a ~10yr life... they would be pretty damn keen to bolster their reserves for cents in the $$ and extend the GP life for another decade, at least.
I think it is only a matter of time before someone gets the ball rolling and makes a move on STX... next few weeks are going to be very interesting.
(20min delay)