the real question about sto is the glng writedown - the...

the real question about sto is the glng writedown - the requirement to stop paying dividends and raise capital to close the balance sheet problem

given the $4bn cut by bp to their asset carrying value - sto needs to sell an infrastructure stake in the next few weeks or face reporting a half year write down and likely having to stop divs and having to raise.

the medium term scenario is very black and white due to this.  if they get their solution its a buy at 7.50 or below - if they dont its a 4.50 stock (thumbnail estimate on market reaction - imp;ossible to do hard calcs without knowing deal terms).

the other point re daytr and price of oil - why people keep focusing on direction of brent is beside the point.

wti direction is driving brent - not the other way around.

so people looking at brent pricing for direction are missing the point.

brent is only relevant if
a) santos is actually getting brent (which i think is incorrect for the glng contracts but probably true for older legacy contracts that predate the shale boom)

http://www.smh.com.au/business/mini...on-oillinked-lng-pricing-20141014-115o24.html

while im still yet to find the actual contract details - it seems clear from this article that glng volumes will be in either wti or jccc benchmark, not brent - given asian buyers clearly wanted to pay what north american
pay.   jcc is a hybrid so seems most likely

b) and even so, its only relevant for working out an idea of future profitability - not for direction for oil stocks near term

yesterday was the day to short.  not today. it will open below 8 in all likelihood - back in 7-8 the noise zone

i hope that is useful to consider for those of you who are open minded and interested in discussing ideas in a constructive fashion

there's a lesson here somewhere