Price drop, page-19

Competitors are eyeing off CVN for their Roebuck position – the potential for multiple, large oil fields in the shallow water of an established, stable jurisdiction. In my opinion, it is very unlikely that STO will launch a hostile bid on CVN because to do so will almost certainly provoke one or more counter-offers, resulting in an auction. That’s good for holders, but bad for STO, who are still struggling with debt and can ill-afford to partake in a bidding war. STO are more likely to sit tight and consolidate with CVN as JV partners, knowing that should a bid be thrown at CVN, they still have pre-emption rights (as difficult as that funding may be). The longer that bidding war is staved off, the better position they will be in to match a bid.

Also interesting to note that CVN’s 20% is probably less than most of the big boys would like. I think that the likes of Woodside, Chevron, Exxon etc would think twice about paying big to take a minority position in a JV with a mid-tier, mostly onshore player. Frankly, they’re more likely to eyeing off STO!

In the end, I fully expect CVN to eventually get swallowed, because the capital demands to get this online and maintain an active program will eventually make them vulnerable. Should be a very profitable ending, though!

"That’s just the way it is….Some things will never change....That's just the way it is..."

mutineer