Evidence of turn around.
I captured some of the figures for me to understand if the turn around is true and how good. It can be a bit confuse so feel free to follow your own numbers and methods.
1. Positive cash flow (excluding asset sale and employment redundancy costs and probably not including the financing activities which is about US$1-200m debt interest annnually)
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With oil price movement during the year:
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There may be some lag in oil/lng price but if we ignore that complication (as STO sells both LNG and oil), it seems the worst oil price months of the year was Jan, Feb and Mar. Since that time, monthly average Brent crude has been above $45/bbl. Dec average should be above $50/bbl.
From the two charts, we would expect a US$100m/month positive cash flow if oil price remain above $50. With the lag of LNG price to oil price, I would say STO is making more than that.
Therefore, free cash flow for the year could be around US$200m (if Dec free cash flow is US$100m).
2. Another metric to look for before we see the end of year report next month is how much free cash they made last year.
Start of the year net debt = US$4.8b
End of the year net debt = US$3.5b
Therefore, US$1.3b was made from cap raising + asset sales + free positive cash flow - debt interest.
Cap raising = A$1b = US$0.75b
Asset sales = US$0.433b (receipt to date as at 8 Dec 2016) + I don't think they've received from other smaller sales yet = US$0.433b
Therefore, free positive cash flow - debt interest = US$1.3b - US$0.75b - US$0.433b = US$117m.
While all numbers are approximate, both estimates comes close. My expectation is that the December free cash flow is as much as the debt interest for the year as it seems to cancel out. I haven't look in details how much they need to pay for the interest. In 2015, they paid A$290m for $A6.5b net debt.
3. Looking into the future, if oil price remains above $50/bbl for the rest of the year, STO can make as much as US$1b free cash flow this year. Today STO market cap only worths its share of GLNG & PNGLNG plant assets. On top of that STO has vast amount of gas and productive oil assets.
(20min delay)