STO vs ORG, page-5

cgt,

you raise an interesting point !

roughly - ORG abt 60% upstream ....

sto - obviously 100% !

I "believe" the reason for the underperformance of sunny STO is as follows:

1. the combined glng - cooper business - when one takes into account 3rd party gas purchases - doesn't actually generate any cash. the "fix" is obviously more dilling in roma shelf, and deep tight gas plays in the cooper. sto has given rough estimates of gas prices reqd for this to be economic......circa 8-9A$/gj). given the product is sold into JCC pricing - it wont get done (unless Total were to "force" STO to deliver into glng, which is a risk.....) until such time as the JCC price provides >10% ROIC for that joint venture.
this is my primary concern, and I expect sto to increase the capital for drilling (ie will be >750m currently forecast) .......
2. they could try and develop CSM assets in NSW (assuming approvals etc) - cost 1.5bn++, and abt 3-years.....
3. STO may have to buy some of the gas resources in PNG to participate in the (possible) expansion of PNG-LNG ......this is a very solid project, and has adequate gas resources for an expansion .......needs to get to "joint venture" partners alighment ....

STo could also look to do a deal, with other QLD players, that potentially have gas to spare .........the most obvious would be shell-cnooc re arrow projects. it requires a pipeline for that to occur, and obviously, shell - cnooc - would want access to intl pricing for "their gas" .......

IF / WHEN Santos works out how to solve its "gas arbitrage" issue - I think the stock can then do OK !

1/4ly's and updates should give us some more clues !

rgds
V_H