triple in value, page-4

H,

A couple of things struck me about yesterday:

DC-10's tone towards Santos. Now I know DC is cheeky, but gone was last year's provocation towards Santos. In fact, I think DC said that the JV was in "good shape" or something similar. That got me thinking...

Now we have this Deutsche report, which explicitly talks about the extra value created were ESG to supply INTO QLD.

DC yesterday also mentioned "gas swaps" again, the first time in ages. This sounds might similar to Santos allusions soon after buying into ESG about "supply point flexibility". That is, PEL 238 supplying Santos' existing domestic markets, freeing up the cooper basin gas to supply GLNG.

Add to that the delay to the Santos-Kogas deal... now this deal has be rumoured for some time, and yet even after all approvals are in we still have seen nothing from Santos. Many people suspect that Santos need to secure more gas (in one way or the other) to allay concerns the Koreans may have about Santos' ability to supply gas for a second train.

We have also seen comments from Santos about acquiring more gas been instantly value accretive - gas in at one end, and sold out the other. In such a situation, Santos would actually be a net SELLER of gas.


So, does anyone get the feeling that a supply deal between ESG and Santos is now being seriously discussed?

Now, before the usual suspects jump down my throat and suggest that ESG is no longer a target, let me just say that nothing has changed on that front. But I am sure ESG are exploring ALL commercial deals. And the most obvious one, and yet the one we have seen no evidence of, YET, is for Santos' shortage of gas to get together with the abundance of gas in PEL 238.

Interesting and exciting times.

Yaq