Is the propostion that STO would sell its stake to marubeni or...

Is the propostion that STO would sell its stake to marubeni or any other realistic ?
Why would you limit them selling their stake to Marubeni?
Why not Totale, Kogas or petronas. They are of course the ones who would be most interested in SECURING supply for their plant and output.

In fact, thats an interesting notion. What better way for Santos to sort out their capital requirements.

Lets look at that.

Santos have raised 700m EUR (approx $1B) in subordinated notes with a floating exchange. Note also, the purpose of those funds: The proceeds of the issue of the Notes will be applied by the Issuer for its general corporate purposes and (in whole or in part) to fund its growth strategy.

I would have loved to have been a fly on the wall for that conversation between the banks and santos.
B: Whats it for?
S: What?
B: The bloody $1B aussie you asked for.
S: Oh that.
B: Yes. Whats it for?
S: Nothing.
B: Come on. Tell us.
S: Growth {wink}{wink}
B: Riiiiiiight. Your moneys in bags at the door.

So KOGAS is rumoured to be entering the fray.

This could pair down the deal as follows:
Now Then
STO 45% 35%
Petro 35% 30%
Totale 20% 20%
KOGAS 0% 15%

They further reduce their capital costs because of farming out their share of plant further, as well as picking up extra cash.

They still have cash due from Magellan (~$100m).

They have income in future years to help fund field development

They had around $2.5B in cash in June.

Santos is a big BUY imo in anticipation for a big market surprise. Estimates might have to be revised down based on less offtake, but the reweighting on certainty for GLNG #1 and #2 as the removal of a cap raising risk could be substantial

Now what about Petronas agreeing to forego their milestone payment in exchange for agreeing to swoop on ESG to shore up their reserves? Totale ruminations about �further� investment in Aussie?

So PEL 238 could be the prize?

Lets look at a break up of that with the same equity stakes as per above in GLNG post Kogas.

based on DCs rumoured to have whispered $2.6B for ESG. ESGs remaining 80% is valued arbitrarily at 2.6Bx80% = ~2.08B

PEL 238 Now Then
STO 48% 35% (+$520M)
ESG 52% 0% (+$2,080m)
Petro 0% 30% (-$1,200m)
Totale 0% 20%(-$800m)
Kogas 0% 15% (-$600m)

So in this little HYPOTEHTICAL situation, it seems Santos could all but reduced any need to tap the market for any significant amounts of cash. Interesting, but very hypothetical ;)

So assuming Santos required about a range of $6.5 to 8.5B for both Train 1 and 2 at 60%, they could have reduced their need for capital substantially by farming down GLNG ownership and receiving cash for this as well as getting some good ROI on their other investments � to the point where they don�t even need to tap the market.

At 35% that is $3.8 to 5B
Less hybrid ($1B)
Less Totale payement (0.6B)
Less MAG payment (0.1B)
Less Kogas payment (0.4B)
Less ESG topup (?0.5)
Less Cash (2.5B)
=~$5.1 B in equity that covers a high side estimate for the plant.

Just a theory and possible situation.


As I have said before, and have been derided
I think I have backed you on this possible, but unlikely scenario.


If they can't prove up the required CSG for Train 2 then they wont need the conventional gas so supply is precedent upon FID for Train 2.
The 750PJ purpose is clear. GLNG#2 or nothing.

Now I am not sure if you are even serious, but you reckon they are going to magically convert 3000PJ of 2P by CY11? in time for GLNG#2 FID. What? Are you nuts.


Surely their drilling programme would allow conversion to reserves to cover 3.6x2x65x20=9360PJ by the end of 2011
So you are serious!
See above.
Nuts.
Bonkers.
Crazy.
Delusional :)

How do you calculate the 2500PJ shortfall you mentioned ?
With a calculator. Its in my DCF model for ESG.
You wont show me yours and I aint going to show you mine mate. Simple.


1mthVWAP +40% based on recent previous takeovers.
sorry didnt mean to miss quote you at 30%. Who am I thinking you would suggest paying a fair dollar for a resource. Of course you are going to pay top dollar at 40% (very very toungue in cheek)

Cheers,

SF