A good question and one I am always re-asking myself for all my...

A good question and one I am always re-asking myself for all my current investments.

I've invested as I see very strong gas demand in the short-to-medium term both domestically and internationally. Until renewables establishes itself and Nuclear power returns with sustained vigour, I see gas being the transition fuel for the immediate foreseeable future.

Another reason I have invested in STX is the IMO forward thinking nature of the board / MD. I like how STX has built a strategy of optionality. They are not simply selling gas into the domestic market. They are exploring other avenues of revenue such as Project Haber, with STX moving further down the supply chain, enjoying each clip of the ticket and potentially increasing their value of gas beyond what they would get at the wellhead.

I have been wondering if the WA govt were to reverse their knee-jerk gas export policy, and wonder if STX were to also access this option, i.e. selling gas into the NWS LNG (like the Waitsia JV have). That would make the economics of WE/SE very interesting. Of course all this goes with out saying that as long as STX resolve the WE issues, book a very strong reserve and deliver the master-stroke of the SE multi-TCF campaign, well, as others have said, it will be truly transformational.

Coming back to LNG... I was involved with the NWS project (specifically the downstream commercial finance) back in the 90s. Selling gas to (predominantly) Japan and now broader Asia Pac was very good business. 25 years later and some of the numbers I have been reading lately are simply astounding.

We currently have LNG spot cargoes being sold at $US50 per million BTU, - just unprecedented numbers. It was only last year in the depth of the pandemic that LNG cargoes were selling at $US2 per million BTU. What an incredible turnaround. Of course such high spot prices won't last but everyone will make hay while the sun is shining.

Get your head around this... a 70,000-tonne LNG cargo sold at $US30 per million BTU would earn USD$150 million... at $50 it's USD$250m. I still remember when we had the opportunity to sell a number of spot NWS LNG cargoes back in the 90s and, when it was a particularly cold northern winter, the prices we could command for the JV I worked for were truly special. Like cream on top stuff. All the JV partners were doing very very well. And of course the WA govt was also enjoying the royalties and I can imagine they would be very keen to exploit the current buoyant LNG market, especially as iron ore has come off it's heady heights.

Now realistically longer term contract prices may settle at the $20 to $25 per m BTU. That is still very healthy $$ for the NWS and QLD LNG O&G players (WPL, STO, OSH etc.) and any others who benefit from selling gas into those plants (looking at you Mitsui & BPT who must be rubbing their hands with glee). Just imagine what this could mean for STX if they had the opportunity of exporting WE/SE gas thru NWS... the numbers would be incredible.

So let's see what happens with the gas / LNG market in the next few months and into 2022/23. And let's se how STX go executing on their grand vision.

In fact, just for fun (and it has been a while since I have run such back of the envelope numbers) but very roughly speaking...

If... 1TCF of gas is equivalent to 20 million tonnes of gas... and one LNG cargo of 70,000 tonnes can sell in current market (@ say conservatively $20 per M BTU)... revenue is USD$100m.

Now if 1tcf field could potentially deliver 285 LNG shipments... @ USD$100m per shipment... the numbers are almost eye watering... $28.5bn.

These numbers are top line only and do not incorporate the cost of processing, transporting, and liquefying the gas which is considerable, but I am hoping you get my point about the economics of the PB gas basin and how WA / Australia can benefit from the world progressively transitioning to de-carbonised future yet still so very energy hungry.

The above numbers are very loose but my intention is to draw people's attention to the significance of what STX have now and what they will potentially have in the near future.

That, at the end of the day, is why I invested and why I stay invested.

GLTA