Takeover bid coming from Linda cook?, page-159

Hi bweerniedeed

There are just my personal thoughts:

I expect that major investments are made with a time outlook of 15 - 25 years. So the POO just now is not so important, other than to support a belief that the long term price will be good enough to support that large investment.

I presume the Santos board will be trying to avoid a takeover, or at least get the offer price much higher. One of their strategies could be to declare a dividend. I expect a 10 cents per share (AUD) dividend will be announced early next year as part of the annual report.

My reason is that the underlying profit reported by Santos for the first half was USD156M. I guess that they will earn another USD250M in the second half. That means USD400M of underlying profit to play with and their dividend policy is to pay 40%. That would require USD160M to fund the dividend.

I always look at cashflows and the third quarter's report released on 19 Oct says it all on the first page: The YTD sales revenue was US$405M greater than the corresponding 9 month period (USD 2.246B compared to 1.841B).

The Santos Net Debt is now down to a very manageable USD2.8B. That compares to net debt of USD4.7B for Woodside and about USD6B (AUD8B) for Origin.

Santos could easily meet its stated target of net debt of USD2.0B by the end of 2019.

Cheers
ft