Their priority is to increase Free Cash Flow (FCF) which comes...

Their priority is to increase Free Cash Flow (FCF) which comes from 3 aspects, ie cost reduction, asset sale & bringing the debt levels down.

At this point in time they are getting steady stream of revenue out of PNG & GLNG so that's a big tick on top  of existing operations in the Cooper, WA & DLNG.

Current Net Debt is USD 2838 mil (at 76c exchange rate this alone is worth AUD 3734 mil or $1.792/sh).

STO intends to bring this down to USD2bil by Dec2019.

So, with price of oil staying between USD50-60/bbl mark, they should have a steady net margin & and a steady rise in FCF.

In 2016 FCF was USD 206 mil. For this year till Sept end it was USD635mil.

I hope they can get to FCF of USD 800 mil by December end so that can form some sort of baseline for projecting next year's growth at a sustained rate.

Back in mid-August 2014 when POO was north of USD100 & AUD was strong vs the USD, STO's SP was around $13. They had 982mil shares on issue with a Mkt cap of AUD 12.87bil. Nt debt A$7.5bil.

Fast fwd to 2017, mkt cap is A$10.7bil with 2083 mil shares @ $5.14, Net debt is  AUD 3734mil.

It's a big ship that has taken a long time & effort to turn around. This change has been made possible with,

- Sale of assets at Kipper, Otway, Stag & Mereenie and
- Placement to Hony & raising capital via Insto's which has increase shares on issue to apprx 2083 mil
- and has helped to pay off a fair chunk of their debt from AUD7.5bil in Dec 2014 to AUD3.7bil now.

IMHO the next phase will depend on SP tagging along the oil price and the Board focussing on getting debt to USD2bil.