$50-60 New Normal or U.S Shale Bubble?, page-773

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pear

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11/03/18

10:45

Post #: 31668826
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Originally posted by croasian ↑

Yes, Santos is underinvesting and should invest much more (something I have also been saying) replacing only 19% and 61% of reserves consumed in 2016 and 17 respectively.
They have also recognised this and are starting to do it.
I have been invested for 3 years, learned a lot but I never thought "the march of the shaeprice" as you put it was clear-cut.
Also was the only one arguing against hedging at the bottom with the "zero cost collat lol" but I see a $90m U.S. loss resulting from their stupid decision there too.
What I said was I thought it cheap from a long term perspective.
It's turned out to be a war of attrition (as you imply) in the oil price and yes the world and all analysts believe that $60 oil is still the "new normal".
In a war of attrition the question is when U.S. production fails to keep up.
A world of $80 or $100 U.S. per barrel oil gives a much higher valuation and is why I continue to hold. I made bold claims in the last that I knew when it would happen but now I am not as sure of myself.
In a war of attrition the question is when U.S. reserves decline.
So my point (which I didn't state as it's an obvious logical inference) is that if Papa is correct (and assuming the market is roughly in balance) but U.S.production growth comes in at 0.5mbpd instead of 1mbpd then demand growth of 1mbpd would mean the deficit is on the verge of getting much larger so I am holding a high % of my portfolio in this despite it underperforming somewhat.
I find it very large and certain but time arbitrage is a thing, most people lose patience too easily.

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Hi Croasian

$90 million exchange loss? Pfthhh. Can't be helped. What that in the scheme of a fast growing company that does not need to pay a dividend? Are you not happy with the share price growth instead of a dividend? Its clear cut to me.

But why do you keep harping about the price of oil? What has that got to do with it? Are you saying that Santos share price is a function of the oil price? If it is that simple, why are we paying millions in salaries to a bunch of brilliant directors?

Pear

STO Price at posting: $4.89 Sentiment: Hold Disclosure: Held
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