Well, in this case I am really happy to have been proven wrong.
NSE has pulled off a good deal, which basically means NSE has gained %17.5 of PEL 570 for free. The money to be paid to NSE is of course going to be put back into PEL 570 (but not straight away), so its basically a nill some transaction. But of course, NSE will worry about where the money will come from later to actually pay for the work to be done in PEL 570. They will need every dollar right now to justify continued drilling in the U.S with the oil price so low.
Invertedva, I totally agree, DLS has pulled of a major coup with the T/O of Ambassador. To have a $40+ million free carry on the work, which is now fully funded and to be carried out by Santos, means as holders, we get the best of both worlds. No Capex requirements for the next couple of years and the work being completed by the best team in the Cooper (in terms of work on the ground). This deal actually shows that DLS fully understands how valuable the acreage is. Perhaps now the market will start to pay a bit more attention to DLS wet gas plans...
It will be interesting to see how NSE holds up today. Good announcement, but the oil price in the U.S dropped to a new 12month low. The weak AUD means that its a double whammy of disadvantage, with the AUD weak against the U.S which all the money will be sent to, to pay for more drilling. Much longer term, if the AUD stays week, NSE might benefit, but since they have already said they plan on buying more EFS acreage. No money will be coming back to Aust for many years.
NSE Price at posting:
9.0¢ Sentiment: None Disclosure: Not Held
STO Price at posting:
$13.01 Sentiment: Hold Disclosure: Not Held
DLS Price at posting:
$1.17 Sentiment: Buy Disclosure: Held
