The bulk of the hedging washes out by 30th June next year. Of the 540,000 bbls hedged this calendar year the average price to be received is around A$40bbl-total production for the year pre Arwon and any other fresh discoveries should be inexcess of 900,000 bbls. On this basis EBIT could be around $30m (the company has indicated it is currently generating net cash flows in excess of $3m per month-and that is before revenues start from RSW,Derrilyn and Harpoono!!!). Add to this further discovery revenues (Arwon?). Yes, the hedging is a pain in the backside in the short term, but the company stacks up very impressively on fundamentals. In comparison with ARQ, both have a strong technical team and a very detailed knowledge of the basins in which they operate. ARQ has a stronger earnings base per share at the moment, STU has greater 'impact' exploration exposure. These two, plus AWE and HDR would make an excellent petroleum portfolio in my opinion. Cheers,TAS-I hold bucketloads of STU and am therefore extremely biased.
STU Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
