What catalyst for increase in price other than oil/ gas and currency against USA have I missed or am underestimating?
IMO you are underestimating the potential for expansion and the value in it. There is the opportunity to double the size of PNG LNG and take advantage of synergies with the existing plant for significant capex savings on what is already a low cost operation by global standards (and particularly so by Australian standards).
The JV has 10 Tcf of 2C resource which is enough for another two trains. And they'll be so low on the cost curve that they should be viable even in a low oil price world, while a lot of other projects that were supposed to be sanctioned to fill the emerging supply gap go on hold and a lot of higher cost projects (like the Qld CSG LNG plants) struggle to compete. So that then leaves OSH open to exploit supply shortages in the future, because you can't put up an LNG plant overnight, and eventually the lack of LNG investment going on at the moment is going to catch up with the market.
Obviously it would be nice for OSH if oil went back to $75+ too, but I don't think that's likely anytime soon. Recent experience shows that as it approaches $50 the US rig counts start to climb rapidly. But if you have to live with sub-$50 oil, you want to be on the bottom of the cost curve like OSH.
OSH Price at posting:
$6.80 Sentiment: None Disclosure: Held
