I don't really think ORG is going to be in any position to take anyone over. With BG already taken a 2 billion writedown over GLNG, and CP flagging that it is likely to follow suit, I suspect ORG and STO will be forced to go down that path too. It is part of the reason why they have been hammered so much of late. ORG is a 12 billion company (or thereabouts), so a couple of billion writedowns won't kill them, but it will hurt their balance sheet and debt funding. As such, I can't envisage them doing any takeover - even at what would appear to be a piddly amount of 400-500mn (assuming some takeover premium over SXY's current market cap).
On STX, I don't know Ian Davies at all, but I doubt if he can possibly be more egotistical than JK. I held a fairly decent position in VPE for about 6 years and sold out at around 50c (when it was on its way up to the stratosphere of about 1.10) for two reasons - (1) Dryhole John was all over the shop and had no strategy despite the market (and their partner ITC at the time) yelling at them to focus on the Western Fairway and (2) I had a valuation of 48cps at the time mainly because I didn't believe their luck with the drillbit would continue at the rate implied by the price rise. Right now, even though I have a valuation of c.36c based on a fairly basic model, I am reluctant to open a trading position on the stock simply because most of their reserve growth has been in gas, and a lot of those gas won't be monetised for quite a while - unless they get taken out of course. And I don't believe they are a takeover target because there has to be a lot of hidden value (either synergy or large prospective asset that can be monetised with sufficient injected capital) for the suitor, and I can't see where those values lie. The unconventional stuff is nowhere near as proven up as they need to be, and there is still plenty of doubts over the economics of the shale stuff anyway. I did walk away with a 2 bagger last time round, but I was behind once factoring in the holding cost and risk adjusted. I nearly pulled the trigger in the low 20s but decided to go for BPT instead. So it might just be a case of once bitten, twice shy. Or just me being wrong
618
DLS Price at posting:
73.5¢ Sentiment: None Disclosure: Not Held
SXY Price at posting:
31.5¢ Sentiment: None Disclosure: Held
STX Price at posting:
11.5¢ Sentiment: Buy Disclosure: Held
(20min delay)
