Morgan BellSantos Braces for Mud Flow Compensation
January 16th 2007 09:15
Santos has been involved in a massive mud flow in Indonesia and might have to pay a big compensation amount. What kind of company is this, Santos? Stay with me for more.
The news today, 16 January 2007, is that “Santos has taken a pummelling in the wake of the Banjar Panji disaster in Indonesia, where mud flows have left 10,000 people homeless on the island of Java.”
“Santos' share price fell from $11.18 on November 22 to just $9.60 on December 12, as Indonesia's Government blamed the joint venture that drilled the Banjar Panji-1 exploration well for sparking the mud flows.”
“Santos has an 18 per cent interest in the project. Lapindo Brantas has 50 per cent and is the operator, and listed Indonesian company Medco has 32.”
“Media leaks from the independent geological survey assessing the disaster suggest the Banjar Panji well had little to do with its cause.”
“Indonesian newspapers have reported a source within the independent survey, which is being led by Japanese vulcanologists, saying the mud flows were a "natural phenomenon" triggered by an earthquake.”
“The unidentified source — the official report will not come out for months — said the disaster was "probably not caused" by the well's drilling.”
“If this proves to be true, a $500 million compensation claim by the Indonesian Government will not have a leg on which to stand.”
“The information comes from an unidentified Japanese-speaking source, via Indonesian newspaper reports that have been translated into English, but is enough for Intersuisse to lift its rating on Santos to "long-term accumulate".”
“It was also enough for Santos to open trading at $9.99 yesterday — the closest it has been to $10 in more than two months.”
This news was published in the online edition of The Age under the title “Mud sticks to Santos, but leak augurs well” and was written by Mark Hawthorne.
Santos (ASX: STO) is an exploration and production company for oil and gas. Its Managing Director is John Ellice-Flint and it‘s located in Adelaide. Santos website address is www.santos.com.
Santos revenues are (12/05) $2,491.4 million, from $1,534.7 million in 2000, a compound annual increase of 10.2 per cent.
Its Net Profit is currently $731 million from $486.8 million six years ago. This equates to a compound annual growth of 8.5 per cent. Net Profit Margin is currently 24.4 per cent which makes STO a very efficient business.
STO’s Return on Equity is great at 20.5 per cent.
STO’s EPS are (12/05) 97.9 cents and last Dividend was 38 cents, a yield of 3.9 per cent.
STO has a Long Term Debt of $1,817 million comprising 38 per cent of capital, which probably means that STO cannot take much more debt.
Interest is $79.9 million and Cash Assets are (12/05) $229.2 million. Santos is Cash Flow positive at 234.7 cents per share.
STO today’s price is $9.75, a P/E of 10 times, being the typical figure for the sector 18 times. Price to Book value ($4.99) is 2 times being the average for the sector 3 times. This two measures make STO look cheap.
If STO ends-up having to pay compensation in Indonesia its price is likely to fall even further. Considering that its ability explore and produce oil and gas would be undamaged, and considering that it is such a great company, I would take the opportunity to buy a share of its equity.
End
The news today, 16 January 2007, is that “Santos has taken a pummelling in the wake of the Banjar Panji disaster in Indonesia, where mud flows have left 10,000 people homeless on the island of Java.”
“Santos' share price fell from $11.18 on November 22 to just $9.60 on December 12, as Indonesia's Government blamed the joint venture that drilled the Banjar Panji-1 exploration well for sparking the mud flows.”
“Santos has an 18 per cent interest in the project. Lapindo Brantas has 50 per cent and is the operator, and listed Indonesian company Medco has 32.”
“Media leaks from the independent geological survey assessing the disaster suggest the Banjar Panji well had little to do with its cause.”
“Indonesian newspapers have reported a source within the independent survey, which is being led by Japanese vulcanologists, saying the mud flows were a "natural phenomenon" triggered by an earthquake.”
“The unidentified source — the official report will not come out for months — said the disaster was "probably not caused" by the well's drilling.”
“If this proves to be true, a $500 million compensation claim by the Indonesian Government will not have a leg on which to stand.”
“The information comes from an unidentified Japanese-speaking source, via Indonesian newspaper reports that have been translated into English, but is enough for Intersuisse to lift its rating on Santos to "long-term accumulate".”
“It was also enough for Santos to open trading at $9.99 yesterday — the closest it has been to $10 in more than two months.”
This news was published in the online edition of The Age under the title “Mud sticks to Santos, but leak augurs well” and was written by Mark Hawthorne.
Santos (ASX: STO) is an exploration and production company for oil and gas. Its Managing Director is John Ellice-Flint and it‘s located in Adelaide. Santos website address is www.santos.com.
Santos revenues are (12/05) $2,491.4 million, from $1,534.7 million in 2000, a compound annual increase of 10.2 per cent.
Its Net Profit is currently $731 million from $486.8 million six years ago. This equates to a compound annual growth of 8.5 per cent. Net Profit Margin is currently 24.4 per cent which makes STO a very efficient business.
STO’s Return on Equity is great at 20.5 per cent.
STO’s EPS are (12/05) 97.9 cents and last Dividend was 38 cents, a yield of 3.9 per cent.
STO has a Long Term Debt of $1,817 million comprising 38 per cent of capital, which probably means that STO cannot take much more debt.
Interest is $79.9 million and Cash Assets are (12/05) $229.2 million. Santos is Cash Flow positive at 234.7 cents per share.
STO today’s price is $9.75, a P/E of 10 times, being the typical figure for the sector 18 times. Price to Book value ($4.99) is 2 times being the average for the sector 3 times. This two measures make STO look cheap.
If STO ends-up having to pay compensation in Indonesia its price is likely to fall even further. Considering that its ability explore and produce oil and gas would be undamaged, and considering that it is such a great company, I would take the opportunity to buy a share of its equity.
End
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