The Share Purchase Plan

Santos are in the hunt for cash.   They’re not my favourite company at present, partly because they built one of the three new LNG plants at Gladstone which (it seems to me) are suffering from tight supplies of gas (with a consequent effect on the prices domestic users will pay).   And a number of their projects took hits when the oil price had a massive fall after November 2014.   Hence the share price has ranged from over $15 at one stage in 2014 to well under than $3 during 2016.

Supposedly, the company has repented and installed a “new leadership team”.

The instos have piled over $1 billion into Santos in recent weeks;  the  “mums and dads” are being invited to follow under a share purchase plan.    Ought they (us) do so?  I guess it mainly comes down to one’s take on the oil price (and perhaps also to one’s belief as to whether the new management has in fact fixed things up as they would have us believe).  Santos claim now to be highly leveraged to increases in the oil price (even though the capital raising will obviously be dilutive);  so the potentail for some upside seems to be there.    On the other hand, when a company has to take advertisements in the daily papers to encourage shareholders to participate in the non-underwritten offer…..interesting!




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