has revised the offer for the merger under which Oil Search investors would receive 0.6275 new Santos shares for each Oil Search share held, implying $4.29 per Oil Search share based on July 19 prices. Santos
The combined entity would become an ASX top-20 company, overtaking Woodside Petroleum as the nation’s largest oil and gas producer.
announced it had submitted a non-binding all-scrip merger proposal to Oil Search, under which OSH shareholders would receive 0.589 STO shares for each OSH share. Santos
Currently values OSH at around A$4.25ps.
The new entity will become the largest ASX listed oil and gas company by
market cap. is our preferred exposure within the energy sector. We highlight the price support at $5.00. Santos is under Algo Engine buy conditions and is a current holding in our ASX 100 model portfolio. Santos
We highlight the buying support and suggest investors keep an eye on the short-term momentum indicators for a reversal higher.
The price of
West Texas Intermediate crude oil dropped over 7% and reached a 14-month low of $50.15 in overnight trade in New York.
Yesterday’s price action extends the rout in crude oil to over 35% since posting a high of $76.90 on October 3rd.
In response, Saudi officials announced that they will attend next week’s G-20 summit in Argentina to meet with US and Russian representatives in front of the OPEC meeting on December 6th in Vienna.
Local oil names
STO, OSH and WPL are all under ALGO buy signals and will stand to benefit from any indication that OPEC will cut production into 2019.
We see chart support for
OSH at $7.00, STO near $5.25 and WPL in the $31.00 area. Oil Search Santos Woodside Petroleum
Santos has a price gap in the chart at $5.25 and we’re looking for buying support to build at or slightly above this level.
The horizontal channel on the
WPL chart below indicates our target price range where we believe new buying interest will begin to build.
The mid-point is approximately $32.00
STO & OSH should also be considered.
Our ALGO Engine generated a buy signal in
Oil Search at $7.50 on October 30th.
With LNG prices firming, we recommend investors accumulate
OSH shares at current levels. OSH is our preferred value opportunity even though WPL and STO also look reasonable over the medium-term.
West Texas Intermediate (WTI) Crude Oil price dropped 1.3% overnight to post their worst monthly performance in over two years.
The combination of trade wars, the global equity market slump and increasing oil stockpiles has raised concerns about oil demand, which pushed the WTI price 10.8% lower during October.
However, with official US sanctions on Iranian oil set to begin on November 4th, some analysts are looking for a bounce in crude oil prices.
Our ALGO engine is currently showing buy signals in the local oil names:
WPL, STO and OSH.
We look for all three of this stocks to firm over the near-term with
OSH reflecting the best value on a relative basis
Oil prices continue to rise as U.S. sanctions on Tehran squeezed Iranian crude exports, tightening supply even as other key exporters increased production.
Recent signals in
OSH and STO continue to push higher. Also, the OOO ETF, (Oil ETF), is now up almost 20% from the recent Algo Engine buy signal.
Oil ETF OOO