Resources and mining companies dominating the headlines this week include BHP delivering annual production records, Woodside Petroleum's second quarter production slipping while revenue rose, Santos' mixed second quarter production results and Newcrest Mining's jump in gold production.
We speak with Linc Energy CEO Peter Bond about why the company decided to scrap plans to buy US oil fields from ERG Resources. We also hear from NAB Commodities Economist Ben Westmore about the week's movements in commodities.
BHP production recordsBHP Billiton Ltd's
(ASX:BHP) has delivered annual production records across four commodities, putting it on track for a record full-year net profit of more than $20 billion. The global miner says iron ore output from Western Australia hit its eleventh straight record, with shipments rising to an annualised 155 million tonnes per annum in the June quarter. In the same period iron ore production rose 7 per cent and petroleum production rose 21 per cent. While metallurgical coal production rose 19 per cent, BHP warned that weather will continue to impact coal sales and unit costs for the remainder of the year.
Linc Energy eyes US oil fieldsLinc Energy Ltd
(ASX:LNC) says it has scrapped plans to buy US oil fields in Texas and Louisiana from ERG Resources due to "certain alleged title defects" identified during due diligence.
Speaking with Finance News Network, Linc Energy CEO Peter Bond says he knows the signs of a good deal, and the time to back away.
"It also shows a bit of maturity, it shows we know what a good deal looks like, we know how to manage the risk and we know how to execute, and when those things don't line up we're mature enough to walk away," said Mr Bond.
Linc intends to pursue other acquisitions in the United States.
"We're very keen on Gulf Coast Texas, Louisiana which is where the ERG stuff was. It's known, it's reasonably cost effective. It's got a good amount of opportunity. I'm also partial to our existing interests in Wyoming and there's some interesting stuff coming up there as well. As well as … in Alaska [especially] extensions to the Umiat area," added Mr Bond.
Woodside production slipsWoodside Petroleum Ltd
(ASX:WPL) says second quarter production slipped 17 per cent while revenue rose 17 per cent from the year before. The energy company's quarterly output fell to 16.3 million barrels of oil equivalent. The fall in production has been attributed to the planned outage of the North West Shelf oil fields. However, in the three months to the end of June revenue rose 17 per cent from the year before to $1.19 billion. Woodside has credited higher commodity prices for the increase. The company is targeting between 62 - 64 million barrels of oil equivalent in fiscal 2011.
Santos reports mixed production resultsSantos Ltd
(ASX:STO) reported mixed second quarter production results. In the three months to the end of June production rose 8 per cent, sales increased 11 per cent and revenue gained 20 per cent from the quarter before. However, when compared to the same time a year before production was flat, sales eased 3 per cent and revenue added 3 per cent. The energy company has confirmed its production guidance of between 47 to 50 million barrels of oil equivalent in the 2011 financial year. Santos also announced that it will buy Eastern Star Gas Ltd
(ASX:ESG) in a $924 million deal that will see it gain the largest natural gas reserves in New South Wales.
Newcrest gold production jumps 16%Newcrest Mining Ltd
(ASX:NCM) reported a 16 per cent jump in gold production for the June quarter, coming in at 700,124 ounces. The company says there are still production disruptions at its Hidden Valley and Lihir mines. For the year, gold production rose 53 per cent to 2.7 million ounces, in line with its forecast and underpinned by increased production and the company's takeover of Lihir Gold Ltd. Newcrest also increased its resource estimate at its Wafi-Golpu deposit in Papua New Guinea to more than one billion tonnes of ore.
Resources NewsGlobal steel production rose in June. The increase was led by record crude steel output in China, US steelmakers also increased output. The World Steel Association reported that global crude steel production rose 8 per cent to 127.746 million tonnes year-on-year in June 2011. This is a record production level of almost 4.3 million tonnes per day, compared with 4.2 million tonnes per day in May.
CommoditiesCommodities Economist Ben Westmore from NAB says we've seen mixed results for commodities over the past week and in trend term prices have been flat, however oil has done relatively well for the week.
"A few weeks ago, towards the end of June we had the announcement from the International Energy Agency that there was a stock release, to try and allay market fears that there would be a shortage of global oil. That had a temporary effect of causing a decline in the crude oil price. But in the last week or so markets have become skeptical about how much of an impact that will actually have on the physical market... crude oil prices have moved higher," said Mr Westmore.
Melissa Beaumont Lee
