Oil price reacts to supply shifts

Resources Corner

The energy sector was rocked this week as US giant Chevron sells its 50 per cent stake in Caltex Australia. The $4.6 billion trade was the single biggest block trade in the country’s history. Chevron explained its pulling out of the oil refining business was part of a regular review which involved ensuring they had cash to support long-term priorities. 
 
The oil price has seen plenty of volatility after last week’s price spike that came after Saudi Arabia launched attacks on rebels in Yemen. Towards the end of this week the price climbed again on signs of tightening supply from US shale operations.
 
In other news Woodside Petroleum has affirmed its annual output guidance while announcing its Pluto LNG Plant in Western Australia has restarted and Liquefied Natural Gas says its flagship Magnolia LNG Project in America is on track to deliver its first LNG in 2018.
 
Commentary
 
Earlier this month Finance News Network spoke with Caltex Australia’s Managing Director and CEO, Julian Segal, about the company’s full year results and strategy for the year ahead. See the full interview here.
 
What was your net profit and key metrics for the 2014 financial year?
 
“The 2014 profit after tax on the replacement cost operating profit for Caltex was $493 million. That’s a solid result underpinned by good growth in marketing and good operational performance in supply chain, as well as the delivery of our Kurnell project.
 
Could you outline where Caltex Australia will be focussing over the 2015 financial year?
 
“The Caltex strategy starts with our vision, which is to be the leader in transport fuels across Australia. And we’ll be doing that by delivering top quartile total shareholder returns. To deliver that, we’ve got four pillars in our strategy. The first is a superior supply chain capability, the second is about our offering to the customer, the third is about organisational competitiveness and the fourth is about corporate growth.”
 
Australian oil reshuffle 
 
Shares in Caltex Australia Limited (ASX:CTX) have dropped after US based oil and gas giant Chevron decided to divest is long held 50 per cent interest in the company on Friday. Caltex says Chevron’s move was driven by a broader portfolio review and will not affect Caltex’s business or ability to reliably and competitively deliver fuel. The stake is understood to have been picked up by Australian and global equity market institutional investors for $35 per share. 
 
Beach Energy Limited (ASX:BPT) says they have been advised by Chevron Exploration Australia that the US firm would be withdrawing from the Nappamerri shale gas project in South Australia. Chevron is reducing its exploration exposure due to market conditions and has reassessed a number of local projects.
 
Woodside Petroleum Limited (ASX:WPL) has affirmed its annual output guidance while announcing its Pluto LNG Plant in Western Australia has restarted. The oil and gas producer temporarily shut-in production at the plant earlier this week after a submersible drilling rig under contract to another party drifted near Pluto flowlines.
 
LNG
 
Liquefied Natural Gas Limited (ASX:LNG) says its flagship Magnolia LNG Project in America is on track to deliver its first LNG in 2018 and talks are continuing for offtake agreements. The liquefied natural gas developer has also announced its Managing Director and Magnolia LNG President Maurice Brand will relocate to Houston next month. 
 
Shares in Karoon Gas Australia Limited (ASX:KAR) plunged after providing an update on its Kangaroo West-1 exploration well. The oil and gas explorer says the latest data has shown no hydrocarbons were intersected because of a lack of oil migration charge into the structure. Shares in Karoon Gas Australia have plunged 16.29 per cent and are trading at $2.21. 
 
Earnings growth
 
Energy Developments Limited (ASX:ENE) has lifted its earnings guidance for the full 2015 financial year after a strong start to the second half. The clean energy business expects to generate EBITDA of between $211 million to $216 million from an earlier forecast of between $205 million to $210 million.
 
Alternative energy
 
Peninsula Energy Limited (ASX:PEN) says that its uranium projects in the US state of Wyoming are on schedule for first production later this year. The wellfield development activities of the Lance projects are underway with four drills already installed and a fifth on its way to the site.
 
Paladin Energy Limited (ASX:PDN) has updated its guidance after a unit it its Langer Heinrich processing plant failed. The unit was off line for around ten day reducing production to around 45% of capacity. As a result Paladin has dropped from the previously anticipated 5.2Mlb – 5.5Mlb to current expectation of a range between 5.0Mlb-5.2Mlb during the 2015 financial year.