Gas and oil treading a fine-line to growth

Resources Corner

A slew of earnings reports this week have shown some tentative gains for hydrocarbon businesses amid anaemic oil prices and a burgeoning gas export market. Caltex Australia has increased its first quarter profit and affirmed its priority remains on pursuing growth opportunities, Santos has forecast being free cash flow positive by the fourth quarter of this year and Origin Energy has boosted its gas production by 10 per cent but has seen its revenue fall by 16 per cent in the March quarter.
 
Also at the end of the week Woodside Petroleum has shown it’s all set to purchase 850,000 tonnes of LNG from Corpus Christi Liquefication in a deal announced in July last year.
 
Eocnomic News
 
The international energy agency sees OPEC oil, led by Saudi Arabia, dominating the market going forward. By driving prices lower they’re squeezing high-cost shale producers in the US who have begun to pull back on supply this year. The IEA’s May report sees the OPEC strategy as showing no signs of slowing down, suggesting oil at $US100 will remain a mere memory for some time to come. 
 
Doing deals
 
Woodside Petroleum Limited (ASX:WPL) is all set to purchase 850,000 tonnes of LNG from Corpus Christi Liquefication in a deal announced in July last year. The oil producer says the subsidiary of Cheniere Energy has met conditions including building two train lines at its site in Texas.
 
Shares in Orca Energy Limited (ASX:OGY) soared after revealing a $20 million capital raising backed by mining executive Nathan Tinkler, pearl businessman Nick Paspaley and his business partner John Robinson. The oil and gas explorer and producer expects Mr Tinkler will join its board as Executive Chairman and Mr Robinson will come on as a Director following the placement.
 
Senex Energy Limited (ASX:SXY) has appointed a new Executive General Manager of Exploration starting next month. Mr David Spring has over 30 years experience in the oil and gas industry, most recently as global exploration manager for Mubadala Petroleum in the United Arab Emirates. 
 
AGL Energy Limited (ASX:AGL) has awarded a new metering field services contract to provider of network services Service Stream Limited (ASX:SSM). Under the deal Service Stream will provide AGL with a range of installation, commissioning, maintenance, logistics and customer contact centre services. The initial term of the contract is for three years, with the option of two one-year extensions. 
 
Results
 
Caltex Australia Limited (ASX:CTX) has increased its first quarter profit and affirmed its priority remains on pursuing growth opportunities and optimising the entire value chain.  The transport fuel supplier’s statutory unaudited profit after tax came in at $174 million, including an inventory gain of $12 million after tax. On a replacement cost of sales operating profit basis, Caltex’s profit grew to $162 million, from $96 million the year before. 
 
Santos Limited (ASX:STO) has forecast being free cash flow positive by the fourth quarter of this year with an oil price averaging $US60 a barrel. Managing Director David Knox said at the energy producer’s AGM that once the Gladstone LNG plant begins exporting it will be free cash flow positive for the full year in 2016. Mr Knox says that since the last meeting the PNG LNG project had begun shipping gas with 87 cargoes leaving port for Asia.
 
Beach Energy Limited (ASX:BPT) has reported a 33 per cent slump in quarterly revenue on the back of lower sales volumes and weaker oil prices. Sales volumes were down 23 per cent on the previous quarter resulting in revenue of $131 million. 
 
Origin Energy Limited (ASX:ORG) has boosted its gas production by 10 per cent but has seen its revenue fall by 16 per cent in the March quarter. The energy producer and retailer says its sales revenue for three months to the end of March reached $198.4 million. The company has blamed lower commodity prices and lower sales of third party volumes for the weakness in revenue.
 
Genesis Energy Limited (ASX:GNE) has cut its forecast for the full year to a maximum of $332 million, down from previous guidance of $350 million. The New Zealand-based energy retailer says lower oil prices and strong competition from energy suppliers have resulted in a reduction in both gas and electricity customers.