OSH 0.16% $6.38 oil search limited

Half year profit jump 450%

  1. 99 Posts.
    This says it all and what I along with many on the market are waiting to hear from Oil Search about who its key customers are. I have written and spoken to Oil Search and I will be meeting with Mr Botten to discuss my concerns. Dont expect any great rises because the Analysts are going to hold this one until Oil Search and or Exxon start to break news. Its a pity because Oil Search when it all happens is going to be one big company.

    Lower profits forecast for Australia's oil majors
    By Michelle Nichols

    MELBOURNE, Aug 7 (Reuters) - Lower oil prices are expected to eat into the first-half profits of major Australian oil and gas producers Woodside Petroleum Ltd (ASX: WPL) and Santos Ltd (ASX: STO), analysts said.

    However, they see Oil Search Ltd (ASX: OSH) reaping the benefits of its merger with Oregon Minerals.

    Oil Search is expected to record a half-year profit jump of about 450 percent to about A$34.4 million after the merged company reported an increase in second-quarter oil and gas production of 52 percent.

    In contrast, volatile oil prices are driving the expected decrease in profits for Woodside and Santos, according to the analysts, with Woodside also recording a decline in first-half production.

    In Australian dollar terms, an analyst said oil prices have fallen by about A$10, or nearly 20 percent, to A$40 per barrel, compared to the first half last year.

    An average of five analysts' forecasts puts Woodside's net profit at A$303.2, within a range of A$290.2 million to A$320 million, down from A$580.2 million last year.

    "Production for the first half is slightly down compared to the first half last year and the realised oil prices are down, so you have got the double impact," Auzeq Securities oil and gas analyst Andrew Williams said.

    But analysts cautioned that Woodside's results, due on August 15, was likely to be overshadowed by the pending decision on the multi-billion dollar supply contract for China's first liquefied natural gas terminal.

    The Woodside-operated North West Shelf venture is competing for the contract against BP Plc BP.L in Indonesia and Qatar's Ras Laffan Co.

    PNG PIPELINE KEY

    Santos is expected to post a half-year profit of around A$173.9 million, down from A$251.5 million in 2001, with five forecasts within a range of A$161 million to A$196 million.

    "This profit is being driven by lower oil prices and higher cash costs. I think it will be interesting to see what they do with the dividend, but don't expect any major write-offs," ABN AMRO oil and gas analysts Paul Ashby said.

    Analysts said the main issue Santos needed to address was how to commercialise assets that appear to be stranded, such as the Evans Shoal gas field in the Timor Sea.

    Although Oil Search is expected to report a huge profit jump, analysts said the market was mainly awaiting news on the fate of the proposed US$3.5 billion Papua New Guinea to Australia gas pipeline, in which Oil Search has a 37 percent stake.

    An average of five analysts' forecasts put Oil Search's profit at A$34.4 million, up from A$6.25 million last year and within a range of A$30 million to A$40.6 million.

    "It really doesn't matter to a degree what they announce, it is really going to be overshadowed by the market really wanting some positive conclusion on the gas project," said one analyst, who declined to be named.

    The pipeline project needs to sell between 120-150 petajoules of PNG gas a year to be vialble, but so far only has one customer -- the Australian Gas Light Co AGL.AX -- who has agreed to buy 50 petajoules a year for 20 years from 2006.

 
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