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Oil Bargain Hunting Remains Elusive Game

There’s a welcome whiff of oil industry consolidation in the air. But a gap between buyers and sellers shows there’s hardly a consensus that petroleum prices have hit bottom. Most of the recent action has been in Australia. Santos Ltd. SSLTY 2.92 % , one of Australia’s biggest energy companies, said Thursday that Scepter Partners, backed by Brunei’s oil-rich royalty, offered a 27% premium for the company over Wednesday’s price. This comes after Australian major Woodside Petroleum WOPEY -1.00 % bid for compatriot Oil Search, only to be rebuffed for being too cheap . Santos is also rebuffing Scepter, saying the bid is opportunistic. Scepter’s offer puts a debt-adjusted market value of $11.38 billion on Santos, or $9.14 per barrel of its proven and probable reserves. That is cheaper than Woodside’s offer for Oil Search at the time for $22.74 a barrel or Woodside’s own value of $17.38 a […]

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BHP Billiton Pares Petroleum Spending Plans

The Anglo-Australian mining and energy company said Wednesday petroleum capital expenditure was set to total US$2.9 billion for the year through June, a 6% cut from its prior guidance. That came after oil-and-gas production slipped 4% on-year to 64.5 million barrels of oil equivalent in the first quarter to Sept. 30, although BHP stuck with a target of 237 million barrels for the year. Chief Executive Andrew Mackenzie said the company continued to reduce costs in its onshore U.S. and conventional energy operations and would still meet its output targets with US$200 million less capital investment. Still, Mr. Mackenzie said the company had picked up oil acreage in the Beagle basin in Western Australia and in the Western Gulf of Mexico and BHP would continue to invest in the business. Across BHP’s operations, production guidance for the full-year was maintained after another rise in iron-ore output , flat coal […]

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Six bears, zero bulls point to lower Asia LNG price: Russell

A LNG (Liquefied Natural Gas) tanker is seen behind a port in Yokohama, south of Tokyo, Japan, September 4, 2015. LAUNCESTON, Australia – Around about now it would be normal for the price of spot liquefied natural gas (LNG) in Asia to start rising ahead of the northern winter, but these are far from normal circumstances. It’s hard to imagine a more bearish set of circumstances facing LNG suppliers, and it’s about to get worse with exports ramping up from Australia’s latest plant and the start of commissioning of the first of a wave of new units in the United States. In previous years, the spot LNG price in Asia has shown clear seasonal movements, even within the broader price trends, generally gaining ahead of the northern winter and summers, before weakening in the spring and autumn. But this year the price has shown no seasonality, remaining within a […]

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BHP Billiton Sees Rocky Outlook for Coal

A multiyear downturn in the energy commodity, used to generate electricity and make steel, is worsening as miners continue to produce too much supply and China’s economy slows, said Mike Henry. China’s restrictions on certain types of highly polluting coa l, introduced earlier this year as part of an accelerating campaign to clean up its air, have added to a significant glut in the global market for the fuel, the mining executive said on Friday. “There are no signs of things getting better in the immediate term,” he said during a speech in Brisbane, Australia, according to prepared remarks. Coal prices have been tumbling since 2011 as cooling demand for the fuel was met by rising supplies from new mines planned when the market was booming. Price declines have deepened this year. The value of metallurgical coal, which is burned for steelmaking, is down as much as 30% from […]

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Sun-Drenched Miners Look to the Skies to Cut Fuel Costs in Half

The DeGrussa copper and gold mine in Australia’s sun-scorched outback is getting a solar farm, the latest example of the industry embracing clean energy. The plant will replace about 5 million liters (1.3 million gallons) of diesel a year, a fifth of the mine’s energy needs. Energy generated by the system may eventually cost about half that of diesel-generated power, according to Sandfire Resources NL, the deposit’s owner. Miners including Rio Tinto Group are installing new solar plants from Chile to South Africa, betting they’ll deliver long-term savings even as tumbling oil prices cut power costs. The global solar-power market for mining companies may grow to about $2 billion a year by 2022 from about $42 million in 2013, according to Navigant Consulting Inc. “Solar-power providers are specifically targeting mines right now and it’s about replacing diesel,” Dexter Gauntlett, a senior research analyst at Navigant said by phone from […]

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BHP Billiton hit hard by Chinese economic decline

Australian mining giant BHP Billiton says Chinese weakness behind major slump in revenue. FIle Photo by UPI Photo/Stephen Shaver MELBOURNE, Aug. 25 (UPI) — An oversupplied crude oil market and a slowing Chinese economy helped drag revenue down for the period ending June 30, Australia’s BHP Billiton said Tuesday. BHP reported revenue from continuing operations down 21.4 percent for the period, total revenue down 22.2 percent, and capital spending down 24 percent for the period compared with last year. The Australian company said it was taking a reigned in approach moving forward, cutting spending next year by 22 percent to $8.5 million and another 17 percent from there to $7 billion in 2017. Profits after tax for the year ending June 30 declined 85 percent to $1.9 billion. Energy companies are struggling to generate cash while lower crude oil prices crimp operating expenses. Crude oil prices are at historic […]

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Australia Sets Emissions Goal, but Climate Experts Say It Falls Short

Photo The Great Barrier Reef in Australia. Critics of the country’s new goal for greenhouse gas reduction say that it does not go far enough, and that the reef could be threatened. Credit Australian Institute of Marine Science, via Agence France-Presse — Getty Images SYDNEY, Australia — Prime Minister Tony Abbott on Tuesday announced a greenhouse gas reduction goal for Australia that he said struck “the right balance” between economic concerns and the need to address climate change , but scientists and environmental groups said the plan fell short of what was needed. The goal — reducing carbon emissions at least 26 percent, and possibly 28 percent, from 2005 levels by 2030 — also earned Mr. Abbott a stinging rebuke from the Marshall Islands, the tiny archipelago northeast of Australia that is threatened by rising sea levels. “If the rest of the world followed Australia’s lead, the Great Barrier […]

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Woodside Sales Slide 47% as Gas Trades Near Five-Year Low

Woodside Petroleum Ltd.’s sales fell by almost half in the second quarter amid falling energy prices and lower output of liquefied natural gas. Revenue at Australia’s second-biggest oil and gas producer dropped 47 percent to $898 million, the Perth-based company said Thursday. That compares with Goldman Sachs Group Inc.’s estimate of $924 million. Woodside is among liquefied natural gas producers grappling with prices in Asia that are trading near the lowest in five years. Prices for the fuel have tumbled in the past year as new supply combined with weakened demand in key markets such as Japan, Korea and China. Production last quarter was lower mainly because of maintenance at the Pluto liquefied natural gas project, the company said. “It’s a tough time to be marketing incremental LNG volumes,” Nik Burns, an analyst at UBS Group AG in Melbourne, said by phone. “There is an oversupply at the moment […]

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As Coal Prices Fall, Miners Cut Output

SYDNEY—China’s appetite for coal used in steelmaking is faltering, deepening a market downturn miners say is the worst in recent memory. The price of steelmaking coal shipped from Australia, the world’s biggest exporter, has fallen 23% this year to roughly $86 a metric ton, its lowest level in nearly a decade. The slide extends a decline begun in 2011, during which the fuel’s value has slumped by around three-quarters. But analysts caution that prices will recover only if more cuts are made. The consultancy Wood Mackenzie doesn’t expect the oversupply of steelmaking coal, or coking coal, to clear up until about 2022. China, whose breakneck economic growth has been the engine for most global commodity markets, won’t need as much steelmaking coal in future, analysts now project. That leaves miners who rushed to open new pits in the boom years to struggle. Chinese sectors such as heavy industry and […]

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BHP plans deeper cost cuts to battle commodity rout

LONDON BHP Billiton said on Tuesday it would slash its iron ore production cost further and cut spending to better withstand a downturn in commodity prices that is testing even mining industry heavyweights. Giant iron ore producer BHP, the world’s largest mining company, and rival Rio Tinto are locked in a battle to become the lowest cost iron producer. At the same time, they are increasing production of the steel ingredient, hoping to squeeze out competitors and gain market share. BHP Billiton Chief Executive Andrew Mackenzie dismissed criticism that such a strategy was fuelling the sharp slump in iron ore prices. "We operate in highly competitive and cyclical markets, where earnings outperformance through the cycle depends on being the most efficient supplier, not supply restraint," Mackenzie said, speaking at an investor conference in Barcelona. "In this environment we are well prepared for the possibility of an extended period of […]

Posted On : Published By : Tom Whipple