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Woodside flies as oil surges

 

NEALE PRIOR

 

Shares in oil and gas group Woodside Petroleum burst through $18 yesterday in the wake of world crude prices surging overnight Wednesday amid concerns about production from Russia's biggest oil producer, Yukos.

 

The price of light sweet crude oil hit 14-year highs of $US43.05/barrel in New York overnight Thursday after Yukos said Russian officials had effectively ordered a halt to production from its main Siberian operation.

 

But oil prices were easing last night after the Russian Justice Ministry said that bailiffs were not seeking to block the economic activities of Yukos or its bank accounts.

 

The overnight oil price rises helped drive Woodside to record levels yesterday, with more than two million shares traded as investors pushed the stock as high as $18.08 before it eased to finish at a record closing price of $18.03.

 

Joining the market rally in petroleum stocks was Woodside's Mauritania exploration partners Hardman Resources and Roc Oil, which respectively surged 11ÃÆâ€â„¢ÃƒÆ’ƒâ€Â ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒ¢Ã¢â‚¬Å¾Ã‚¢ÃƒÆ’ƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’‚¡ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ to $2.35 and 6ÃÆâ€â„¢ÃƒÆ’ƒâ€Â ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒ¢Ã¢â‚¬Å¾Ã‚¢ÃƒÆ’ƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’‚¡ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ to $1.63.

 

Australian market watchers said the petroleum stocks were boosted yesterday by the strong oil prices but there was particular interest in the Mauritania partners as they prepared to embark on a massive drilling program in the north African nation.

 

Woodside, the Mauritanian operator, said three weeks ago it would drill up to 21 exploration, appraisal and development wells at the Chinguetti oil project and nearby Tiof and Banda fields.

 

The program is expected to cost more than $200 million.

 

Patersons Securities analyst Simon Oaten said sentiment about Woodside was helped by the company announcing on Wednesday that it had signed an extension of its LNG sale agreement with Japanese group Kansai Electric Power Company.

 

Mr Oaten said it was a sign that Woodside was heading in the right direction in its campaign to bed down contract extensions with customers.

 

Extensions and new contracts would underpin a decision to develop a fifth LNG train on the North West Shelf. In London last night, US light crude was trading around $US42.41/barrel.

 

Despite the price falls, traders remained nervous about already tight supplies and the precarious situation of Yukos.

 

Crude supplies are extremely tight, with Iraq's output hampered by saboteurs and most producers already pumping as much as they can.

 

There are concerns that increasing attacks in Saudi Arabia may at some point lead to a supply disruption from the world's largest oil exporting country.

 

"There is a definite shortage in the market of crude oil," said Keith Pascall, a trader at GNI-Man Financial. "The market is very worried about Yukos. There is not enough oil around already, so what will happen with another exporter going down or not being able to export any more?"

 

Peter Gignoux, a London-based oil adviser for GDP Associates, said Yukos was just a psychological event. "There's a doomsday machine out there that could easily drive prices higher."

 

Mr Gignoux said many futures traders and speculators had bet that oil prices wouldn't exceed $US42.50 a barrel.

 

Saudi Arabia has recently boosted its production by about one million barrels a day, but much of this fresh oil has yet to reach customers.

 

The extra OPEC oil has helped replenish US crude oil inventories.

 

Some traders say the focus has already shifted to inventories of winter heating oil, which are barely above year-ago levels amid limited worldwide refinery capacity.

 

 

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Analysts back Woodside stock

Date: 03/08/04

By Greg Tubby

 

 

 

Shares in Woodside Petroleum Ltd traded heavily on Tuesday as analysts continued to back the stock as it hovers near an all-time high.

 

A market favourite, Woodside ended down five cents at $18.65 on turnover of 2.3 million shares, after hitting another record high on Monday on the back of strong oil prices and an announcement that its half year net profit would beat average analysts' earnings by 10 per cent.

 

Goldman Sachs JBWere said it had considered downgrading its recommendation on the stock, currently short term "market perform" and long term "buy", after Monday's sharp price appreciation.

 

But it decided to retain the rating because of upcoming exploration in Mauritania, the prospect of ongoing oil price highs, the suite of investment decisions planned for the second half of the year, and Woodside's identified growth profile.

 

The brokerage also increased its earnings estimate for Woodside for the six months to the end of June by 3.4 per cent to $305 million to reflect the company's guidance.

 

The figure does not include its foreign exchange gains estimate of $40 million after tax, which Goldman Sachs said it regards as a significant item and not part of the net profit forecast.

 

Deutsche Bank has also retained its "buy" rating on Woodside because of the high oil prices, and has a target price for the company's shares of $21.00.

 

But it's not just the top end of the energy sector that is reaping the benefits of continued near record oil prices, which saw US crude oil futures hit $US43.92 a barrel in pre-opening trade in New York overnight - their highest point since trading began on the New York Mercantile Exchange 21 years ago - before dropping back once the market opened to close at $US43.65.

 

Two-thirds of Australian oil stocks are hovering within three per cent of their year highs.

 

Until the oil price eases, analyst Marcus Padley said there is unlikely to be any significant selling of the major oil stocks, or a loss of "faith" in the minors.

 

"It's all about the oil price and that's all about China and terrorism and the long term story ... the exhaustion of fossil fuels (imagine what that would do for oil exploration company share prices)," Mr Padley said in his MarcusToday newsletter.

 

"The big question is how much is left and which stocks."

 

The most likely upside is in the smaller stocks such as Australian Worldwide Exploration Ltd and Roc Oil Co Ltd, Mr Padley said.

 

"People are seeing these huge rises already in things like Hardman Resources Ltd and wondering what the next one is," he told AAP.

 

"It could well be AWE and Roc, not because of any fundamental assessment but just because they're a bit smaller and maybe people haven't trusted them as much.

 

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Hi wolver, yep I remember that you had "a few".

I dont have many but doing nicely.

 

Thanks for the reports xmagx ,xerxes and abner,lots of buys reco's now, maybe time to lighten?

Every time I think about it it jumps again.Wish all my stocks had this problem !

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