A look at the latest development in Energy space - WOR, CTX, WPL

The Australian Securities Exchange ended the market session on 31 December 2019, in red with the benchmark index S&P/ASX 200 declining by 120.8 points (-1.8% from its last close) at 6684.1 points. The S&P/ASX 200 Energy (Sector) also ended the day with a decline of 185.2 points (-1.61% compared to its previous close) at 11,502.3 points.

In this article, we will look at three energy companies – Worley Limited, Caltex Australia Limited and Woodside Petroleum Limited - that have made significant announcements recently.

Worley Limited (ASX: WOR)

Sydney, Australia-based Worley Limited offers a range of engineering design and project delivery services, including professional project and asset, and advisory support services to the energy, resources, and chemicals sectors.

Contract with the Nuclear Power Plants Authority of Egypt

On 30 December 2019, Worley announced that it had been awarded a consultation services contract by Egypt’s Nuclear Power Plants Authority (NPPA). As part of the agreement, NPAA will receive consultation services from Worley to aid the completion of Egypt’s first nuclear power plant.

The services will comprise of technical support in engineering and design review, commissioning, quality assurance project management, procurement, and construction management, among other activities. The contract is expected to extend until 2030.

Engineering and procurement services contract extension with Imperial and Syncrude

Worley announced the extension of engineering and procurement services contract with Imperial Oil Limited and Syncrude Canada Limited on 20 December 2019. The period of extension is five years. The company, through its Canadian team, will continue offering its engineering, procurement and project delivery services to Imperial and Syncrude, and will be assisted by its global business.

Worley awarded an engineering services contract by Marathon Petroleum

Marathon Petroleum Company LP awarded an engineering services contract to Worley for a diesel refinery, Dickinson, in North Dakota, the US. As part of the deal, awarded on 20 December 2019, Marathon will receive engineering services and get equipment and materials for conversion of the refinery to a renewable diesel refinery.

The services will be provided by Worley’s US team and will be assisted by the company’s global business.

Stock Performance

Worley’s (WOR) stock closed at $15.310 on 31 December 2019, with a decline of 0.842% from its last close. The number of outstanding shares for the company were 520.36 million, and the market capitalisation was $8.03 billion.

The stock has a 52 weeks high price and low price of $16.450 and $11.320, respectively. The shares of the company went up 18.68% and 2.18% on three months and six months basis, respectively.

Caltex Australia Limited (ASX: CTX)

Caltex Australia Limited is engaged in the procurement, distribution, refining and sale of petroleum products. The company also operates convenience stores across Australia and New Zealand.

Caltex produces fuels, including LPG, diesel petrol, and jet fuel. The company also manufactures greases, and lubricants, among other specialty products.

Source: Company’s Report

Caltex’s intention to transition to Ampol brand

On 23 December 2019, Caltex announced that Chevron Corporation gave the company a termination notice with respect to its licence agreement to use Caltrex brand in Australia. The company further announced that following a comprehensive brand strategy review, it has decided to continue working on its current plan of transitioning to the Ampol brand. Caltex will start the transition process once the six-month termination notice period of the licence agreement expires.

Business Update and Highlights from Investor Day

On 5 December 2019, Caltex announced that it will divest the first tranche of 25 higher and better (HBU) retail sites for approximately $136 million and will have exchanged contracts of roughly $80 million. Caltex expects roughly $92 million worth of net cash proceeds after remediation costs (Approximately $25 million), capital gains tax and sales fees.

As part of its existing capital management strategy, the company also announced its aim to issue $300-$500 million worth of hybrid capital securities.

Key highlights from Investor Day

· Couche-Tard proposal: Caltex deduced that the bid undervalues the company and that the value is not persuasive enough for the shareholders.

· Significant progress on the retail network with actions taken on approximately 550 sites to generate future value and position.

· Expected sale of 25 HBU sites for approximately $136 million.

· Company’s objective to launch an IPO for approximately 49% interest in about 250 retail sites.

· Potential for substantial earnings growth driven by a strategy intended to bring $195 million of uplift from opportunities by the year 2024.

· On track to provide savings worth $100 million by 2020.

· Focus on initiatives to help release franking credits to shareholders.

Stock Performance

Caltex’s stock closed at $33.950 on 31 December 2019, with a decline of 0.673% compared to its last close. The number of outstanding shares for the company were 249.71 million, and the market capitalisation was $8.53 billion.

The stock has a 52 weeks high price and low price of $35.160 and $20.520, respectively. The shares of the company went up 29.86% and 36.83% on three months and six months basis, respectively.

Woodside Petroleum Limited (ASX: WPL)

An oil & gas company, Woodside Petroleum Limited is engaged in the discovery, assessment, development, production and commercialisation of hydrocarbons. The company, founded in 1954, operates approximately 6% of the global liquified natural gas (LNG) supply and has delivered LNG cargos to over 5,000 customers globally.

Woodside signs a sale and purchase agreement with Uniper

On 24 December 2019, Woodside Energy Trading Singapore Pte Ltd announced that it has signed a sale and purchase agreement (SPA) with Uniper Global Commodities. Under the terms of the agreement, Woodside will supply LNG to Uniper starting from 2021 for a period of 13 years.

Also, initially, Woodside will supply 0.5 million tons per annum (Mtpa) which will increase to 1 Mtpa by 2025, which is subject to final investment decision on Scarborough development.

New agreements with Ngarluma Yindjibarndi Foundation Limited and the Murujuga Aboriginal Corporation

On 2 December 2019, Woodside entered in a new contract with Ngarluma Yindjibarndi Foundation Limited (NYFL), and the Murujuga Aboriginal Corporation (MAC).

In the updated agreement, there will be a rise in funding for a range of programs and benefits being delivered as part of the existing agreement.

Appointment of non-executive director

Woodside announced on 2 December 2019 that its board has appointed Ms Goh Swee Chen as a non-executive director. Ms Goh will join as an independent director, effective 1 January 2020, and will be a member of various committees including Human Resources and Compensation, Sustainability, and Nominations Committee.

Stock Performance

Woodside’s (WPL) stock closed at $34.380 on 31 December 2019, with a fall of 1.546% from its prior closing price. The number of outstanding shares for the company were 942.29 million, and the market capitalisation was $32.9 billion.

The stock has a 52 weeks high price and low price of $37.700 and $30.480, respectively. The shares of the company went up 7.84% on three months basis and declined by 4.49% on a six months basis.