A Look at Two stocks from Energy Sector – OSH, WOR

  • Feb 04, 2020 AEDT
  • Team Kalkine
A Look at Two stocks from Energy Sector – OSH, WOR

Energy Sector is one of the most prominent sectors in Australia, which plays an eminent role in building an economy. This sector has witnessed a growth in the past decade. Also, the sector has provided employment, contributed in the growth of the economy and boost to all the other macroeconomic factors.

Moreover, at the close of trading session on 4th February 2020, S&P/ASX 200 Energy (Sector) settled at 10,973.2, reflecting a decline of 140.2 points from its last close. In the below article, we will be looking at the two energy sector companies that have updated the market on the status of their new contract wins.

Let us now deep dive into the two companies, through their recent updates.

Oil Search Limited (ASX: OSH)

Incorporated in 1929, Oil Search Limited (ASX: OSH) is engaged in the activities like exploration, development and production related to oil and gas. The company possesses 98% of its assets in Papua New Guinea (PNG).

The company has recently notified the market with Papua New Guinea’s Prime Minister’s release, which stated that negotiations on the P’nyang Gas Agreement have stopped at the current stage in order to enable the Government of Papua New Guinea to concentrate on developments that are already in the pipeline.  

OSH complies with the Government of PNG’s right to set fiscal terms for resources developments in PNG, for making sure that an appropriate share of value from these projects is given to the State, resource owners as well as the people of Papua New Guinea.

Oil Search added that it is dedicated to ensuring appropriate benefits are distributed to the right stakeholders as well as getting the correct balance.

The company would continue to pursue to build up the Papua LNG Project in an appropriate method with the help of a number of engineering and commercial changes required to be made currently which the P’nyang development has postponed.

Strong Rise in Revenue

The company recently notified the market with its results for the fourth quarter ended 31st December 2019 and outlined the following:

  • Net total production for the quarter stood at 7.0 mmboe, reflecting a rise of 3% as compared to the previous quarter. It also added that a contribution of 6.3 million barrels of oil equivalent net to the quarter has been made by Papua New Guinea LNG project, which is based on an annualised gross production rate of 8.5 million tonnes annually.
  • The company reported revenue amounting to US$446.7 million, indicating an increase of 24% as compared to Q3 FY19. This increase reflects the timing of shipments, higher realised oil and condensate prices as well as recovery in production.
  • 2019 full year production reached to 27.9 mmboe with the help of robust Q4 FY19, which was in line with OSH’s revised guidance of 2019. The company experienced an impact on volumes by scheduled plant maintenance in the Q2 FY19 as well as a short curtailment of production in the Q3 FY19. Besides all this, PNG LNG achieved a record gross production of 8.5 MT in 2019, reflecting a rise of 2% as compared to the previous record reached in 2017.
  • At the end of quarter, the liquidity position of the company stood at US$1.15 billion, which comprises of cash amount of US$396.2 million and US$755.7 million in undrawn credit facilities. OSH also mentioned that the Pre-FEED, exploration and development activities in PNG and Alaska, and a scheduled PNG LNG project finance principal repayment, has been financed predominantly out of cash flows from operations.

The stock of OSH closed the day’s trading at $6.555 per share on 4th February 2020, indicating a fall of 2.455% against its previous closing price. The company has a market capitalisation of $10.25 billion as on 4th February 2020. The total outstanding shares of the company stood at 1.52 million. The stock has generated a total return of 7.05% and 5.88% in the time period of three months and six months, respectively.

Worley Limited (ASX: WOR)

Worley Limited (ASX: WOR) provides professional services in order to help its customer with the changing requirements for energy, chemicals and resources.  The company recently announced that it has appointed Chris Ashton for the role of Chief Executive Officer of the company, which would be effective from 24th February 2020 post the retirement of Andrew Wood.

EPCM services contract

  • On 6th January 2020, the company via a release notified the market participants that ExxonMobil Exploration and Production Malaysia Inc. has presented a five-year engineering, procurement and construction management (EPCM) contract to Perunding Ranhill Worley Sdn Bhd.
  • It was mentioned in the release that Ranhill Worley Sdn Bhd happens to be a joint venture company amid the Ranhill Group Sdn Bhd and Worley group, and is the company that executes services for PRW. Worley Group is also a joint venture stakeholder in Perunding Ranhill Worley Sdn Bhd (PRW).
  • Under the terms of contract, Ranhill Worley would be delivering debottlenecking projects for offshore projects in Malaysia as well as brownfield asset restoration. Engineering, Procurement and Construction Management services or EPCM also include material management, workpack preparation, offshore field engineering services for EMEPMI’s offshore assets as well as construction planning / reporting.

Contract for the first Egyptian nuclear power plant

The company on 30th December 2019 published a release and outlined the following:

Worley stated that it has secured a consultation services contract for the first Egyptian nuclear power plant by Nuclear Power Plants Authority (NPPA) of the Arab Republic of Egypt.

Under the terms of the contract, Worley would be providing consultation services to NPPA in order to support the implementation of the nuclear power plant project at El Dabaa. The company added that the power plant would comprise of 4 pressurised water reactors with a nameplate capacity of 4800 MW.

The stock of WOR closed the day’s trading at $14.105 per share on 4th February 2020, indicating a rise of 1.111% against its previous closing price. The company has a market capitalisation of $7.26 billion as on 4th February 2020. The total outstanding shares of the company stood at 520.39 million. The stock has generated a total return of -0.36% and -3.93% in the time period of three months and six months, respectively.


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