Oil Search (OSH)

Submitted by Craig Strzelecki on 17 September, 2007 - 15:25

from Australian stock analyst Macquarie Research Equities. The oil company's stock price has jumped on the back of speculation of a bid. Shares in Oil Search (OSH) rallied as much as 19% in trade today after speculation emerged that the stock was in the sights of a corporate predator. In response to the press speculation in the South China Morning Post that CNPC Exploration was considering a bid of US$5bn (~A$5.50/share), Oil Search (OSH) has informed the market that it has not received any formal approach from any party regarding a takeover. The press report suggesting that CNPC (the equal joint venture between China National Petroleum Corp and its Hong Kong-listed subsidiary PetroChina) was planning to bid saw OSH rally to $4.60/share from Friday's close of A$3.85 per share before settling back to around $4.30 (up 11%).

While it would appear that this is not a signal of imminent corporate activity, it does support the view that the upside for OSH available from its large volume of undeveloped, stranded gas in PNG could be attractive to potential suitors. In previous analysts' research, they we have highlighted the possibility of takeover given the apparent increased level of appetite for LNG optionality in Asia from both Asian and international E&P companies. The recent price suggested by the Woodside:Petrochina LNG deal would support the view that China is increasingly attracted to gas importation despite the current high pricing environment. While the analysts believe the speculation may not be based on an immediate threat it does give an indication that substantial upside is available if ExxonMobil progresses with an LNG development. The New PNG Government will sit tomorrow for the first time under returning PM Sir Michael Somare and we anticipate the address to the nation will carry a strong message regarding the Governments expectations on a LNG development. Read a previous stock recommendation for Oil Search. The company was a previous Loser of the week

Oil Search Limited is listed on the Australian Stock Exchange (ASX) under stock code OSH. You can view their investor website here. OSH was listed on the ASX on the 1st January, 1974. Oil Search is involved in the exploration for oil and gas deposits in Papua New Guinea and the development and production of such deposits. Browse for other broker recommendations. Check your charts and good luck with your share trading!