Australian Energy Sector

Submitted by Share Trading on 15 April, 2008 - 12:08

An Australian stock analyst, Macquarie Research Equities have provided an update about the energy sector: Woodside Petroleum (WPL), Santos Oil (STO), Oil Search (OSH) and Australian Worldwide Exploration (AWE).

Energy Sector: The Australian Energy Sector

The Australian energy sector has leveraged off the strength of commodities over recent months, with Oil prices spiking to record highs against a meagre $US. One argument suggests that the record price of light sweet crude has impacted consumer spending patterns, particularly in petrol. On the contrary, this pricing trend has supported the prospects for a number of energy firms. Furthermore, it’s important to note that the spike in commodities prices, such as oil, is not so much a catalyst for current global economic turmoil, but a by-product, if you will. Macquarie Research Equities (MRE) highlight their adjusted forecasts for the sector…

MRE have adjusted their forecasts for the energy sector by taking into account field production guidance, exchange rates and 1Q actual Oil prices. Following are some of their adjustments:

  • WPL adjusted earnings 2008: 1.7% (Quarterly Result – 17 April)
  • STO adjusted earnings 2008: 3.2% (Quarterly Result – 23 April)
  • OSH adjusted earnings 2008: 1.9% (Quarterly Result – 22 April)
  • AWE adjusted earnings FY08 10% (Quarterly Result – 20 April)

Australian Energy Sector: Preferred Exposure:

Oil Search (OSH) remains the sector pick for MRE with an Outperform recommendation and $6.00 12-month price target. The upside value argument is driven largely by the commercialisation of its stranded gas assets via an Exxon-led LNG development.