Oil Search Limited
OSH Details
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Update on InterOil bidding proposal: Oil Search Limited (ASX: OSH) surged 3.9% on July 18, 2016 post market views about Exxon Mobil superior bidding deal for U.S. listed InterOil (IOC). Specifically, RBC Capital Markets’ believes the superior proposal from Exxon to be positive for OSH as OSH would receive a US$60 million break fee from InterOil (of which France's Total (TOT) is entitled to 20%) if the company takes a back step. Meanwhile, Oil Search has time until July 21 to decide on raising the offer. Under terms of Exxon Mobil Offer, InterOil shareholders would receive a payment of $45.00 per share of InterOil, paid in ExxonMobil shares. Oil Search offered an additional $6.05 per share for every trillion cubic feet of likely reserves above 6.2 trillion found in InterOil’s Elk-Antelope fields while Exxon is offering $7.07 per share for each trillion cubic feet above 6.2 trillion.
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Recommendation: We maintain our “Buy” recommendation on the stock at the current price of $7.25
Australian Agricultural Company Ltd
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AAC Details
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Focusing on beef business: Australian Agricultural Company Ltd (ASX: AAC) stock rose about 1% on July 18, 2016. The group reported that its beef sales in 2016 accounted for 88% of the revenue. AAC is focusing on processing on its own beef for global sale, by establishing the Livingstone Beef processing facility at Darwin. For 2016, the total revenue increased by 45%, while the beef’s export to United States rose by 175%. AAC is even investing for global expansion and in the next three months, they would roll out around five brands which would give recognition in the world. The group recently launched their new website and would launch Wylarah and Westholme beef in the next few months. Meanwhile, AAC stock has risen 47.15% (as on July 15, 2016) in the last six months.
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Recommendation: Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $1.95
Whitehaven Coal Ltd
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WHC Details
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Strong June quarter performance: Whitehaven Coal Ltd (ASX: WHC) stock continued to rise about 2% on July 18, 2016 while Prudential Plc reduced the voting power to 10.09% from 11.16%. The group reported better than estimated June quarter performance. For June quarter, Maules Creek operating reached over 9.0Mtpa rate, while Narrabri and Tarrawonga established the new ROM coal production levels. Second longwall change out at Narrabri was finished as estimated and solid ROM coal production was delivered from the Gunnedah open cuts which reached 5.8Mt for the year.
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Recommendation: Despite the stock generating 238.78% (as on July 15, 2016) in the last six months, we maintain our “Speculative Buy” recommendation at the current price of $1.69
Guidance for FY 2016 (Source: Company Reports)
WorleyParsons Limited
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WOR Details
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Ongoing contract wins and other approvals: WorleyParsons Limited (ASX: WOR) stock rose 2.2% on July 18, 2016 while National Australia Bank became a substantial holder. Meanwhile, WOR’s joint venture with the Kazakh Institute of Oil and Gas JSC (JSC KING) is sanctioned by Tengizchevroil LLP (TCO) to provide detailed engineering, procurement and construction management for the Future Growth Project, which is expected to maximize Tengiz production capacity to about 42 million tons of oil per year and the whole project is expected to be finished by 2021. Moreover, WOR has got the contract worth CAD130 million to offer module assembly and field construction services for the Cutbank Ridge Partnership Program’s 15-27 Saturn Phase 2 Sweet Gas Plant Project.
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Recommendation: We maintain our “Buy” recommendation on the stock at the current price of $7.88
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