WorleyParsons Limited

WOR Details

Dividend Re-initiation: WorleyParsons has been positively impacted by the favourable movement of oil and commodity prices over the last few years. Higher investments by oil and gas players has helped the group move up the ladder. The group also restarted its dividend payment with its latest performance, after a period of lull. Lately, the group received a contract from Tullow Oil for providing services for the foundation phase of the South Lokichar onshore oil field development in Kenya. In the month of May, the group bagged many contracts including an offshore engineering, procurement, construction, installation and commissioning (EPCIC) contract by Neptune Energy. In addition, the group’s backlog remains strong. The group has also completed a cost reduction program that yielded $500m in annualised savings while it expects total overhead run rate heading into FY18 of $950m per annum. WOR still expects 2018 capex above 60%, but below 2013 peaks, given the projects in hand.


MMO Market (Source: Company Reports)

On the other hand, its UK Integrated Solutions business is expected to provide key differentiated services across the target Maintenance, modifications and operations (MMO) market. Going forward, oil and gas are expected to grow to 2040 and this would continue to provide support to the stock price movement. We give a “Hold” on the stock at the current price of $ 16.880.
 

WOR Daily Chart (Source: Thomson Reuters)
 

OceanaGold Corporation

OGC Details

Drilling Updates: The share price of OceanaGold Corporation’s (ASX: OGC) climbed up 3.374 per cent on June 12, 2018 after the update on drilling program wherein it intersected significant high-grade mineralization on Martha and empire veins at Waihi. According to the management, the latest drill results further demonstrate the significant mineralization that resides beneath the Martha Pit. These results are from a drill program that forms only a subset of a much more extensive drill program along kilometres of the combined strike and hundreds of metres of vertical vein extent. The exploration program is designed to unlock the million-ounce resource target at Waihi which would sustain current mining operations out to 2030 at historical production levels. Further, the group will continue its drill programs over the course of the next 18 months and expect to make periodic updates to Waihi’s mineral resource throughout this period.


Plan View Across the Martha Underground Drill Targets (Source: Company Reports)
 
Moreover, the Company will continue to pursue and review internal and external growth opportunities to enhance shareholder wealth while it intends to stay disciplined in its use of capital and investing in growth opportunities to align with the corporate strategy of investing in high-quality assets. The exploration target within the Martha Underground is expected to yield tonnages of between 3.5 million and 5.0 million tonnes and grades ranging between 5.0 g/t and 7.0 g/t gold for 500,000 to 700,000 ounces of gold. This exploration target is conceptual in nature and was generated from an assessment of surface and underground drilling data collected by the Company as well as historical and archived geological and mining data from over a century of mining activity at Waihi. It is expected that the permitting process for the Martha Project will be completed by the end of 2019, with resource potential to allow continuity of mining operations at Waihi to at least 2030. On the financial front, the group has recorded gross margin of 65.3% as at 31 December 2017, which is above industry median (15.5%). RoE and ROIC substantially improved in 1HFY18 from the previous half year and were above the industry median. Hence, we maintain our “Buy” recommendation on the stock at the current market price of $ 3.370, considering positive drilling results from the two underground drill drives which are expected to continue for rest of the year in conjunction with other drilling programs at Waihi and other regions.
 

OGC Daily Chart (Source: Thomson Reuters)
 

Woodside Petroleum Limited

WPL Details

Extending Tenancy Agreement at Aspen Karratha Village:Woodside Petroleum Limited’s (ASX: WPL) stock climbed up 1.37 per cent on June 12, 2018 after the announcement of the one-year extension to existing worker accommodation agreement at Aspen Karratha Village (AKV). This agreement will extend the occupancy at AKV to January 2020 with a minimum commitment of 160 rooms. Following this, the management stated that the group will continue to invest in major projects which strengthens the status of Karratha as a major economic centre. Further, the expansion of existing and recently announced additional projects will significantly increase the demand for workforce accommodation from Woodside and other associated and new businesses seeking to operate and expand using Karratha as a base. The agreement extension will strengthen predictability in Aspen Group’s recurring revenue throughout the 2019 financial year.


Quarterly Production Performance (Source: Company Reports)

Besides this, WPL reported decent first quarter report for the period ended 31 March 2018 wherein it delivered higher quarter-on-quarter production of 22.2 MMboe and sales revenue of $ 1,169 Mn. Along with this, the group has achieved steady production from Wheatstone Train 1, representing production rates above nameplate capacity. The gross margin stood at 51.8% in 1HFY18, which is in line with the industry median. Currently, the stock is trading close to its 52-week high level ($ 34.725), hence we give a “Hold” recommendation on the stock at the current market price of $ 33.940, considering the oil price scenario.
 

WPL Daily Chart (Source: Thomson Reuters)
 

Cooper Energy Limited

COE Details

Update on Sole-3 Status and Production Guidance for full year:Cooper Energy Limited (ASX: COE) provided an update on the drilling of the Sole-3 production well for the Sole Gas Project wherein 97 metre near-horizontal reservoir section of the well has now been completed, the production string is being installed and testing and preparations will soon begin for well flow back. It is expected that Sole-3 will be ready for flow back within 5 to 7 days. This is around 1 week later than earlier anticipated due to operational issues associated with the downhole service tool. This completion is expected to have inflow performance equivalent to the original design. After the clean-up and flow of Sole-3, the drilling rig will be moved to Sole-4 which is approximately 40 metres away to continue drilling and completion of that well. As earlier advised, Sole-4 has already been drilled to a depth of 532 mMDRT (metres measured depth below rotary table) in the Gippsland Limestone, with 13 3/8” casing installed and established, and the Sole-4 wellhead has been installed and tested. The Sole Gas Project has been taken to 48% completion as at 31 May 2018 which is within schedule and budget. Recently, the group has undergone several strategic acquisitions with the objective of building its gas supply business around Otway and Gippsland hubs.


 
Location of Sole-3 and Sole-4 wells on Sole Gas Field (Source: Company Reports)

On the financial front, the group has reported splendid performance till date from March 2018 wherein it marked a revenue growth of 81% to $47.1 Mn from $26 Mn. Apparently, March year to date production was up by 93% to 1.1 MMboe from 0.6 MMboe.  Based on this, the company now aims to have full-year production of 1.4 MMboe to 1.5 MMboe against the previous guidance of 1.4 MMboe. This is at the back of contribution from its key assets and benefits from strategic acquisitions.  ROE and ROIC as at December 2017 stood at 5.5% and 3.9%, respectively, against values as at June 2017 of (2.8%) and (2%). The Quick ratio improved from 1.79x to 4.09x and current Ratio also improved from 1.81x to 4.12x in the six months as at 31 December 2017, representing healthy liquidity position of the firm (the ratios indicate a company’s ability to pay its short-liabilities with assets).The stock was up by 28.81 per cent in the past six months and rose up by 4.11 per cent in the past one month as at June 08, 2018. Based on the strong fundamentals and potentiality to grow further at the back of synergetic benefits from its partners and positive update on Sole-3 drilling event, we give a “Buy” recommendation on the stock at the current market price of $ 0.38.
 

COE Daily Chart (Source: Thomson Reuters)
 

Infigen Energy

IFN Details

Year-to-date Production increased by 2%: Infigen Energy (ASX: IFN) announced its monthly production (as at May 2018) entailing total production of 142 GWh against the prior corresponding period production of 95 GWh, marking a growth of 49% on pcp basis. Moreover, the year to date FY18 production increased by 2% to 1,434 GWh on pcp basis. This was mainly supported by strong asset portfolio performance across all the regions. Currently, the groupis looking to diversify and expand its customer base and focuses on to grow its portfolio in response to strong price and investment signals.


May-Month 2018 Production Summary (Source: Company Reports)

In the short run, it is targeting its expansion in New South Wales and entry into the Victorian and Queensland regions of the National Electricity Market. RoE and ROIC stood at 5.4% and 2.3% respectively in 1HFY18, representing good return within the industry and expecting same performance in years to come. Meanwhile, IFN stock has risen 22.50 per cent in the past three months as on June 08, 2018 and is moving close to 52-week higher level. Hence, we maintain our “Hold” recommendation on the stock at the current price of $ 0.720, considering the robust return ratio which is above the industry median and expecting decent operating performance for the full year.
 

IFN Daily Chart (Source: Thomson Reuters)

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