Woodside Delays LNG Shipment; Rio Tinto Gains Control of Riversdale

Marcus Jacob
17 Jun, 2011
New York City

The Australian index edged up on Friday but for the week lost 1.7%. Woodside Petroleum delayed its shipment date from Pluto project and estimated $900 million in higher costs. Rio Tinto gained full control of Riversdale Mining after Tata Steel sold its 26% stake.

[R]4:35 PM Sydney – The Australian index edged up on Friday but for the week lost 1.7%. Woodside Petroleum delayed its shipment date from Pluto project and estimated $900 million in higher costs. Rio Tinto gained full control of Riversdale Mining after Tata Steel sold its 26% stake.[/R]

Stocks in Australia edged up after a sharp sell-off in the previous session. Energy linked stocks declined after Woodside Petroleum delayed the initial delivery from its Pluto project and cited higher costs.

The ASX 200 index edged up 5.7 to 4,484.9 and All Ordinaries index added 4.4 to 4,551.10.

The Australian dollar decreased to US$1.0543 and crude oil price edged 61 cents lower to US$94.34 a barrel.

In trading, turnover increased to 3.04 billion shares worth $6.67 billion near the high for the year. Of the stocks traded, 534 stocks increased, 568 decreased and 425 closed unchanged.

Stock Movers

Resources and energy stocks closed lower after a weakness in commodities and production downgrade from Woodside.

Woodside Petroleum Ltd declined $1.61 to $40.80 after it lowered its full year production outlook and delayed the start of liquefied natural gas delivery from its Pluto project in Western Australia.

Woodside anticipates the first delivery now to take place in March of next year instead of the previous estimate of September this year and estimated cost overrun of $900 million.

On the news, Santos Ltd declined 21 cents to $13.38 and Oil Search dropped 8 cents to $6.65.

The weather and rising wages contributed to the latest delays and cost escalations. Five months ago, ExxonMobil also estimated project costs to rise to US$4.4 billion from the previous estimate of US$2.7 billion on higher labor costs.

BHP Billiton Ltd declined 5 cents to $41.95 and Rio Tinto fell 58 cents to $77.82. Fortescue Metals Group added 4 cents to $6.06.

Rio Tinto completed the purchase of Riversdale after India based Tata Steel agreed to sell its 26% stake in the company to the company for $1.06 billion. Tata will continue to hold its stake in a venture in Mozambique with Riversdale and take the delivery of 40% of coking coal from the mine.

Banks closed higher after dropping sharply in the previous session.

ANZ declined 1 cent to $21.34, Commonwealth Bank added 26 cents to $49.52, National Australia Bank gained 10 cents to $24.36 and Macquarie Bank edged up a fraction.

Healthcare stocks closed higher.

CSL added 31 cents to $32.46, Ramsey Health Care increased 40 cents to $18.31 and Resmed increased 8 cents to $2.95.