BHP Surges to Record, Woodside Up

123jump.com Staff
14 May, 2008
New York City

Stocks in Australia rose after BHP Billiton surged 6% to a record high on a speculation that Chinalco may take a stake in the company. The rampant speculation lifted stocks of other mining companies. ABC Learnings addded 5.4% after the government offered to pay more for childcare to families with income of less than $150,000. Woodside Petroleum completed its acquistion of North West shelf interest.

[R]3:00AM New York, 7:00PM Sydney – BHP surged to a record high on a speculation of investment from China. Woodside completes the acquisition of North West Shelf interest.

Market Sentiments

ASX 200 index gained 1% or 60 to close at 5,872.70. The Preliminary market turnover was 1.93 billion shares worth $5.39 billion with 669 stocks up, 563 down and 334 unchanged. The most traded stock was Junior explorer Lakes Oil with 174.7 million shares worth $1.17 million.

Market Driver

The world''s biggest mining company, BHP Billiton share reached record high with a rise of 6.1% on the rumors that Chinese entity was interested in acquiring a stake in it.

The market was awash with speculation that Chinese state-owned Aluminum Corp. of China known as Chinalco was planning a share raid on BHP as it did on Rio Tinto Group.

In February, Chinalco bought a 9% stake in BHP''s takeover target, Rio Tinto as it try to influence in deciding how much iron ore and at what price it gets.

BHP Chief Executive Officer Marius Kloppers told reporters that he had largely anticipated the move by the Chinese investors. BHP''s share also rose as much as 4.5% in London while Rio Tinto was up 4.6% in Australia and 5.5% in London at the close.

Gainers and losers

Of the ASX 200 index stocks, AED Oil Ltd led the gainers with a rise of 18% followed by increases in BHP Billiton Ltd of 6.1%, in Ramsay Health of 6%, in ABC Learning of 5.4% and in Valad Property of 5.2%.

Of the ASX 200 index stocks, AWB Ltd led the decliners with a fall of 8.1% followed by losses in APA Group of 6.7%, in Centro Properties of 5.3%, in West Australian Newspaper of 4.3% and in St Barbara Ltd of 3.8%.

Woodside completes acquisition of the North West Shelf oil interests

Australia''s second-largest oil and gas producer, Woodside today announced that it had completed the acquisition of Shell Development (Australia) Proprietary Limited''s North West Shelf oil interests.

The company said in a statement that the final adjusted purchase price as at completion was $277.7 million and it would treat production attributable to the acquired Shell NWSV oil interests as accruing to the company from 1 May 2008.

Prior to this transaction, as of the end of the year 2007, the company had a 16.67% interest in the Cossack, Wanaea, Lambert and Hermes oil fields covered proved plus probable reserves of 19.6 million barrels of oil equivalent and an additional 7.2 million barrels of contingent resources.

It also had a 33.33% interest in Egret covered contingent resources of 4.1 million barrels of oil equivalent. The sale doubles Woodside''s participating interest in the Cossack, Wanaea, Lambert and Hermes fields to 33.33%.

The company''s interests in the Egret oil discovery area and remaining active oil exploration portfolio within a tieback distance to the Cossack Pioneer increases to 50%.

""At this point in time Woodside maintains its recent 2008 production guidance and will provide an update when the company announces its half year results in August,"" it said.

Voelte, chief executive officer of the company said, “The existing taxation arrangements had underpinned more than $25 billion in investment in the North West Shelf Venture, providing billions of dollars in revenues to the Western Australian and Commonwealth governments over the past 24 years.
The North West Shelf Venture is a major contributor to the nation''s gross domestic product, and any changes to the fiscal regimes under which existing major projects such as this operate should be considered extremely carefully."" The government has recently imposed an additional excite tax on the condensate processing.

Woodside share was up 0.1%.

Leighton Holdings gets US$350 million contract

Australia''s biggest construction company, Leighton Holdings Ltd has been awarded a US$350 million contract for the expansion of mining services at MSJ coal mine in Indonesia for PT Mahakam Sumber Jaya (MSJ).

The company said the expansion, extending over five years, would commence immediately and be completed in April 2013. Leighton has obtained $1 billion of project work in the last twelve months in Indonesia.

Leighton has been operating the mine since May 2004, when it signed an initial three-year contract. An additional $125 million, three-year extension was signed in July last year. The new contract includes the removal of overburden, the loading and transportation of coal from the mine site to the port, and maintenance of the mine''s haul road.

OceanaGold share sinks as mine budget is revised upwards

Australian gold producer, OceanaGold Corp''s share sank to a record 30% in Sydney trading today after it revised its cost estimate for building a mine by over 100%. The company revised the cost of building Didipio mine in the Philippines to $320 million from $154 million and may have to sell shares to raise capital.

The addition funding was expected to cover a $33 million power plant and engineering cost. Meanwhile the company yesterday announced in a statement that its board member, Kerry MacDonald had decided not to stand for re-election to the board of directors.

Shares in ABC rise on new measures

Shares in ABC Learning Centres Ltd gained 6% after investors digested child care initiatives announced in the federal budget.

The government would raise childcare tax rebate from 30% to 50%, with the rebate being paid on a quarterly basis. The baby bonus would be raised to $5,000 a year from July 1 and would be available only to families with a combined annual income of less than $150,000 by January 1.

The new measures is likely to help ABC which was pressured into selling 60% of its US operations to Morgan Stanley Private Equity after company failed to refinance its debt obligations.

Gladstone Pacific Nickel considers selling stake in a nickel refinery

Australian firm, Gladstone Pacific Nickel Ltd is considering selling its stake in a $3.65 billion nickel refinery and mine in Australia to its Chinese partner China Metallurgical Group to speed development. The Chinese company has an agreement with Gladstone on an initial construction and funding accord that was signed in January.

Gladstone'' managing director, John Downie said they might sell a 30% stake in the project. There was no comment from China Metallurgical. MCC is also building the $1.37 billion Ramu nickel mine in Papua New Guinea to feed demand in China, the biggest user of the metal.

The company wants to build a nickel and cobalt refinery in Australia''s Queensland State to produce as much as 120,000 metric tons of nickel a year, or 10 percent of global supply. First output from the refinery is scheduled for 2011.

National Australia Bank leaves counterbid option for St George open

National Australia Bank chief executive John Stewart today left open his company''s option of making a counterbid for St George Bank, a day after the St George board endorsed a $19 billion takeover by Westpac. The two banks have entered into two weeks of exclusive negotiations. Stewart told the press that they were watching the developments with keen interest.

NAB''s share fell 2% while St George''s share was up 2.6% and Westpac was down 0.6%.