Woodside, oil stocks hammered
UPDATE 1.25pm: Shares Woodside and Australia's other oil producers were hammered today amid tumbling crude prices and a decision by OPEC's oil ministers to maintain production targets despite a glut of the commodity.
At the close, Woodside shares were off $2.72, or 7.07 per cent, to $35.75, while Santos shares fell a massive $1.51, or 13.01 per cent, at $10.10 and BHP Billiton gave up $1.08, or 3.38 per cent, to $30.92.
PNG-focused Oil Search had lost 50 cents, or 5.9 per cent, to $7.97 while Origin Energy closed down 92 cents, or 6.99 per cent, at $12.25.
OPEC oil ministers overnight decided to maintain their output target despite an oversupply and Brent North Sea Crude hitting a four and a half year low of $US72.74.
Analysts say the weakness will weigh on local producers in the short-term as revenues decline, but over the next decade energy demand is expected to be strong.
State One Stockbroking industry analyst Peter Kopetz said investors would renew their focus on major projects as revenues declined.
"There's going to be short-term pain as the hefty cashflows that they had over the last few years are not going to be there any more so investors have to re-adjust,” Mr Kopetz said.
He said the short-term pain would be offset by long-term gain.
"Energy demand over the next decade or so looks reasonable,” Mr Kopetz said.
He said there was more risk attached to Santos' developments as the company still had one year left to complete its GLNG project, the world's first coal seam gas export facility.
Fat Prophets Resources analyst David Lennox said Australia's big producers would experience compressed margins and cost cutting as well as less exploration spending and slower development programs.
"We can expect to see the local energy industry go through a similar thing as the iron ore sector,” he said.
Companies would also be forced to revalue their assets as prices fall, he said.
West Texas intermediate was down 6.3 per cent to $69.05 a barrel while Brent North Sea crude for January hit $US72.74, a level last witnessed on July 7, 2010.
But there were winners from the falling prices, with Qantas up 12.5 cents, or 6.96 per cent, at $1.92.
