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Energy & Utilities Roundup: Market Talk

10 Oct 2017 8:20 am

The latest Market Talks covering Energy and Utilities. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.

0526 GMT - A midafternoon fade resulted in Australian stocks finishing down slightly even with a late recovery. The S&P/ASX 200 fell 1.2 points to 5738.10 after spending most of the day in a narrow 15-point range, consolidating the advance of Friday and Monday. That as most major indexes in the region logged further gains today. Energy companies and a mixed performance by the major banks capped the index today. Despite overnight strength in crude, Oil Search declined 1.8% yesterday after outperforming yesterday while Woodside slipped another 0.6%. Meanwhile, AMP rallied 3.6% on a Credit Suisse upgrade. (robb.stewart@wsj.com; @RobbMStewart)

0346 GMT - The $1.3 billion deal to sell 9 jack-up rigs will provide crucial liquidity to Sembcorp Marine, PhillipCapital says, as the rigbuilder's working-capital needs nearly tripled in 1H from a year earlier while borrowings were up 10%. The former exacerbated net cash outflows from operations and stretched interest burdens as debt rose. The broker says the $500 million of advanced payments Sembmarine is getting will let it fund working capital without escalating indebtedness. There's also the potential for debt reduction, says PhillipCapital as it upgrades Sembmarine shares to neutral. They're up 1.1% to S$1.84, adding to yesterday's 4.6% jump. (saurabh.chaturvedi@wsj.com; @journosaurabh)

0216 GMT - Sembcorp Marine's stock jump yesterday could be sustained. The week-end deal involving 9 jack-up rigs reinforces Singapore's position as the top global builder for such vessels. Analysts are predicting orders to pick up as firms will need to replace older platforms. Shares are up 0.2% after yesterday's 4.6% jump to 6-month highs. (gaurav.raghuvanshi@wsj.com)

0004 GMT - Today's clean-energy deal could give beaten-down shares of China Power a lift today. The coal-fired electricity producer is down 7.1% this year, with 1H earnings having plunged 78% on rebounding coal prices. It's buying operations that include clean-energy production like hydro and wind. Part of the CNY5 billion ($753 million) deal will be funded by a 1-to-3 rights issue expected to raise at least HK$2 billion ($256 million). (john.wu@wsj.com)

2356 GMT - A taxpayer-backed fund set up to back infrastructure in Australia's north has offered to provide a A$18.6 million ($14.4 million) concessional loan to develop the Onslow port as a base for oil-and-gas developments, government officials say. The A$5 billion Northern Australia Infrastructure Fund has approved Onslow Marine Support Base as its first official project, matching a minimum of A$24.5 million in private-sector funding. The base will mainly service the energy industry off the Onslow coast, which supports Chevron's US$34 billion Wheatstone gas-export project and BHP Billiton's US$1.5 billion Macedon project. The approval may also indicate the fund is near a decision on whether to back a controversial rail line linking Indian conglomerate Adani's planned Carmichael coal mine with its export port near Gladstone. (rob.taylor@wsj.com; @WSJRobTaylor)

2300 GMT - WorleyParsons is buying a forced sellers assets at an attractive multiple to gain exposure to the U.K. North Sea market and accelerate its growth ambitions, Deutsche Bank notes. The Australian engineer is picking up Amec Foster Wheeler's operations on an implied ev/ebitda of 8.9, in line with the average peer trading multiple, and Worley seems to be conservative in its estimate of maintainable ebitda, the investment bank suggests. It remains bullish on the stock and lifts its target 1.2% to A$16.67, well above the A$14.24 last close. (robb.stewart@wsj.com; @RobbMStewart)

1628 GMT -- The Bel-20 closes 0.2% higher at 4054.4 as utilities firms lift stocks across European markets. French energy firm Engie SA leads gains with a 1.2% increase, trailed by a 0.9% rise in the shares of the world's largest brewer, Leuven-based Anheuser-Busch InBev SA/NV. Belgium's local and international postal-services company bpost SA is the worst performer with a 3.4% drop, followed by a 1.4% decline in the shares of steel-wire coating company Bekaert SA. (emre.peker@wsj.com)

1606 GMT - Nordic markets close higher with Sweden's OMXS30 index ending the day 0.1% higher and the pan-Nordic OMXN40 index up 0.2%. Advances in Spanish stocks and strong German economic data helped stocks find some support Monday, Saxo Bank said in a note. "Utility and tech shares still logged the best performances but industrial, oil and gas and financial shares turned lower." Spain's IBEX 35 was the standout gainer after hundreds of thousands of people gathered in Barcelona on Sunday to protest Catalonia's secessionist push, it added. "WTI posted the biggest slump in a week since May as concerns eased about Tropical Storm Nate's threat to offshore crude platforms and coastal refineries." Oslo's oil-heavy OBX index rose 0.1%. (dominic.chopping@wsj.com)

1421 GMT - Phillips 66 is launching a new $3 billion share buyback program, bringing the company's total authorization for share repurchases to $12 billion since 3Q 2012. Phillips's buyback is among the latest in the energy industry, following Anadarko Petroleum's announcement last month it would repurchase $2.5 billion worth of its outstanding shares. Shares in Phillips are up 0.4% to $93.15 in morning trading and are up about 8% so far this year. (allison.prang@wsj.com; @AllisonPrang)

1340 GMT - Norway's offshore oil operator Borr Drilling signs $1.3B order with Singapore's Sembcorp Marine for 9 jack-up rings, reflecting a recovery in the offshore oil market after a four-year downturn, which forced some of the biggest names in the business to go bankrupt. Borr will partly fund the purchase with a $650M equity raise and deliveries of the rigs will start at the end of this year. (costas.paris@wsj.com)

1305 GMT - AES says Hurricanes Irma and Maria could hurt its EPS by 3c-5c after the storms damaged two of its power plants in Puerto Rico and one in the US Virgin Islands. The company says it now expects FY2017 adjusted EPS to be in the lower half of its previous EPS guidance of $1-$1.10. One unit at a coal-fired plant in Puerto Rico is still under inspection following minor damage but the company says it should be back to generating much-needed electricity in the next couple of weeks. The other two plants that were damaged were solar plants. AES shares are down 1.2% premarket. (cara.lombardo@wsj.com; @CaraRLombardo)

1139 GMT - Oil prices are likely to lose momentum as falling demand eclipses geopolitical risks, says Julius Baer. The Swiss private bank acknowledges that political issues such as Iran's nuclear program continue to drive market sentiment and could underpin prices. Still, the market is entering a soft patch as the U.S. summer driving season wraps up and refineries slow crude buying to carry out maintenance, it notes. Baer added that it doesn't believe tougher U.S. nuclear sanctions on Iran will significantly disrupt the Middle East nation's oil exports. "We stick to our cautious view and see prices falling back into the past months' trading range," Baer's Norbert Ruecker says. The price of a barrel of Brent crude is last down 0.2% at $55.50. (philip.waller@wsj.com)

(END) Dow Jones Newswires

October 10, 2017 04:20 ET (08:20 GMT)

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