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Energy & Utilities Roundup: Market Talk

17 Nov 2017 9:20 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.

0354 GMT - Canvest Environment's latest win of a new waste-treatment project won't be its last of 2017, says Daiwa, as the firm has yet to reach its 2017 target. The investment bank, which expects Canvest to achieve 30% compound annual growth in contracted capacity through 2019, raises its stock target 7.3% to HK$5.90. Shares rise 1.6% to HK$4.90, hitting a 7-month high. (joanne.chiu@wsj.com; @joannechiuhk)

0211 GMT - Australia will leapfrog Qatar as the leading exporter of LNG by 2019 thanks to new projects, predicts BMI Research. How long it stays atop the table is a question. Australia is projected to register annual volume growth of 14% the next 5 years, the firm says, though it will be front-loaded as the likes of Chevron's Wheatstone project and Shell's Prelude floating LNG operation ramp up. Softer growth should start in 2019, BMI adds. (robb.stewart@wsj.com; @RobbMStewart)

0204 GMT - Public Investment Bank sees opportunity for bottom-fishing at Malaysia's largest independent power producer. Malakoff has lost 1/4 of its market value this year, but shares have gone sideways the past month. Improving technical indicators signal a reasonable entry level, the bank says. It puts resistance at MYR1.09; shares are flat today at MYR1.01. (yantoultra.ngui@wsj.com; @yantoultra)

0058 GMT - Credit Suisse's gut feeling is that Santos doesn't accept Harbour Energy's takeover bid, which the investment bank estimates prices crude at US$61/barrel. To Credit Suisse, that suggests the newly revitalized Santos deserves more of a chance to build on current momentum unless a takeover price is really right. Besides, given the parlous state of Australia's east-coast natural gas market it questions Canberra's appetite for a takeover by a relatively unknown foreign entity. Santos is up another 0.5% after surging 13% Thursday. (robb.stewart@wsj.com; @RobbMStewart)

2155 GMT - Harold Hamm, Continental Resources CEO, continues his critique of oil-production forecasts by the Energy Information Administration, saying the US government agency makes "unrealistic growth projections" that unfairly lower US oil prices by suggesting a looming oversupply. In a presentation posted on the EIA's website, the Hamm-led oil producers association known as DEPA says the price for US oil benchmark WTI is about $7 cheaper than global benchmark Brent "because US growth is overstated." The EIA sees US oil production soaring to 9.7M bpd in December, even though data through August has output at 9.2M. The EIA defends its projections, saying US output rose 340k bpd in 1H17, and it forecasts a similar 336k growth in 2H. (dan.molinski@wsj.com)

2218 GMT - Santos may have rebuffed a bid at A$4.5/share from Harbour Energy as too low, but it's unlikely to end there, Morningstar opines. Led by ex-Shell executive Linda Cook, Harbour is no tin-pot cobbled-together outfit and it's quite possible it will table a formal offer for Santos soon, the research firm suggests. The interest could also awaken a number of other suitors, not least Woodside Petroleum given a tie-up would create an Australian powerhouse and skirt any national interest concerns. Morningstar also tips Shell as another potential contender and BHP Billiton as a long shot. (robb.stewart@wsj.com; @RobbMStewart)

2003 GMT - A nearly 200-mile transmission line to move Canadian hydroelectric power into New England received presidential approval, seven years after first being proposed by a utility now known as Eversource Energy. The long timeline garnered displeasure from US Energy Secretary Rick Perry, who said such developments "shouldn't take this long to approve." The $1.6B project had faced opposition from environmentalists in part because its route goes through the White Mountain National Forest, where Eversourcehas asked for permission to bury the line. Northern Pass still needs some approvals in Canada and New Hampshire, but is on track to begin construction by mid-2018, Eversource says. (erin.ailworth@wsj.com; @ailworth)

1721 GMT - Although investors have been concerned about a slowdown in Chinese crude imports, the country's consumption remains robust, say analysts. The Asian country's imports plummeted to a one-year low of 7.3 million barrels a day in October. "This has led to the usual (unfounded) concerns about Chinese oil demand, despite Chinese product consumption surging higher in recent months," say Energy Aspects analysts. Chinese buyers have also paused their crude buying spree, as some of the independent refiners have reached their crude quotas for the year and will have to wait for 2018 before they can import again, according to analysts.

(neanda.salvaterra@wsj.com)

1540 GMT - Bullish oil investors hoping for a Venezuela-related supply squeeze may be out of luck for the time being, as it appears the socialist government is soldiering through yet another crisis--this time related to the country's sovereign debt obligations. Eurasia Group says "the government does seem committed to maintaining debt service," while it tries to restructure, and in a note today says it's increasing the odds of President Nicolas Maduro surviving until the end of his term in January 2019 to 60% from 40%. "Deepening divisions within the opposition and the government's total institutional control will prevent forced political change in the near term." (dan.molinski@wsj.com)

1623 GMT - Kepler Chevreux gives U.K. utility Centrica PLC a double upgrade, to buy from reduce, noting that the shares have fallen by 22% since it downgraded the stock from hold to reduce in early 2016. This has taken the shares well below the 190 pence target price the broker set at the time, and it now recommends that investors "jump in here." It retains its price target at 190 pence. Centrica shares trade up 0.36% at 166 pence. "We remain comfortable with our structural valuation for the stock and recommend exploiting the current market opportunity," Kepler says. (jessica.fleetham@wsj.com)

1609 GMT - Three bonds that Orsted, the Danish group previously known as Dong Energy, offers to buy back from investors get a boost on the secondary Thursday. Orsted looks to buy back the 6.5% 2019, 4.875% 2021 and 2.625% 2022 euro-denominated bonds, becoming the latest in a series of European companies buying back their own debt -- either using available cash or by issuing new bonds -- to improve their balance sheet. It also aims to refinance its 4.875% hybrid bond through the issuance of Green bonds. (tasos.vossos@wsj.com; @tasosvos)

1404 GMT - RWE's generation businesses had a solid third quarter, though the company's earnings growth prospects are relatively subdued, says CFRA. The German energy producer is "on track" to meet or beat its 2017 financial targets, notes CFRA, as it raises its 2017 earnings per share estimate for RWE to EUR2.03 from EUR1.92. RWE benefited from efficiency measures and the absence of the nuclear fuel tax, both of which CFRA says helped to offset the effects of lower electricity prices. However, CFRA is leaving its 2018 estimates unchanged and notes that near-term concerns about a possible coal phase-out policy in Germany are likely to affect share prices. Shares trade down 2.4% at EUR20.16. (sonia.amaralrohter@dowjones.com)

(END) Dow Jones Newswires

November 17, 2017 04:20 ET (09:20 GMT)

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