Arab Today, arab today australian energy firms hit by falling oil commodity prices
Last Updated : GMT 20:44:49
Arab Today, arab today
Arab Today, arab today

Australian energy firms hit by falling oil, commodity prices

Arab Today, arab today

Arab Today, arab today Australian energy firms hit by falling oil, commodity prices

BHP Billiton's iron Ore mine
Sydney - AFP

Shares in Australian energy companies were hammered Tuesday by plunging oil and commodity prices, with BHP hitting a five-year low and Santos at levels not seen for a decade.
Oil and gas companies were among the biggest losers on Australia's benchmark Standard and Poor/ASX200 index as the energy sector shed 4.81 percent. It is down 22.24 percent over the past month.
Oil prices have fallen to fresh five-year lows, battered by OPEC's decision last month to maintain its output levels despite a global supply glut.
This weighed heavily on the Australian market, which ended 1.68 percent in the red.
Santos, one of the nation's largest oil and gas producers, saw its shares sink another 7.23 percent.
A credit rating downgrade by Standard and Poor's accelerated a dramatic slide that began on November 24 and has wiped Aus$4.7 billion (US$3.87 billion) off the company's market value.
Despite the downgrade, Santos chief financial officer Andrew Seaton said the company's credit rating from Standard and Poor retained an investment grade.
"Santos has a robust funding position, with approximately Aus$2.0 billion in cash and undrawn debt facilities available as at 30 November 2014," he said.
IG Markets' chief strategist Chris Weston called the oil price volatility "staggering" and said the prospects of a rally anytime soon were low.
"Santos has become the poster boy of the global energy space, given its highly committed CAPEX (capital expenditure) intentions," he said, referring to giant projects in Australia and Papua New Guinea.
"Traders have taken an axe to the share price, courtesy of a downgrade from S&P that was always going to happen."
Shares in Woodside Petroleum, which operates six of Australia's seven LNG processing plants, ended the day 2.85 percent lower. Origin Energy dropped 4.76 percent while Oil Search was down 7.13 percent.
Companies sensitive to iron ore prices also took another hit, led by the world's biggest miner BHP Billiton. Its shares slumped 4.05 percent to Aus$28.88 -- a more-than five-year low.
Weston said BHP, which also has exposure to oil, "looks awful on the monthly chart".
"While I wouldn't generally look at this timeframe, you simply can't get away from the fact price action suggests we could feasibly see Aus$24 or even Aus$20 at some stage next year," he added.
Fellow mining giant Rio Tinto was down 2.85 percent while Fortescue Metals ended 4.14 percent lower.
Australia, the world's largest exporter of iron ore, is heavily dependent on China's hunger for resources and with the Chinese economy slowing many companies are hurting.

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Arab Today, arab today australian energy firms hit by falling oil commodity prices Arab Today, arab today australian energy firms hit by falling oil commodity prices

 



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