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No energy to please a demanding market

IT is very hard for energy companies to please the stock market these days. Woodside Petroleum shares slithered 18 cents to $13.50 at the end of last month as traders whimpered over the prospect of a monster cash raising to pay for the purchase of Veba Oel oil and gas holdings in Libya, Syria, Venezuela and Trinidad.

Last week we learned the company had been gazumped by Petrocanada, which is forking out $US2 billion for the prize. Woodside promptly skidded to under $13 on disappointment that it had failed to buy the assets in those far off and volatile lands. Go figure.

Some analysts seem to want Woodside boss John Akehurst to run around the world paying over the odds for risky ventures to plug a short-term earnings hole over the next couple of years. They are not prepared to look across the valley to the growth story ahead.

Note that the seller of Veba was none other than BHP Billiton. If Woodside does get into bed with an acceptable partner, it is likely to be BHP Petroleum. If not, stand alone prospects remain very bright. The Perth group has a better-than-even-money chance of winning the 25-year contract to supply China’s Guandong province with three million tonnes a year of LNG – bringing on the NWS fifth production train.

Santos too copped a share shellacking following the reduction in estimated oil reserves after a review ordered by managing director John Ellice-Flint. The market has moaned for years that the Santos reserves were overstated. Now it is not happy with the new transparency.

Commodity shares have surged 15 per cent in recent weeks in the belief that the global economic contraction is over. It is illogical to leave energy out of the equation.

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