Forbes | Don't Overlook This Cost-Effective Alternative To Offshore Services Forbes On a worldwide basis, companies are pausing efforts or taking a step back from globalization. In Europe, this is most evident in recent months with Brexit in the UK. In the United States, it is most evident in the proposals underway in Congress and the ... |
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Don't Overlook This Cost-Effective Alternative To Offshore Services - Forbes
Text: Levon Sevunts
Responding to criticism of the move from Darrel Nasogaluak, the mayor of Tuktoyaktuk, a remote community on the shores of the Beaufort Sea, during a town hall meeting in Yellowknife on Friday, Trudeau said one of his governments fundamental responsibilities was to protect communities and the environment from a potential environmental disaster.
There has been a lot of research, a lot of people over a long time have tried to look at ways to exploit and explore Arctic Ocean resources and quite frankly it has never been determined that it can be done safely, Trudeausaid. The cataclysmic impact of an oil spill in the High Arctic Ocean is unimaginable. Thats why we made the decision that there needed to be moratorium on Arctic oil and gas exploration.
David Miller, president and CEO of World Wildlife Fund Canada, praised Trudeaus comments as positive and very consistent with the science.
Its quite clear from our work at WWF that risk to nature of drilling is far too great to be worth taking, Miller said in a telephone interview.
Unhappy territorial leaders
However, while environmental activists have applauded the ban, announced by Trudeau in conjunction with outgoing President Barak Obama on December 20, 2016, the Liberal leader has come under fire from local government and some Indigenous leaders in Nunavut and the Northwest Territories, who have denounced the lack of consultations with them prior to the announcement.
Our people have been working with the industry over 50 years on and off, weve grown skills, weve got good employment, our businesses have grown, the region has grown, Nasogaluak said, addressing Trudeau. To lose an opportunity on oil and gas for our people is very upsetting. One elder told me, We cant just up and move to where the jobs are.
Trudeau acknowledged that the Liberal government has closed one door of potential economic opportunity but said the various levels of government need to work together to ensure that we are opening many more doors of economic opportunity.
Moratorium to be reviewed
Yet he did not close the door to future oil and gas exploration completely.
We make decisions based on science, Trudeau said. Thats why were working with the North, with communities, with the premier with the scientists to establish the framework so that we can evaluate every five years the science around the modern technologies, around spill response, around operating frameworks to make sure that the moratorium is still relevant.
The ban means Arctic ecosystems will be protected by default and it would be up to the oil industry to demonstrate that they can operate safely, which we are a long way from being able to do right now, Trudeau said.
Paul Barnes, manager of Atlantic Canada and Arctic for the Canadian Association of Petroleum Producers, said Canadas offshore industry has been operating safely for more than 50 years.
The oil and natural gas industry has a long history of meeting the challenges of Arctic exploration with technological advances, science-based research, applications of lessons learned from operating experience, traditional knowledge and adaption of best practices from elsewhere around the world, Barnes said in an emailed statement. Our members have been working to world-class standards in the offshore and have brought tremendous economic benefits to Northern and Atlantic Canada.
Canadas energy regulator, the National Energy Board, has strict filing requirements for offshore drilling in the Canadian Arctic and it the oil industrybelieves that itcan be done safely, Barnes said.
Weve done oil spill trajectory modeling and any deep-sea well puts the ecological health of huge swathes of the Arctic at risk, Miller said. And that is an economic challenge, not just an environmental challenge because it puts the jobs and livelihoods of people whose livelihood depends on sustainable exploitation of things like fish very much at risk.
And while the science on the dangers of offshore drilling wont change, the political climate could, Miller warned.
Im less concerned with Mr. Trudeau changing his position than the fact the moratorium isnt permanent, Miller said. Because Mr. Trudeaus successor could, perhaps, change that position sometime in the future whether it be in five, ten, fifteen or twenty years.
Hundreds of people had packed into the gym at the Yellowknife Multiplex to take part in the town hall, first town hall event north of the 60thparallel.
Trudeau answered questions on building roads to access northern mining resources and reduce the current reliance on the seasonal ice roads, as well as affordable housing and updating federal legislation to better protect Canadas rivers and lakes.
The Liberal leader was also grilled for abandoning plans to reform Canadas first-past-the-post electoral system, a key electoral promise during the 2015 campaign.
On Thursday, Trudeau was in Iqaluit the capital of Canadas Arctic territory of Nunavut, where he signed a declaration with Inuit leaders, setting apromised Inuit-to-Crown partnershipin motion.
This was Trudeaus first visit to the northern territories since his 2015 election victory.
This story is posted on Independent Barents Observer as part ofEye on the Arctic, a collaborative partnership between public and private circumpolar media organizations.
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Trudeau: Arctic offshore drilling too dangerous - The Independent Barents Observer
Last week Diamond Offshore (NYSE:DO) delivered Q4 revenue of $391.9 million and eps of $0.40. The company beat on revenue by over $32 million. The stock is up about 2% since the report. I had the following takeaways:
Revenue Fell Y/Y, But Bounced Sequentially.
Diamond's total revenue fell 29% Y/Y. Ultra-deepwater floaters still make up 60% of total contract revenue. This segment fell 41% Y/Y as drilling for ultra-deepwater remains prohibitively expensive. Deepwater was off 30%, while Mid-water nearly doubled.
On a positive note, revenue was up about 13% on a sequential basis; Ultra-deepwater and Mid-water led the way with gains of 7% and 91%, respectively. The OPEC supply cut has sent oil prices in the mid-$50 range, and breathed new life into certain segments of the offshore market. The higher prices have also enticed North American shale drillers to increase supply. I expect oil prices to range from $50 - $60, which could help the Mid-water segment to remain a catalyst for several quarters.
Market For Offshore Drilling Remains Oversupplied
The general market for offshore contractors remains oversupplied. Industry participants have suffered from revenue declines due to waning demand for contract drilling services. Revenue earning days and average daily revenue have both been in decline. Diamond's biggest selling point is that it did not succumb to unbridled optimism that befell Seadrill (NYSE:SDRL) and others; it did not take on excessive debt or commit to capital expenditures that only made financial sense with oil prices in the $75 - $100 range.
On the earnings call management was keen to point out that it does not have any assets delayed in shipyards yet to be delivered or any sixth-generation assets uncontracted. The company has also been able to sustain its EBITDA margins during the downturn. Q4 EBITDA margin was 50%; this was higher than the 46% margin achieved in the year earlier period, despite lower revenue. These factors should allow the company to at least tread water if oil prices remain range bound.
Pristine Balance Sheet
Energy-related names seem to be bifurcated between those with strong balance sheets and those without them. Diamond's balance sheet is pristine. At Q4 it had working capital of $165 million. With $220 million in annual free cash flow, the company's liquidity should grow over time. As importantly, Diamond's $2.1 billion debt load is only 2.7x run-rate EBITDA.
That is in stark contrast to the balance sheets of competitors like Seadrill whose debt is over 5x EBITDA; Seadrill also has upside down working capital, and $1 billion in near term principal payments it might not be able to meet. Diamond's low debt load is probably why its liquidity and cash flow is so strong. If it had billions in near term principal payments then its cash flow and business prospects would be a lot more dismal. There is a scenario where Seadrill or another competitor could fold and potentially remove some supply from the market.
Conclusion
DO trades at 5.5x run-rate EBITDA. The low multiple is most likely due the dismal prospects of the offshore market with oil prices sub-$60. I believe oil prices will remain range bound due to land drillers increasing supply at higher prices. If financial markets endure a major correction or if a major competitor goes belly-up, removing supply from the offshore market, DO could become a buy. For now I rate the stock a hold.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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You have to give Diamond Offshore (NYSE:DO) credit. Despite an absolutely brutal market for offshore rigs, the company was able to not only soundly beat estimates for the quarter, but it was able to actually increase earnings. That's something that almost no other rig owner has been able to say for the past several years.
Here's a look at how Diamond was able to pull off this rather remarkable feat, and how management thinks the position it is in today will help to make it an even more competitive company in the coming years.
Image source: Getty Images.
*in millions, except per-share data. Source: Diamond Offshore earnings release.
Based on the dynamics of the oil and gas industry today, the last group of companies you might expect to see an uptick in earnings is with offshore rig companies. Yet that is exactly what happened with Diamond this past quarter. That net income gain is a little larger because of an early termination fee that added $0.28 per share to the bottom line, but even after we pull out that gain it was still an impressive gain over the two comparable quarters.
There are some gains that are sustainable, and some that aren't. One of the most notable gains was in its Mid-water floater segment. However, this is the segmenet where it netted that one time contract termination gain. The one that is truly impressive, though, is the gains for its ultra deepwater fleet. Two rigs -- the Ocean GreatWhite and Ocean BlackLion -- both started 3 year contract terms.
The Ocean GreatWhite is in a unique position because the job it was hired to do was drill in Austrailia's Bight Basin for BP (NYSE:BP). BP has since suspended operations there, however, so the two have worked out a hybrid standby contract that will remain in place until BP can find a place to put this ship to work.
Source: Diamond Offshore earnings release. Author's chart.
The increase in revenues and the declines in operating costs have also freed up cash flow for the company, which is enabling it to pay down some debt. This past quarter alone Diamond was able to pay back $188 million in short term borrowings. With little in terms of capital spending in the coming quarters, the company should be able to throw off quite a bit of cash for either paying down debt or even returning that cash to shareholders. Considering the depressed share price, it wouldn't be shocking to see Diamond buy back some stock.
For the most part, CEO Marc Edwards' comments were on all of the action items that have happened as of late, notably the contracting of several rigs. While that does give the company a decent boost to the income statement now, Edwards also explained how there are some other advantages to being in this position for the future.
Although the next few years will be challenging for offshore drillers, we have uniquely positioned Diamond Offshore to take best advantage of a recovery either in '19 or 2020.
For example, our sixth-generation fleet is contracted through 2019. Our clients have a strong preference for rigs that have recently completed other work. In other words, rigs that are hot. They do not want to take the financial or time risk of qualifying a rig which has been stacked for a lengthy period. We are already seeing some tenders illustrate a strong preference for rigs that are hot. As the market recovers, our rigs will be finishing up their contracts and will therefore be the most attractive to our clients.
Diamond Offshore has done a great job of transforming itself over the past several years. It has gone from a company with an old fleet of rigs with little to differentiate itself from the pack to a young, capable fleet that is working on some innovative ideas like its partnership with General Electric for its pay for performance blow out preventors and its new generation design for ultra deepwater rigs.
With a decent chunk of its fleet contracted out over the next several years, it looks as though Diamond will be in a much better position than its peers to handle the ups and downs of the market. With shares trading at very cheap prices today, it may be a long term investment worth putting on your radar.
Tyler Crowe and The Motley Fool own shares of General Electric. The Motley Fool has a disclosure policy.
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Diamond Offshore Surprises Everyone With a Fourth Quarter ... - Motley Fool
What happened
Oil prices continued to meander higher this week, ending up less than 1% to around $54 per barrel. That marked crude's highest finish in the past five weeks, fueled by reports that oil demand was coming in stronger than expected while OPEC members were mostly complying with their pledge to cut output.
Unfortunately, higher oil prices could not lift most oil stocks out of the doldrums this week. Lackluster earnings and a continued bleak outlook for the offshoredrilling market sank several oil stocks. Leading the underperformers, according to data fromS&P Global Market Intelligence, wereHornbeck Offshore Services (NYSE: HOS), Atwood Oceanics (NYSE: ATW), Bristow Group (NYSE: BRS), and Matrix Service Company (NASDAQ: MTRX):
BRS Price data by YCharts.
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Matrix Service Company led this week's losers after reporting lackluster results for its fiscal second quarter. The construction and engineering company missed on both the top and bottom line, due primarily to lower volumes in its oil gas and chemicals segment. Because of that, the company pulled back the reins on its full-year guidance. Needless to say, the combination of an earnings miss and a downward revision to guidance did not sit well with Matrix Service's investors, who sold off the stock.
Atwood Oceanics' stock also plunged after releasing earnings. The offshore driller's revenue continued to slide, while earnings missed expectations because the company could not push costs down as much as expected. Making matters worse, Atwood Oceanics' outlook was not very appealing, with the company saying that it could be another year before offshore drilling activities start improving. Meanwhile, rival Diamond Offshore Drilling (NYSE: DO), painted an even bleaker picture of the offshore market this week. Diamond Offshore said that it has "yet to see a floor in the declining demand for deepwater assets." Worse yet, Diamond Offshore said it did not anticipate a recovery until 2019 or 2020. The bleak offshore drilling outlook caused an analyst from Evercore to suggest that Atwood might need to issue equity to stay afloat given its shrinking backlog and hefty debt load.
Image source: Getty Images.
That gloomy outlook for the offshore drilling sector seemed to weigh on service companies Hornbeck Offshore Services and Bristow Group because it implies that they will not see an increase in demand for their services. In Bristow's case, last week's sell-off erased its post-earnings pop from the previous week after it reported better-than-expected results and secured new financing to help it stay afloat. That's because it's possible that conditions could still get worse before they start getting better.
While green shootsare popping up across the onshore oil and gas marketplace, the offshore market is quite a different story. Drilling activities continue to slow down, which is putting further pressure on offshore drillers and service providers. There's no bottom in sight, which is why investors are better off turning their attention to companies that have exposure to the improving onshore market for the time being.
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Oil and Gas Stock Roundup: The Outlook for Offshore Drilling Continues to Dim - Fox Business
A file photo shows the company logo at the headquarters of Norwegian energy firm Statoil outside Oslo. BERIT ROALD / AFP/Getty Images
A week after Statoil sold off all its assets in Albertas oilsands, it looked eastward, to Newfoundlands offshore.
There, the Norwegian energy giant saw opportunity in the North Atlantic, announcing this week plans to drill two offshore exploratory wells this summer in the Flemish Pass Basin, roughly 500 kilometres east of St. Johns, N.L.
It is a gamble pulling out of one area with vast pools of proven oil reserves, while simultaneously launching a drilling program in the open ocean, where discovering commercially viable reservoirs is not certain.
But analysts say there is logic behind Statoils decision. While companies shifting their investments to offshore exploration are taking on more risk, there is upside.
The crude found beneath the ocean floor is generally lighter and more valuable than oilsands bitumen. Offshore oil can also be shipped anywhere in the world by tanker, whereas Albertas landlocked oil requires pipelines to access markets abroad pipelines that still need to be built.
You fill up a tanker from your platform and you send it to whoever is willing to pay the best price for it, said Kevin Birn, senior director for IHS Markit.
Whereas in Western Canada, the history has been you put it in a pipeline and it goes south. Those prices are subject to transportation costs down to the Gulf Coast and you have a lower price as a result.
Statoil Canada president Paul Fulton said the decision to invest in the offshore is in line with the parent companys strategy of funding safe, high-volume projects (with) low-carbon emissions.
He said Statoils exit from the oilsands was a commercial decision that had nothing to do with criticism from environmentalists in Norway, as has been suggested by some.
The upstream emissions from potential projects out there (on the East Coast) are very good, so we see that as a good fit and it fits into the competitive portfolio of Statoil globally, Fulton said in an interview.
Analysts, however, say criticism in Norway had to have been a factor in the sale of oilsands assets.
Statoil in particular was facing some political pushback from Norway as a state-owned company operating in the oilsands, said Nathan Nemeth, an upstream research associate at Wood Mackenzie.
Nemeth said oilsands and offshore projects both face long planning phases, high upfront costs and complicated construction issues, but the payback of capital for offshore comes much more quickly because of flush production from freshly drilled wells. Oilsands production, on the other hand, is steady and predictable for decades.
Statoils offshore investment comes as Calgary-based Husky Energy confirmed earlier this week it had shipped its first oil to an unnamed customer in China from the White Rose project, about 350 km east of Newfoundland.
The pieces of the puzzle fell together for the sale, company spokesman Mel Duvall said in an email. Favourable freight rates made it economically attractive.
Statoil is a major player in Newfoundlands offshore oil sector with a nine per cent stake in the Hebron project, a five per cent share in Hibernia and a 15 per cent stake in Terra Nova.
In 2015, the company bought six exploration licences in the Flemish Pass Basin and its first two licences for offshore Nova Scotia.
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After selling off all oilsands assets, Statoil looks to Newfoundland offshore - Calgary Herald
(Bloomberg) Wind power is making a comeback. One of the earliest energy sources to be harnessed by mankind has now overtaken coal-fired generation in Europe and hydroelectric dams in the U.S.
Europes wind industry was aided by increasing investments in offshore projects, while developers added thousands of new turbines on the breezy plains of Texas, Oklahoma and Kansas, according to a pair of reports released Thursday by the industrys main trade groups in the two regions.
Were on a steady course to double wind energys contribution to U.S. electricity with $60 billion in investments, Tom Kiernan, chief executive officer of the American Wind Energy Association, said in an interview Wednesday. He expects wind turbines will supply 10%of U.S. electricity in a few years, up from about 5 percent last year.
With more than 8.2 gigawatts installed in 2016, the U.S. wind industry has supplanted big hydroelectric dams as the countrys largest single renewable energy source, AWEA said Thursday. Hydropower has dominated the nations renewable generation since before the Hoover Dam was completed in 1936.
Oklahoma installed 1.2 gigawatts of wind turbines last quarter, beating out California to become the third-biggest market in the U.S. And Kansas surpassed Illinois for fifth place behind the top two producers, Texas and Iowa, according to data from the Washington-based trade group.
Rising demand for wind turbines has helped lift shares of U.S. tower and blade manufacturers. Broadwind Energy Inc. gained 3.3 percent to a five-month high of $4.77 at the close in New York. The Cicero, Illinois-based maker of steel towers has more than doubled in the past year. TPI Composites Inc., a maker of fiberglass blades, gained 2% in New York Thursday.
European wind grew 8% last year, to 153.7 gigawatts, comprising 16.7% of the regions total installed capacity. That was more than any other technology, driving wind past coal as the continents second-biggest type of generation, according to figures published Thursday by the WindEurope trade group. Gas-fired generation remains the biggest source of power.
With countries seeking to curb greenhouse gas emissions that causes climate change by replacing fossil fuel plants with new forms of renewable energy, investment in wind grew to a record 27.5 billion euros ($29.3 billion) in 2016, WindEuropes annual European Statistics report showed.
The group said 10.4 gigawatts of wind energy are under construction and another 7.9 gigawatts are in advanced development.
While winds installed capacity beats coal in Europe and hydropower in the U.S, it doesnt yet produce as much energy because its not always blowing.
Wind and coal are on two ends of the spectrum, Oliver Joy, a spokesman for WindEurope, said in an e-mail.
Wind is steadily adding new capacity while coal is decommissioning far more than any technology in Europe.
Bloomberg News by Christopher Martin and Jessica Shankleman
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Offshore projects help raise profile of wind power in US, Europe - WorkBoat (blog)
What happened?
If you look at some of the news from offshore rig companies, it would look as though things are starting to look up for the business. The one exception is looking at Seadrill (NYSE:SDRL) as of late. Shares of Seadrill declined an incredible 45.2% in January. Compare that to Ensco (NYSE:ESV) and Noble Corporation (NYSE:NE), which both saw double-digit gains. The big reason Seadrill's stock declined sharply while others made some modest gains is that the company announced it is struggling with refinancing with some of its creditors.
Image source: Getty Images.
Let's start with the good news in the offshore rig industry: Producers are starting to show an interest in hiring offshore rigs again. Noble announced on its most recent fleet status report that two of its jack-up rigs had their contracts extended until 2022. Granted, Noble took a slightly lower day rate in the negotiation, but the two will add to the company's backlog of contracted work. Also, Ensco picked up a contract for one of its jack-ups in the North Sea that will mobilize in the spring, although no price has yet been given for the contract. Overall, considering how many rigs have gone off contract as of late, this is a pretty welcoming sign for offshore rigs.
Seadrill, on the other hand, wasn't so fortunate. The company did announce in late December that it had received a three-year contract extension for one of its jack-up rigs, but that news has been overshadowed. The real big event in January was when Seadrill announced that it was in discussions with its creditors to restructure its debt. Accord to CEO Per Wullf, those negotiations have taken longer than expected. The company has been making as many capital preservation moves as possible lately, such as delaying delivery of new rigs under construction, but the rapid decline in contract work for its fleet is leaving it with little cash flow to spend on preserving its fleet or paying down debt.
It's ultimately going to come down to a large issuance of equity. Management has already warned investors that it thinks it needs to raise about $1 billion in debt, and that it may result in "significant shareholder dilution."
One important lesson investors should have learned during this market downturn is that balance sheets matter. Seadrill's balance sheet was in rough shape during this most recent downturn, while Noble and Ensco's financial statements looked much more respectable. So, as cash flows have dried up, Seadrill has perpetually been trying to pare down its expenses and its debt load to survive. With a need for $1 billion to keep things going, that's likely going to mean investors are going to get hurt, here, one way or another.
For investors looking at offshore rig stocks other than Seadrill, now may be an intriguing time to put them on your radar. Both Noble and Ensco are trading well below their tangible book values. It will likely be a long payback period, but there looks to be a lot of value in these shares for investors who have the patience.
For Seadrill, though, there is a little more uncertainty. Until the company announces the final results of its debt restructuring and how it impacts the equity in the company, it's probably best to stay away.
Tyler Crowe owns shares of Seadrill. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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What happened
Shares of a number of offshore drilling stocks are up big on Friday following the announcement of Q4 earnings fromNoble Corporation Ordinary Shares (NYSE: NE). Noble's shares are leading the way today, up over 12% as of 2:50 p.m. EST, butSeadrill Ltd(NYSE: SDRL) stock is also up more than 10%, whileENSCO PLC(NYSE: ESV) andDiamond Offshore Drilling Inc(NYSE: DO) are both up around 5%:
NE Price data by YCharts.
Today's jump for these stocks is largely tied to Noble's earnings release. The company reported an adjusted loss of $0.15 per share. And while a loss isn't exactly great, Wall Street analysts were expecting a much bigger $0.22-per-share loss from the company this quarter. On a GAAP basis, Noble's loss was much bigger, as the company took a $1.3 billion impairment against five of its drilling rigs.
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From an operations perspective, Noble has made a lot of progress. The company generated positive operating cash flows in 2016, and the impairments above are a reminder that the global drilling vessel fleet still has a lot of rationalization to go through before reaching parity with existing demand for work.
There's still less offshore activity, and that's not changing overnight. Image source: Getty Images.
From a capital perspective, Noble remains on sound footing. The company issued $1 billion in new debt in the fourth quarter, due in 2024, and used $762 million of the proceeds to pay off debt due in 2020, 2021, and 2022. At the quarter's end, Noble reported a cash balance of $726 million, $2.45 billion in undrawn credit capacity, and no major debt maturities within the next couple of years.
Noble's report comes on the back of a surprisingly good report from Diamond Offshore on Feb. 6. The company delivered a strong $0.53-per-share earnings profit. And while a one-time gain of $0.26 per share tied to a settlement over a contract dispute won't boost future quarters, Diamond still delivered a stronger result than many were expecting.
ENSCO is scheduled to hold its earnings call on Feb. 28, while Seadrill will likely report sometime in March. But investors probably shouldn't put too much stock in Noble's or Diamond Offshore's results when it comes to optimism for ENSCO or Seadrill.
If you're following offshore drillers, it's probably best to focus more on their balance sheets and less on GAAP profits and revenue at this stage. Look for the companies that are best-positioned to ride out the downturn, which could continue through 2017, and have the financial stability to make it to the recovery.
Noble, Diamond Offshore, and ENSCO are all in much better positions than Seadrill in that regard.Seadrill has nearly $5 billion in obligations due within 12 months, while the other three have less than $1.6 billion combined. The others also have a combination of cash and available credit liquidity to address their short-term obligations, while Seadrill has far more debt maturing in the next several months than it has the liquidity to deal with.
There is real opportunity in offshore drillers, but also very real risk of permanent losses. Make sure you balance the two, and understand the risks before investing in any of these companies. It's also important to acknowledge that it could take another year -- or more -- before the offshore market really starts recovering.
10 stocks we like better than Noble When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
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Jason Hall owns shares of Diamond Offshore Drilling, Ensco, Noble, and Seadrill. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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These Offshore Drilling Stocks Are Up Big as Earnings Season Starts - Fox Business
Forbes | Cost Impact of Immigration and Visa Reform to US Customers Using Offshore Services Forbes 2000x-18 Most US organizations have substantially used offshore service providers in IT and business process outsourcing (BPO) to drive cost reduction. But there is currently a great deal of discussion in Congress and the Trump Administration as well ... |
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Cost Impact of Immigration and Visa Reform to US Customers Using Offshore Services - Forbes
Israel has extended the original deadlines for each step of its first offshore oil and gas bid round launched last November, Energy Minister Yuval Steiniz said on Thursday.
Under the original plan for re-opening Israels offshore to new oil and gas exploration, the country announced its first bid round for development of resources in its territorial waters. At the time, minister Steiniz quoted independent research as having estimated that there are additional resources in a range of 6.6 billion barrels of oil and 2,137 BCM of natural gas yet to be found offshore Israel. The ministry is auctioning off 24 exploration blocks of up to 400 square kilometers (154.4 square miles) each, and will award 3-year licenses, extendable by another 3 years under certain conditions. In order to keep a healthy competition, companies with significant holdings in active offshore leases in the area are not allowed to bid. That means that Israels Delek and U.S.-based Noble Energy which are developing the giant Leviathan natural gas field are not bidding.
The original timetable had stipulated that the deadline for submission of proposals would be April 21, 2017, with winners of the new blocks expected to be announced in July 2017.
However, under the revised timetable, the closing date for bid submission is July 10, 2017, and bid bonds are valid until March 1, 2018, which may mean that the awarding of the licenses may take place next year.
Related: U.S. Oil Rig Count Up On Rising Oil Prices
Dozens of companies have expressed interest in the bidding process, thus the extension to allow for more time to prepare for bids, Natural Gas World quoted Steiniz as saying at a roadshow in Tel Aviv.
In the eastern Mediterranean, other countries are also advancing bid rounds and licensing awards. Cyprus has recently awarded three offshore blocks one to Italys Eni, one to an Eni/Total partnership, and the other to ExxonMobil and Qatar Petroleum while Lebanon opened last month five offshore blocks up for bidding, re-launching the first licensing round after three years of political impasse.
By Tsvetana Paraskova for Oilprice.com
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Israel Puts Off License Award In First Offshore Oil, Gas Bid Round - OilPrice.com
By Dan Healing The Canadian Press
The head office of Statoil in Stavanger, Norway, in this file photo dated Jan. 18, 2013.
A week after Statoil sold off all its assets in Albertas oilsands, it looked eastward, to Newfoundlands offshore.
There, the Norwegian energy giant saw opportunity in the North Atlantic, announcing this week plans to drill two offshore exploratory wells this summer in the Flemish Pass Basin, roughly 500 kilometres east of St. Johns, N.L.
It is a gamble pulling out of one area with vast pools of proven oil reserves, while simultaneously launching a drilling program in the open ocean, where discovering commercially viable reservoirs is not certain.
But analysts say there is logic behind Statoils decision. While companies shifting their investments to offshore exploration are taking on more risk, there is an upside.
READ MORE:Calgary-based Athabasca Oil buys oilsands assets from Norwegian firm in deal worth up to $832M
The crude found beneath the ocean floor is generally lighter and more valuable than oilsands bitumen. Offshore oil can also be shipped anywhere in the world by tanker, whereas Albertas landlocked oil requires pipelines to access markets abroad pipelines that still need to be built.
You fill up a tanker from your platform and you send it to whoever is willing to pay the best price for it, said Kevin Birn, senior director for IHS Markit.
Whereas in Western Canada, the history has been you put it in a pipeline and it goes south. Those prices are subject to transportation costs down to the Gulf Coast and you have a lower price as a result.
READ MORE:Gas facility in Algerian Sahara attacked, Norwegian energy group says
Statoil Canada president Paul Fulton said the decision to invest in the offshore is in line with the parent companys strategy of funding safe, high-volume projects (with) low-carbon emissions.
He said Statoils exit from the oilsands was a commercial decision that had nothing to do with criticism from environmentalists in Norway, as has been suggested by some.
The upstream emissions from potential projects out there (on the East Coast) are very good, so we see that as a good fit and it fits into the competitive portfolio of Statoil globally, Fulton said in an interview.
Analysts, however, say criticism in Norway had to have been a factor in the sale of oilsands assets.
Statoil in particular was facing some political pushback from Norway as a state-owned company operating in the oilsands, said Nathan Nemeth, an upstream research associate at Wood Mackenzie.
Nemeth said oilsands and offshore projects both face long planning phases, high upfront costs and complicated construction issues, but the payback of capital for offshore comes much more quickly because of flush production from freshly drilled wells. Oilsands production, on the other hand, is steady and predictable for decades.
Statoils offshore investment comes as Calgary-based Husky Energy (TSX:HSE) confirmed earlier this week it had shipped its first oil to an unnamed customer in China from the White Rose project, about 350 km east of Newfoundland.
The pieces of the puzzle fell together for the sale, company spokesman Mel Duvall said in an email.
Favourable freight rates made it economically attractive.
Statoil is a major player in Newfoundlands offshore oil sector with a nine per cent stake in the Hebron project, a five per cent share in Hibernia and a 15 per cent stake in Terra Nova.
In 2015, the company bought six exploration licences in the Flemish Pass Basin and its first two licences for offshore Nova Scotia.
2017The Canadian Press
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Statoil looks to Newfoundland offshore after selling off all oilsands assets - Globalnews.ca
The north-west shelf project in Western Australia which the Tax Justice Network says pays high royalties. Photograph: Graeme Robertson for the Guardian
The Turnbull government must introduce a 10% royalty on all offshore oil and gas projects in Australia to ensure taxpayers start getting a fair return on their natural resources, the Tax Justice Network says.
The group has called for the petroleum resource rent tax (PRRT) to be overhauled, saying there were too many opportunities under its regime for offshore oil and gas companies to exploit transfer pricing, with direct impacts on PRRT credits and profits.
In a submission to the PRRT review, the Tax Justice Network said a 10% royalty ought to be applied to offshore oil and gas projects in commonwealth waters that were only subject to the PRRT.
It said a 10% royalty needed to be charged because the PRRT which was designed in the 1980s for crude oil projects, but which had failed to keep up with developments in the industry was failing to collect adequate revenue.
The treasurer, Scott Morrison, admitted last year that revenues from the PRRT had halved since 2012-13, and crude oil excise collections had fallen by more than half.
He announced a formal review of the PRRT regime in November after a rapid decline in revenues from the tax.
Jason Ward, from the network, said a 10% royalty would raise between $4bn and $6bn over the next four years.
He said the royalty system should be similar to existing state and Commonwealth royalties that already apply to all other oil and gas projects in Australia.
It should be deductible from PRRT, and the PRRT should remain as a backstop to collect additional revenue if and when prices increased substantially and when existing PRRT credits were exhausted.
With Australia poised to be the worlds largest exporter of LNG but projected to generate little direct government revenue for decades, there is a major problem that needs to be addressed, he said.
At the moment projects in commonwealth waters are getting millions of tonnes of LNG effectively for free.
No other industry, including coal, iron ore and onshore gas, get given the total cost of their investment (plus uplift) in free resources before they begin paying for that resource.
This policy will level the playing field across the oil and gas industry. At the moment projects in commonwealth waters are getting a competitive advantage over onshore projects and the north-west shelf who pay much higher royalties.
All of the major companies, Shell, Chevron, BHP, Woodside and BP, already pay under our proposed model through their ownership of the north-west shelf project. They have been happy to pay under this model for years without complaint. The north-west shelf shows they still make huge profits under this type of royalty regime.
Ward said mature oil projects, such as BHP in the Bass Strait who already pay PRRT, would not be affected given the royalty would be fully deductible from the PRRT.
This proposal we believe ensures a fair return to the Australian people while still encouraging investment by maintaining our royalty regime as one of the most generous in the world, he said.
We call on the industry to support this proposal to the commonwealth government.
The problems raised by the Tax Justice Network are similar to those raised by tax expert Dr Diane Kraal, from Monash University.
Her submission warned flaws in the PRRT regime meant Chevrons giant Gorgon gas project off WA would not pay the tax until at least 2030, despite decades of operation.
Kraal said her modelling showed $5bn in revenue would be raised from Gorgon alone by 2030 if royalties were reintroduced.
She said her research indicated other natural gas projects in commonwealth waters should also be subject to commonwealth royalties, including Chevrons Wheatstone, Woodsides Pluto LNG project, and Inpexs Ichthys project.
Woodside Petroleum used its submission to argue against any changes to the PRRT.
It said the PRRT had been operating as intended, despite declining revenues from the tax recently.
It said the regime had delivered $200bn worth of projects over the past decade, and Woodside had paid $2bn in PRRT since 2001.
As a profits-based tax, it is not unusual to have declining PRRT at a time of declining oil and gas prices and prior to these projects recouping their costs, its submission said.
Woodside pays billions of dollars of taxes in Australia. The PRRT is just one part of our tax contribution but increasing it could put other tax revenues at risk by making future projects unviable.
Woodside has an ownership stake in three of Australias major undeveloped gas resources. As the leading Australian gas producer, we want to develop these resources and deliver significant benefits to the Australian people.
We urge the PRRT review team to consider carefully the substantial impact of any changes to the current fiscal settings that could jeopardise existing and future investments.
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Coalition urged to charge 10% royalty on offshore oil and gas projects - The Guardian
Eni has started production of the East Hub Development Project in Block 15/06 of the Angolan deep offshore region, five months ahead of schedule.
The oilcompany is using the Armada Olombendo Floating Production Storage and Offloading (FPSO) vessel for production which can generate up to 80,000bpd of oiland compress up to 3.4 million cubic metres of gasa day.
FPSO Olombendo will put Cabaa South East field into production with nine wells and four manifolds at adepth of 450m.
The Cabaa South East field is located about 350km from Luanda and 130km west of Soyo.
East Hub Project production will add to the output from the existing West Hub Project in the Sangos, Cinguvu and Mpungi fields, where another vessel, FPSO NGoma, is operating.
Overall, Block 15/06is expected to reacha peak of 150,000bpd this year.
Eni CEO Claudio Descalzi said: We are proud of what we have achieved in Block 15/06. Leveraging our extensive experience in exploration, we have been able to discover a total ofthree billion barrels of oil in place throughten commercial discoveries.
"We have been able to discover a total of three billion barrels of oil in place through ten commercial discoveries."
Moreover, thanks to strong field development and project management, we are beginning production of the East Hub with a time-to-market of onlythree years, andfive months ahead of schedule.
Cabaa South East brings our number of fields in production to five, withtwo more expected to start before the end of 2018.
This is yet another example of Enis Angolan and worldwide capability to deliver state-of-the-art projects, and was made possible by Enis new operational model, where we play an increasingly active role in the integrated development of our projects.
Eni operates Block 15/06 with 36.84% stake. Sonangol Pesquisa e Produo and SSI Fifteen Limited hold the remaining ownership with interests of36.84% and 26.32%respectively.
Eni has been operating in Angola since 1980 through its subsidiary.
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Eni starts production of East Hub Development Project, offshore Angola - Offshore Technology
Christian Grey has seen $22.4 million worth of business at the international box office through Thursday. Fifty Shades Darker, Universals sequel to the 2015 S&M phenomenon that was Fifty Shades Of Grey,is releasing day-and-date this weekend with the U.S. Overseas, 37 offshore markets undressed Wednesday and Thursday.
The film is dominating with No. 1 openings in 36 territories and 50% market share across the current releases. There are still 20 hubs to tie in today, including the UK and Spain. By the end of the weekend, the total will climax at 57.
Already, Australia pulled a No. 1 opening day with $2.1M and 55% market share (including Wednesday night previews). Thats the second-biggest opening for an R-rated film and the second-biggest Universal opening day of all time, behind Furious 7.
Argentina also set a record for biggest R-rated opening. Brazil had an impressive $2M day one at No. 1 with 72% of the market the top opening day of the year andsecond-biggest 16+ rated film opening day of all time.
France also submitted to the sequel with a No. 1 start of $1.9M. Thats the biggest opening day of the year for the Hexagon. In Germany, where it looks like the lovers could hit near to 1M tickets sold this weekend, the No. 1 start was $1.4M for 53% of the market. Italy, likewise has Darker dominating at $1.6M/70%. There, the movie boasts thesecond-biggest opening of a R-rated film, behind Fifty Shades Of Grey.
Other No. 1 starts include the Netherlands ($319K/biggest R-rated opening of all time and best opening day of 2017); Philippines ($370K/biggest opening day of all-time for a February foreign release); and Russia ($1.5M M).
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'Fifty Shades Darker' Unmasks $22M In Offshore Foreplay International Box Office - Deadline
Cuba is seeking foreign investments in its oil industry, with a particular focus on offshore drilling, a senior government official said this week. At the moment, about 50 percent of the islands demand is being satisfied by local production, but plans are to raise this substantially in the near term, the deputy general director of state-owned company Cuba Petrol Union (CUPET), Roberto Suarez, said.
Currently, CUPET pumps around 4 million barrels of oil equivalent a year, with the oil used for power generation. Almost all of Cubas natural gas output, 97 percent, is utilized as heating fuel and power generation.
After the U.S. lifted its trade embargo on the island, Cubas government has wasted no time in trying to attract foreign investments that are vital for the development of its energy industry, among all others.
What the island has to offer is total undiscovered technically recoverable reserves of 4.6 billion barrels of crude oil, 9.8 trillion cubic feet of natural gas and 900 million barrels of natural gas liquids, based on 2004 estimates by the United States Geological Survey (USGS). The country has, almost like clockwork, produced about 50,000 barrels of liquids per day, most from the coastal reserve areas east of Havana.
Related:Will Lebanese Oil And Gas Ignite The Country?
One of the few oil companies exploring for oil in Cuba, Australian Melbana Energy, earlier this month said it has revised up its estimates for onshore oil reserves on the island, and substantially. Now Melbana believes there are 612 million barrels of oil in its Block 9, almost double the earlier estimates.
Other foreign companies, including Russias Zarubezhneft and Spanish Repsol, have drilled in Cubas portion of the Gulf of Mexico but so far, no commercially viable finds have been made.
Recent discoveries in Cubas shelf were made, according to Suarez, in the North Belt: a 200-km-long offshore area east of Havana, which is divided into 45 blocks. CUPET is looking for bidders for these blocks as well as partners that will bring in new technologies to its oil industry.
By Irina Slav for Oilprice.com
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Cuba Eager to Develop Offshore Oil Reserves | OilPrice.com - OilPrice.com
We issued an updated research report on Diamond Offshore Drilling Inc. (DO - Free Report) on Feb 8, 2017. The leading offshore contract driller reported better-than-expected fourth-quarter 2016 results. However, the stock underperformed the Zacks categorized Oil & Gas Drilling industry in the last three months.
Currently, the company carries a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. equity market over the next one to three months.
Diamond Offshore is a leading offshore contract driller with services all around the world. The companys working fleet is much younger than that of most other drilling players. Furthermore, 94% of the rig days for the companys ultra-deepwater units are being booked by top-tier global customers for 2017. This is likely to result in steady cashflows for the company.
As of Dec 31, 2016, Diamond Offshore had a backlog was $3.6 billion. This not only reflects steady demand from customers but also offers an unmatched level of earnings and cash flow visibility. This enables Diamond Offshore to navigate the current uncertain environment better than many of its peers.
Recently, the company reported fourth-quarter 2016 adjusted earnings of 53 cents per share that comfortably surpassed the Zacks Consensus Estimate of 12 cents. Initiatives for cost control, along with improving efficiencies for rigs, resulted in the better-than-expected earnings.
The bottom line, however, decreased from the year-earlier earnings of 89 cents per share due to considerably low contributions from jackups.
Moreover, Diamond Offshore shares displayed significant pricing weaknesses in the last three months. During the aforesaid period, the companys shared gained 0.5% compared with 27% increase for the Zacks categorized Oil & Gas Drilling industry.
Additionally, the company is overvalued with its Price to Free Cash Flow ratio trending higher than the industry over the past three months. Presently, the Price to Free Cash Flow ratio of Diamond Offshore is 25.04, which is significantly above 6.56 for the broader industry.
Stocks to Consider
Some better-ranked players in the energy sector include Imperial Oil Limited (IMO - Free Report) , Northern Oil and Gas Inc. (NOG - Free Report) and Denbury Resources Inc. (DNR - Free Report) . Both Imperial Oil and Denbury Resources sport a Zacks Rank #1 (Strong Buy), while Northern Oil and Gas carries a Zacks Rank #2 (Buy).You can see the complete list of todays Zacks #1 Rank stocks here.
In 2017, Imperial Oils earnings are anticipated to grow 386.6%.
Northern Oil and Gas posted an average earnings surprise of 81.35% in the last four quarters.
Denbury surpassed the Zacks Consensus Estimate in each of the last four quarters with an average earnings surprise of 283.33%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
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Should Diamond Offshore (DO) Stock Be in Your Portfolio? - Zacks.com
Wind farm developers installed more power than any other form of energy last year in Europe, helping turbines to overtake coal in terms of capacity, industry figures show.
European wind power grew 8 percent, to 153.7 gigawatts, comprising 16.7 percent of installed capacity and overtaking coal as the continents second-biggest potential source of energy, according to figures published Thursday by the WindEurope trade group. Gas-fired generation retained the largest share of installed capacity.
With countries seeking to curb greenhouse gas emissions that causes climate change by replacing fossil fuel plants with new forms of renewable energy, investment in wind grew to a record 27.5 billion euros ($29.3 billion) in 2016, WindEuropes annual European Statistics report showed.
Wind and coal are on two ends of the spectrum,said Oliver Joy, a spokesman for WindEurope, in an e-mail. Wind is steadily adding new capacity while coal is decommissioning far more than any technology in Europe.
The group underscored that wind, which only produces power intermittently, hasnt yet overtaken coal share in total power generation.
European wind investment increased 5 percent in 2016 from a year earlier driven by the offshore segment that attracted 18.2 billion euros, the report said. That offset a 29 percent investment decline in the onshore market.
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Wind Overtakes Coal Power in Europe as Turbines Head Offshore - Bloomberg
RICHMOND Tom Perriello, who is running an upstart campaign for the Democratic nomination for governor, said he is opposed to two proposed natural gas pipelines, will not take campaign cash from utility giant Dominion Virginia Power and voiced doubts about offshore drilling something he supported as a congressman.
I will not take one dime from Dominion, but I will sit down with them any time to talk about pragmatic solutions that move us forward, Perriello said at a news conference Wednesday at a park overlooking the James River.
The Democrats announcement came a week after a populist Republican running for governor, Denver Riggleman, appeared at the Capitol with his own anti-Dominion pitch, calling for a ban on political donations from the state-regulated monopoly.
[Riggleman, a contender for Virginia governor, takes on utility giant Dominion]
While Rigglemans appeal was a defense of property rights and an attack on crony capitalism, Perriellos centered on clean energy and jobs. Perriello also said he was skeptical about offshore drilling something he backed during his single term in Congress.
Ive always been very skeptical of offshore drilling, he said. Ive been a big supporter of offshore wind.
Along with a bipartisan group of Virginia congressional members, Perriello sponsored a measure to allow oil and gas drilling off Virginias coast, Energy Tomorrow reported in March 2010. The Republican Party of Virginias website linked to that article last month in a post from Chairman John Whitbeck, who predicted that Perriello would flip on the issue.
I look forward to yet another heart-felt, tear filled Jimmy Swaggart-style Facebook post in which Tom Perriello repents for his previous sins against the church of far-left liberalism, Whitbeck wrote, referring to a long mea culpa Perriello had posted on Facebook to explain an abortion vote he said he now regrets. Hes already apologized for his previous pro-life leanings and support from the NRA. His flip on offshore drilling should be one for the ages.
During his successful 2008 campaign, Perriello called on TV stations to drop ads aired by incumbent Virgil Goode (R), complaining that they included the libelous claim that Perriello opposed offshore drilling, according to a news account from the time, to which Whitbecks post also linked.
In response to a request for comment, Perriello spokeswoman Remi Yamamoto emailed a statement issued when Whitbecks post first appeared.
Tom believes a robust and innovative clean energy sector is key to Virginias inclusive economic future, said Jessica Barba Brown, who was then Perriellos campaign spokeswoman. Throughout his career, Tom has been willing to consider offshore drilling only as part of a comprehensive energy strategy, and only if it is not done in environmentally sensitive areas. He has fought for strong environmental and safety regulations and would continue that track record as governor.
At Richmonds Libby Hill Park, Perriello laid out his opposition to two natural gas pipelines proposed for Virginia: Dominions Atlantic Coast Pipeline project and the Mountain Valley Pipeline Project, a joint venture that does not include Dominion.
Wasting $8.6billion on the technologies of the past and the energy sources of the past, on projects that will largely employ people from out of state and not in Virginia, to transport fracked gas from out of state across our beautiful heritage to other areas is not the way that we keep value in the community, he said.
He said a focus on wind, solar and energy-saving weatherization projects would create more jobs and better protect the environment.
Perriello faces Lt. Gov. Ralph Northam in the June Democratic primary. Northam spokesman David Turner said the lieutenant governor supports the pipelines as long as property rights, safety and the environment are protected.
As a doctor and a scientist, Ralph Northam always believes in a robust and transparent process driven by science, facts and property rights, Turner said in an email. This is why he urges the Federal Energy Regulatory Commission and Virginias Department of Environmental Quality to hold this process to the highest possible standards with the utmost due diligence given to protecting our natural heritage. This is the logic that has underscored his long-standing opposition to offshore drilling.
Aaron Ruby, a Dominion Energy spokesman, said Virginians strongly support the Atlantic Coast project.
Virginians want new jobs; they want cleaner energy; they want more economic opportunity; and, they recognize that new infrastructure like the Atlantic Coast Pipeline is critical to making it happen, Ruby said in a written statement. This project is essential to the economic vitality and environmental future of Virginia. It will create thousands of new jobs, promote cleaner air in our communities and enhance the energy security of our region. Its unfortunate Mr. Perriello has disregarded these important public priorities and the aspirations of most Virginians.
In his visit to the Capitol last week, Riggleman drew attention to two bills aimed at Dominion, both brought by state Sen. J. Chapman Chap Petersen (D-Fairfax). One would have subjected electricity rates to review by the state. The other would have prohibited Dominion and other state-regulated monopolies from donating to legislators and statewide candidates.
Dominion is the largest corporate contributor in Virginia, having plowed $4million into state-level races over the past decade.
Both bills died.
Riggleman, a distillery owner and one of four Republicans running for governor, has tangled with Dominion as a property owner. At one point, plans called for the Atlantic Coast Pipeline to cross 50acres he owns in Nelson County. He has said he is not opposed to the pipeline, but to eminent domain practices that he contends are unfair to property owners.
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A little over a decade after it lost hundreds of millions of dollars on poor risk management with an ill-judged foray into New Zealand, energy utility AGL is again planning to expand abroad, although it is tight-lipped on details.
On Thursday, the company outlined a pushinto the gas retail market in WesternAustralia, as it confronts the reality of limits to growth in the local market, with more detail on its move offshore to be clarifiedby year end.
"One of the challenges we have is finding domestic opportunities for growth," AGL's chief executive Andy Vesey said. "Givenour current size, it is very difficult to do anything more than grow organically."
AGLis entering the West Australian market this year, with an investment of up to $100 million as it targets100,000 retail customers, while warning investors it will lose money on the foray, at least initially.
But selling electricity in WA "is not part of our calculus", Mr Vesey said, with the lack of its own generation capacity in that market a disincentive, he said.
With the pending move abroad, Mr Vesey said the plan is to take advantage of his company'srisk management expertise in electricity markets, with the focus on developed markets which are shifting to consumer-led demand.
He was speaking after the release of December-half earnings which disclosed higher wholesale electricity prices had offset lower volumes of electricity sold to both household and business sectors. Additionally, AGL boostedsales into the wholesale market, which typically carry smaller margins. One reason for the decline was warmer weather in some markets last winter, coupled with heightened competition for business customers.
Margins were also squeezed in the gas market, as cheaper, long-term supply contacts expired.
"We largely generatewhat we sell, which puts us in a strong position as prices rise," Mr Vesey said, with household electricitycharges to rise annually, depending on competitive pressures, with prices rising more slowly in the business market, for examplewhere many prices are fixed on two-year terms.
"A rising [forward] electricitycurve remains a key driver of profit growth," Mr Vesey said.
In the December half it posted a net profit of $325 million, a reversal from the loss of $449 million a year earlier, with the performance masking a deterioration in electricity sales volumes.
The interim dividend has been hiked to 41from 32, thanks to a change in the dividend policy, as it now targetsa payout of 75 per cent of underlying earnings up from 60-65 per cent paid out previously.
The underlying profit for the half was $389 million compared to $375 million earned a year earlier.
The company has left unchanged its forecast of a year to June underlying profit of $720 million-$800 million, although earnings are expected to reach the top half of this guidance, it said.
The firm outlook saw the shares close up4.3 per cent at $24.
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AGL to head offshore amid limited growth options locally - The Sydney Morning Herald