KFM Weekly Investment Update: Friday, 04 April 2014

Local Market Summary

• InterOil Limited announced operating results for the fourth quarter and full year ended December 31, 2013 showing record revenues of $1,400 million (2012: $1,321 million). Record revenue was due to record total products sold of 9.4 MMbbls (2012: 8.5 MMbbls), an 11% increase from the year before. During 2013, investments in development of Upstream and Midstream Liquefaction resulted in a net loss of $75.1 million (2012: net loss of $59.6 million). This was balanced by Corporate, Refining and Downstream collectively recording a net profit for the year of $34.7 million (2012: $61.2 million). The consolidated $40.4 million net loss compared to a $1.6 million profit in 2012 was mainly driven by the Papua New Guinea kina depreciating 13% against the US Dollar leading to a consolidated $41.2 million in exchange rate losses.

• Nautilus Minerals has announced that its seafloor production tools for the Solwara 1 project has been 90% complete as of December last year.

• Marengo Mining Limited announced the appointment of Mr John Mears, P.Geo, as Chief Operating Officer of the Company. Mr Mears is an experienced, licensed Geologist in the USA and a Member of the Australasian Institute of Mining and Metallurgy.

• Oil Search Ltd is contesting Total SA’s purchase of a 40% stake in PNG’s biggest undeveloped gas field, but has yet to specify its complaint. InterOil’s Chief Executive Officer Michael Hession has told analysts he expects the dispute to go to arbitration in London. According to analysts the fight centres on the vehicle that InterOil used to sell down its stake in the Elk and Antelope licence to Total SA. Total SA purchased the InterOil subsidiary that held the 40% stake rather than an acquisition of the stake itself.

• The Asian Development Bank economic experts are forecasting record growth for Papua New Guinea’s economy with gross domestic product expected to peak at 21% next year, driven by the country’s thriving LNG sector.

• Papua New Guinea needs a trade policy to be competitive on international markets according to its Minister for Trade Commerce and Industry, Richard Maru. He made the statement as he addressed delegates at the signing of a finance agreement for the 10th European development fund trade related assistance project phase II. The four year K18million project is aimed at promoting effective engagement with the private sector for sustainable development in PNG.

• The KSi Index closed the week 0.3% higher on 3,626.54 while the KSi Home Index closed the week 2.1% higher at 8,130.97.

International Market Summary

• Aussie stocks were up marginally over the week, closing up 0.52% to 5,422.8 today despite an intraday slump on Tuesday following a slump in crude (see chart in the PDF attachment below) before a swathe of positive global manufacturing data.

• Although the European Central Bank elected to keep interest rates at the record low of 0.25%, policy makers at Thursday’s meeting said quantitative easing is now on the table as a means to address alarmingly low rates of inflation. The policymakers have pledged to monitor the developments very closely and will consider all available instruments.

• China’s central bank is walking a narrow line between conflicting goals as economic growth wavers while credit growth remains at worrying levels. So far, the bank has relied on reserve requirement ratios and open-market operations to rein in liquidity, and the question now is whether policymakers will ease up as investment declines.

• To end the week the PGK appreciated against the USD and AUD by 0.7% and 0.7% respectively. Whilst the AUD depreciated by 0.1% against the USD.

• In world oil prices the Brent crude declined by 1.6% to US$106.29 a barrel while Light crude also shed 1.1% to US$100.45.

Click on the link below to view full report in PDF.

pdfKFM Weekly Investment Update: Friday, 04 April 2014

Online banking