Analyst Wrap

The wheels are in motion for the unravelling of the complicated corporate structure that holds together the $4 billion worth of Australian assets owned by struggling US utility Aquila.

WA gas utility AlintaGas confirmed talks are progressing with Aquila, United Energy and AMP Henderson that may result in Alinta emerging with interests in the United Energy and Multinet distribution businesses.

Alinta will then sell off two-thirds of the combined distribution networks to the AMP Defender Fund. In a separate transaction, the fund will then buy out the half-stake in Multinet held by Aquila. Now you see it, now you don't and another US chequebook waver exits stage left with its tail between its legs.

Resource giant BHP Billiton this week announced a half-year profit of $US931 million, which was down nearly 20% on the corresponding period last year. Nevertheless, the petroleum division continued its strong contribution to the company's bottom line thanks to a higher average realised oil price of $US27.19.

The company this week also farmed into a coalbed methane project in Queensland's Bowen Basin. The commitment will see BHPB contribute more than $20 million to the capital cost of the project.

Integrated energy company Origin Energy expects to beat last year's profit by 20% after reporting a big jump in half-year net profit. The company said the result was driven by acquisitions, tariff increases and improved margins in the energy retailing.

As for the full year result, Origin said it expects a positive contribution from E & P and generation while seasonal vagaries will see lower contributions from energy retailing.

In other market news, a Shell spokesperson told that talk of retailer Coles-Myer buying out its petrol stations is purely "speculation". Reports have emerged Coles is negotiating the deal in attempt to combat arch-rival Woolworths, who now own 280 outlets and sells 45 million litres of petrol a year.

It's been a big week for exploration, drilling and production. Early in the week, BHP Billiton and Woodside reported a significant oil strike in the offshore Carnarvon Basin in Western Australia. The Stybarrow-1 well intersected 23m gross oil with net pay of 18.6m.

BHP, the operator, said the field could contain as much as 50 million barrels. And together with nearby Enfield, Laverda and Vincent fields, which are set for development in 2006, the area could contain as much as 300 million barrels - a significant amount in global terms.

Arc Energy and Origin will be hoping for better luck drilling an onshore Perth Basin wildcat than others had drilling offshore Perth Basin wildcats. Arc/Origin will move 2km west of Hovea-7 to begin drilling Eremia-1 next week.

Meanwhile, the junior explorers drilling in the offshore sector of the Perth Basin told the market their latest wildcat well, Vindara-1, was also a duster. The last two exploration wells, Twin Lions and Mentelle, also turned out to be dusters.

Further north, Woodside spudded an exploration well in the southern Bonaparte Basin just one week after consolidating its interest in this part of northern Australia.

Australian oil and gas companies have been busy overseas with mixed results. It was a case of double dusters for Horizon with two wells in two exotic locations (PNG and Tunisia) both being P&A'd as dusters. Amadeus put the disappointment of three recent Texan dusters behind it and is looking for more exploration plays in Okalahoma after completing for production a third Red Creek Prospect.

Hardman Resources saw its share price rise by 4c to 51c after announcing an upward revision of reserve estimates for the offshore Mauritania Chinguetti field. Meanwhile, Amity Oil is reporting good flow rates from its Gocerler gasfield in Turkey.