Mosaic boosts AGL results

Release Date: 2011-02-23

Australian utility AGL’s acquisition of Mosaic Oil in October last year has boosted the company’s upstream gas earnings as the company’s underlying net profits fell in the first half.

AGL Energy reported a 4% drop in underlying first-half net profit, to A$226.2 million, ($226.6 million) from the A$234.8 million recorded at the same time the previous year.

But the operating earnings before interest and tax of AGL’s Upstream Gas unit from July 2010 to December 2010 increased to $16.9 million from $3 million in the previous corresponding period – a 463.3% increase.

In an announcement, AGL said the Mosaic acquisition had enabled it to develop the depleted Silver Springs and Renlim gas fields as a gas storage facility.

It also enabled it to sign a seven-year gas storage agreement with Queensland Gas Company (QGC), a subsidiary of UK-based BG Group, with the first injection of gas targeted for at the Silver Springs underground gas storage project due in June.

In a presentation to investors, the company said it had plans to expand its initial injection rate and storage capacity by 30%.

The company had received A$15 million in gas storage fees – above the A$8 million to A$10 million per year it expects to receive over the next three years.

Total 2P gas reserves increased by 377.3 billion cubic feet since 30 June 2010, the company said.

The blame for the company-wide profit slump was centres on a 98% fall in earnings from the Loy Yang coal-fired power station in Victoria, due to lower pool electricity.

Managing director Michael Fraser said he did not expect the station to improve in the second half, Bloomberg reported.

“But we are forecasting further strong growth from our retail business and an improvement in our wholesale electricity business,” he said.

The company cut its full-year profit forecast earlier this month to between A$415 million and A$440 million from a prior projection of A$450 million to A$480 million, citing “extreme weather,” including a cyclone and floods in Queensland and record heat in Sydney.

Net income rose 30% to A$239.6 million as sales climbed 9% to A$3.49 billion.

Type:	NORMAL
Url:	http://www.upstreamonline.com/live/article245701.ece