Publications
Partners
Johannesburg - Petrochemicals group Sasol [JSE:SOL] sees opportunities to buy cheap natural gas assets in North America that would help boost its output of chemicals and synthetic fuels, a senior official said on Monday.
Sasol, the world's top maker of motor fuel from coal, is investing heavily in growth, especially by expanding its shale gas portfolio, with capital expenditure seen at R29bn this financial year rising to R32bn in 2012/13.
"It is a very attractive time to buy gas resources. The opportunity has never been as good as now to do such an acquisition," Lean Strauss, a Sasol group manager, told Reuters.
"We are focusing on North America. That is where the gas is the cheapest by far in the world right now."
Sasol is conducting feasibility studies to build three 48 000 barrels per day gas-to-liquid (GTL) plants, one in Canada and two in the United States.
The company recently bought stakes in two shale gas assets in Canada, which together should supply about 60% of the gas it needs to power the three plants over a 25-year period, and will be looking for other assets to secure the remainder.
Sasol has slowed the development of the two Canadian assets given low gas prices, but said they would be ready by the time the GTL plants were up and running, which if approved was expected around 2017.
Sasol also produces gas from the onshore Pande/Temane fields in Mozambique, most of which is sent to South Africa.
Strauss said the quantities were not sufficient to justify a GTL plant, although the company was in talks with others who had found gas in the region about partnering in one.
"We have opened discussions with those who have found gas in the northern parts of Mozambique and southern parts of Tanzania, but it is very early days," Strauss said.
Earnings jump
His comments came after Sasol reported headline earnings per share up 81% to R23.50 in the six months to end-December, boosted by higher oil and product prices and a weaker rand, which it said was 7% softer on average than in the previous period.
A weaker rand is a positive for South African exporters as it lifts profits when overseas earnings are brought home. The currency has strengthened since the start of 2012, which will negatively impact Sasol's next set of results.
Lower synfuels production due to a strike and other plant incidents was offset by stronger performance at other units.
"The results were good. Some investors may be impatient because of its sensitivity to the fluctuations in the rand and the oil price and because of the long time it takes to get the mega projects up and running, but it is a fantastic stock and one to definitely have in your portfolio," said Sasha Naryshkine, an analyst at Vestact.
The jump in earnings was largely priced in after Sasol in February forecast an 80 to 90% increase.
The stock, up 1.9% so far this year, was down 0.7% at R389.90 by 12:26 GMT, compared with a flat JSE Top-40 index of blue-chips.
Sasol also said it was on track to deliver higher earnings for the full year, but warned that the rand-dollar exchange rate remained the biggest external factor impacting profitability.
"For every 10 cents change in the annual average rand/dollar exchange rate, it will impact our operating profit by nearly R1bn," said chief financial officer Christine Ramon.
The company said Sasol Synfuels' production for the full year was expected at between 7.0 and 7.2 million tonnes.
The company said it would pay an interim dividend of R5.70, up 84% on the comparison.
Sasol, the world's top maker of motor fuel from coal, is investing heavily in growth, especially by expanding its shale gas portfolio, with capital expenditure seen at R29bn this financial year rising to R32bn in 2012/13.
"It is a very attractive time to buy gas resources. The opportunity has never been as good as now to do such an acquisition," Lean Strauss, a Sasol group manager, told Reuters.
"We are focusing on North America. That is where the gas is the cheapest by far in the world right now."
Sasol is conducting feasibility studies to build three 48 000 barrels per day gas-to-liquid (GTL) plants, one in Canada and two in the United States.
The company recently bought stakes in two shale gas assets in Canada, which together should supply about 60% of the gas it needs to power the three plants over a 25-year period, and will be looking for other assets to secure the remainder.
Sasol has slowed the development of the two Canadian assets given low gas prices, but said they would be ready by the time the GTL plants were up and running, which if approved was expected around 2017.
Sasol also produces gas from the onshore Pande/Temane fields in Mozambique, most of which is sent to South Africa.
Strauss said the quantities were not sufficient to justify a GTL plant, although the company was in talks with others who had found gas in the region about partnering in one.
"We have opened discussions with those who have found gas in the northern parts of Mozambique and southern parts of Tanzania, but it is very early days," Strauss said.
Earnings jump
His comments came after Sasol reported headline earnings per share up 81% to R23.50 in the six months to end-December, boosted by higher oil and product prices and a weaker rand, which it said was 7% softer on average than in the previous period.
A weaker rand is a positive for South African exporters as it lifts profits when overseas earnings are brought home. The currency has strengthened since the start of 2012, which will negatively impact Sasol's next set of results.
Lower synfuels production due to a strike and other plant incidents was offset by stronger performance at other units.
"The results were good. Some investors may be impatient because of its sensitivity to the fluctuations in the rand and the oil price and because of the long time it takes to get the mega projects up and running, but it is a fantastic stock and one to definitely have in your portfolio," said Sasha Naryshkine, an analyst at Vestact.
The jump in earnings was largely priced in after Sasol in February forecast an 80 to 90% increase.
The stock, up 1.9% so far this year, was down 0.7% at R389.90 by 12:26 GMT, compared with a flat JSE Top-40 index of blue-chips.
Sasol also said it was on track to deliver higher earnings for the full year, but warned that the rand-dollar exchange rate remained the biggest external factor impacting profitability.
"For every 10 cents change in the annual average rand/dollar exchange rate, it will impact our operating profit by nearly R1bn," said chief financial officer Christine Ramon.
The company said Sasol Synfuels' production for the full year was expected at between 7.0 and 7.2 million tonnes.
The company said it would pay an interim dividend of R5.70, up 84% on the comparison.
