ANALYSTS APPLAUD CSR'S BOLD MOVE TO SELL DELHI

  CSR Ltd &lt;CSRA.S> has made a bold move in
  selling its oil and gas interests for almost a billion dlrs and
  ploughing 150 mln into its traditional sugar business, share
  analysts said.
      "It sounds like a good deal," Stuart McKibbin of &lt;A.C. Goode
  and Co> told Reuters.
      CSR said it had dropped plans to float its oil and gas
  interests held in the &lt;Delhi Australia Fund> and would instead
  sell it to Exxon Corp &lt;XON> unit &lt;Esso Exploration and
  Production Australia Inc> for 985 mln dlrs.
      In a twin announcement CSR, already Australia's largest
  sugar refiner, made a 2.20 dlr a share bid for the 70 pct it
  does not already hold in &lt;Pioneer Sugar Mills Ltd>.
      "This will be a big shock to the market, which was under the
  impression that CSR was well down the road to floating Delhi,"
  McKibbin said.
      A float of part of Delhi would have raised between 200 and
  300 mln dlrs, but in opting to sell outright, CSR had given
  itself the cash to practically eliminate its debt and embark on
  an ambitious expansion programme in its best-performing
  divisions of sugar and building products, analysts said.
      CSR not only gets the 985 mln dlrs but also has the right
  to share equally with Esso any higher returns resulting from an
  oil price over 20 U.S. Dlrs a barrel in the next two years.
      Delhi is one of Australia's largest onshore oil producers
  yielding about six mln barrels a year from the Cooper Basin.
  Analysts said the deal could net CSR as much as three mln dlrs
  for every dollar rise in the oil price above 20 dlrs.
      Neale Goldston-Morris of Sydney broker &lt;Bain and Co Ltd>
  said the move out of Delhi and investment in the sugar industry
  was a sensible one but added that it represented the loss of
  Australian-owned assets to a foreign company.
      "The farm they bought back a few years ago is being sold
  back to the Americans," Goldston-Morris said.
      The Pioneer Sugar investment would make CSR by far the
  largest player in Australia's 850 mln dlr a year sugar industry
  and would give it access to some of the best sugar properties
  and mills in the country, analysts said.
      They said Pioneer Sugar was expected to recommend
  acceptance of the bid through which CSR would benefit from the
  bottom out of a cyclical downturn in sugar prices.
      Sugar prices are forecast to rise to 340 dlrs a tonne next
  season from an estimated 270 dlrs this year, they said.
      Selling Delhi meant CSR has finally quit a damaging
  investment, made in 1981, which has dragged down the company's
  overall performance, analysts said.
      CSR last year wrote off more than 550 mln dlrs in losses on
  what had been a 591 mln U.S. Dlr investment financed entirely
  from U.S. Dollar debt, they said.
      "It was a bad investment for them. They financed it entirely
  with debt, the currency collapsed on them and then the oil
  price collapsed on them," Owen Evans of Sydney broker &lt;Meares
  and Philips Ltd> said.
      Esso not only picked up Delhi's oil and gas output but also
  gained as much as 300 mln dlrs in transferable tax losses
  accumulated in exploration allowances and other concessions.
      Analysts said Esso also gained its first real onshore stake
  in Australia in its first major diversification from the 50/50
  Bass Strait partnership with The Broken Hill Pty Co Ltd
  &lt;BRKN.S>.
      "Esso has been very keen to diversify from the Gippsland
  Basin. They haven't found too much oil in Bass Strait lately
  and Esso needed a large pool of ongoing production,"
  Goldston-Morris said.
  

