While the oil price forecasts seem to be taking a bullish stance in the coming year, below are the two oil and energy plays that have gained momentum in the past and continue to perform well with respect to the industry dynamics.
Origin Energy Ltd
Efforts to reduce debt:Origin Energy Ltd (ASX:ORG) has released the October drilling report by Beach Energy, wherein the third Cooper Basin JV drilling rig has been noted to commence with success at the Namur-5 gas appraisal well. ORG has 13.19% stake in this project. Meanwhile, ORG in the September quarter has reported for 58% growth in the quarterly gas production revenue from a year ago period, with increased output from the Australia Pacific liquefied natural gas (APLNG) project and higher gas prices.APLNG has shipped 32 cargoes in the quarter and boosted the production by 1.8 petajoules equivalent (Pje). APLNG is expected to provide approximately 30 percent of total east coast gas market demand in 2018, as well as meet its export contract commitments. The revenue grew to A$678.6 million ($521.50 million) in the September quarter from A$429.7 million in the year-ago quarter, beating UBS' forecast of A$655 million. ORG has posted the quarterly production of 89.1 PJe, that was in line with the June 2017 quarter, reflecting a sustained level of production at APLNG after the 90 day two-train operational test. Moreover, during the quarter the company sold its natural gas unit, Lattice Energy, to Beach Energy for A$1.5 billion ($1.2 billion) to reduce debt. As part of the deal it secured access to a portion of Lattice Energy's future east coast gas production under long-term gas supply agreements to support its domestic gas business.Meanwhile, ORG stock has risen 12.38% in three months as on November 01, 2017. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $8.12
September Quarter Production Report (Source: Company Reports)
Oil Search Ltd
Acquiring Assets in the Alaska north slope: Oil Search Ltd (ASX:OSH) has announced about acquiringa number of oil assets in the Alaska North Slope from privately-owned companies Armstrong Energy LLC and GMT Exploration Company LLC for US$400 million. The assets include a 25.5% interest in the Pikka Unit and adjacent exploration acreage and a 37.5% interest in the Horseshoe Block. These leases include approximately 500 million barrel (gross) in the Nanushuk and satellite oil fields, and Nanushuk is one of the largest conventional oil fields discovered in the US in more than 30 years. Moreover, the purchase price equates to US$3.1 per barrel, and has the potential resource upside of reducing the cost to US$1.3 per barrel. This dealis compared very favorably with global acquisition benchmarks.The acquisition represents a measured entry into an area that has the potential to grow materially through the development of discovered resources. OSH is seeking to acquire the oil interests to create a more balanced portfolio which is less exposed to one commodity and one country. Lately, the target for P'nyang South 2 well was said to migrate 2C (proven and probable) gas resource volumes to the 1C (proven) category along with appraising 2C resource upside potential identified in the south-eastern part of the field. The group has now proceeded with final pre-spud preparations at P'nyang South 2 well and drilling commenced in October.OSH stock has risen over 8% in three months and we give a “Hold” recommendation on the stock at the current price of $7.27
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