Energy players like Origin and Woodside Petroleum, which have gas liquefaction facilities, now seem to be gearing up given the opportunities disseminating from the green energy thrust at the back of advantages of gas over oil. Over the past few years, it has been seen that many oil and gas assets across the globe are on a decaying track with some like US Shale depleting at a faster rate (40% per annum) and some diminishing at around 5 to 8% per annum. Amidst this alarming scenario, electric vehicles (EV) are taking some limelight in displacing oil. At the same time, it is worth noting that while EV penetration is on the upswing, supply is still under pressure owing to low prices and sluggish rate of investment. Renewables alone might not help fully provide the source for power for the EVs and this calls for the energy players that can vest on the advantages with gas.
Woodside Petroleum (ASX: WPL) is tracking well in terms of its projects and development work, and is delivering continued healthy performance with support from its third quarter 2017 result wherein higher than prior quarter sales revenue of $914m and sales volume of 21.1 MMboe were noted. The group particularly executed portfolio LNG sales agreement for delivery of up to 12 cargoes between April 2018 and March 2020. The commencement of LNG production is expected to help the group cherry-pick best of the things in the basket. WPL’s ability with development of new resources and commercial discussions at the Browse Joint Venture are signals of future growth. The market is estimating 60% growth in annual production to 130 million barrels of oil equivalent by 2024.
Similarly, Origin Energy (ASX: ORG), which had indicated for stable quarterly production in its September 2017 report, has completed the 90 day two-train operational test at Australia Pacific LNG. The group has also secured 41PJ of additional gas for domestic market. Its gas supply position is expected to grow market share and support generation.
The long-term view on these stocks look bullish.
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ORG’s Flexible Portfolio (Source: Company Reports)
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