Oil and gas shares to buy
In the following article we talk about why the oil and gas sector has performed so well of late and outline some of the best oil and gas shares to buy in the Australian sphere.
The oil and gas sector has been one of the hottest sectors in Australia in recent times, partly due to the emergence of coal-seam gas (otherwise known as coalbed methane) as a financially viable energy source.
Gas is hardly a new story, but it has significant desirability these days due to the fact that it has low emissions compared to coal. Given this, gas looks certain to remain a hot commodity for the foreseeable future.
Once seen as the bane of coal miners, the demand for coalbed methane has grown exponentially.
For centuries, coalbed methane was a significant problem for coal miners, causing explosions and deaths from asphyxiation.
More recently, given that the prospects for traditional fossil-fuel reserves are diminishing, major companies have increased the hunt for new, unconventional resources, particularly coalbed methane.
Large, international companies are currently expanding aggressively into coalbed methane and other unconventional gas resources. They are also in a foot race to be the first to export the expertise and technology developed in recent years.
This theme is highlighted by the $5.9 billion joint venture formed between the US’ ConocoPhillips and Origin Energy in 2008.
For Australian investors who want a piece of the action, the starting point is sector heavyweight Woodside Petroleum (WPL).
Woodside is Australia’s biggest pure oil and gas company, with its key interest the North-West Shelf joint venture, Australia’s greatest natural resource project. The North-West Shelf JV is the third largest LNG producer in the world.
Woodside’s operations encompass the production of liquefied natural gas, domestic gas, condensate, crude oil and liquefied petroleum gas.
Next on the shopping list is Santos (STO). Santos is Australia’s second biggest pure oil and gas company. Santos has significant oil and gas operations, producing natural gas, liquefied natural gas, crude oil, ethane, and liquefied petroleum gas both for domestic and export markets. Santos’ main interest is presently in the Cooper Basin, but the company has plans to build a 3-4 Mtpa LNG processing plant at Gladstone in Queensland, at a total cost of $5-7 billion.
Another solid performer in the sector is Oil Search (OSH). Oil Search is principally involved in the exploration, development and production of oil and gas in PNG. Oil Search has also diversified into the Middle East, with production coming from their Nabrajah field in Yemen.
In the junior oil and gas space there are a number of stocks currently on the radar that are benefitting from the recent interest in the sector.
They include Australian Worldwide Exploration (AWE), Beach Petroleum (BPT), Roc Oil (ROC) and Tap Oil (TAP).
All of these junior players have gas interests, although they are predominantly focused on oil production.
Depending upon what sort of exposure you are looking for, whether it be blue-chip value stocks or more speculative growth stocks, the above list is a good starting point for anyone who wants to buy oil and gas shares.