ASX-Listed Oil & Gas Exploration Companies Beat Global Explorers with Superior Benchmark Adjusted Returns

  • Dec 05, 2019 AEDT
  • Team Kalkine
ASX-Listed Oil & Gas Exploration Companies Beat Global Explorers with Superior Benchmark Adjusted Returns

Natural gas prices witnessed spike in the recent months over the increased demand in the northern hemisphere due to the cold weather and the shift in global stance towards the clean energy sources. The demand for natural gas supported the Australian oil & gas exploration companies due to their significant contribution in the LNG industry.

The ASX oil & gas explorers are the backbones of the Australian LNG industry, which exported 75 million tonnes of LNG in 2018-19 in the global market. The higher export from the ASX oil & gas exploration companies and their expanded nameplate capacity is anticipated by the industry experts to fan Australia to surpass Qatar in the LNG exports.

To gain insight into the massive LNG industry in Australia, and to know more about the new projects, nameplate capacity, future forecasts, etc., Do Read: Australia To Jostle Qatar for the LNG Crown; How Long Would the Reign Last?

While the LNG exports from Australia are witnessing exponential growth and are predicted to boom further with new projects coming along, the current demand remains supportive for the ASX oil & gas exploration companies, which in turn, had made some of the oil & gas exploration companies-star performers in the recent months.

However, despite decent demand in the international market, the LNG supply glut is keeping a check on the gains of many global oil & gas explorers along with some of the Australian oil & gas exploration companies.

The S&P Commodity Producers Oil & Gas Exploration & Production Index, which tracks the stock performance of the global oil & gas explores has delivered negative returns over the long-term and small negative returns over the short-term.

S&P Commodity Producers Oil & Gas Exploration & Production Index

The top 10 constituents of the index, selected as per the current market capitalisation, are as below:

(Source: S&P Dow Jones Indices)

On the YTD basis, the index delivered a return of -4.53 per cent and a return of -2.73 per cent on a QTD basis. The index also delivered a negative return of 16.81 per cent on a yearly basis.

While the global oil & gas explorers have delivered negative returns, the Australian oil & gas explorers are performing relatively better.

Let us now look at the Australian oil & gas exploration companies, that are performing relatively well as compared to the S&P Commodity Producers Oil & Gas Exploration & Production Index.

Beach Energy Limited (ASX: BPT)

BPT is an ASX-listed oil & gas exploration, development and production company. The production segment of the company includes the Cooper basin, which includes oil and gas sales from Australian production. The company is engaged in sales of gas and hydrocarbon liquids via secured sales contracts from energy retailers and industrial users.

Operational Metrics

In 2019, the average crude oil production of the company stood at 18,852 barrels per day, which remained over 21 per cent higher against the previous year average production of 15,574 barrels a day. The overall crude oil production for the year stood at 6,900,000 barrels, up by 21.1 per cent against the previous year overall production of 5,700,000 barrels.

The company produced 60 per cent higher gas liquids in 2019 with an average gas liquids production of 10,929 barrels a day as compared to 6,831 barrels a day in 2018. The overall gas liquids production stood at 4,000,000 barrels, up by 60 per cent against the previous year production of 2,500,000 barrels.

In the cubic metre terms, BPT produced 3,044,400,000 cubic meters per day of natural gas, which marked an increase of 72.3 per cent against the previous year natural gas production of 1,767,168,000 per day. BPT realised 3.7 per cent higher prices per cubic metre of the natural gas against the realised price of $0.23 per cubic metre of natural gas in 2018.

On a YTD basis, the stock of the company delivered a return of 88.37 per cent and a return of 40.06 per cent over the last six months. On a yearly basis, the stock delivered a return of 47.72 per cent.

Post adjusting the return of the company with the total return delivered by the S&P Commodity Producers Oil & Gas Exploration & Production Index, BPT delivered a total return of 77.60 per cent on a YTD basis.

Benchmark Adjusted YTD Returns (Source: Thomson Reuters)

Senex Energy Limited (ASX: SXY)

SXY is an ASX-listed oil & gas exploration company with segments including Surat/Bowen basin and Cooper through which the company produces over one million barrels of oil annually from over ten operated oil fields.

In 2019, the average crude oil production of the company stood at 2,131 barrels per day, which remained 4.0 per cent higher against the previous year average production of 2,049 barrels a day. The overall crude oil production for the year stood at 780,000 barrels, up by 4 per cent against the previous year overall production of 750,000 barrels.

In the cubic metre terms, SXY 73,065,600 cubic meters per day of natural gas, which marked an increase of 377 per cent against the previous year natural gas production of 15,292,800 per day.

Over the last six months, the stock of the company delivered a return of 11.86 per cent and a return of 24.53 per cent on a YTD basis. However, over the last one year, the stock delivered a return of -15.38 per cent.

Post adjusting with the return of the benchmark index, i.e., the S&P Commodity Producers Oil & Gas Exploration & Production Index, the stock of the company delivered a total return of 22.50 per cent on a YTD basis.

There are many other oil & gas explorers such as Strike Energy Limited (ASX: STX) listed on the Australian Securities Exchange that have delivered massive return despite the natural gas and LNG supply glut in the global market. STX delivered a return of 126.67 per cent over the last six months and a return of 100.0 per cent on a YTD basis.

Post adjusting with the benchmark index return, the index delivered a total return of approx. 119.70 per cent on a YTD basis.

While the global oil & gas explorers are facing issues concerning to the oversupplied natural gas market, the high demand and lower supply of natural gas in Australia amid expanding LNG industry have supported the prices of ASX oil & gas explorers.

Apart from that, the increased energy consumption in Australia is also supporting the sales of the oil & gas explorers, which, in turn, is supporting the ASX listed oil and gas explorers.

To know more about the energy consumption trends in Australia, Do Read: Australia’s Energy Consumption Gushes; While ACCC Nods in Consent for Liberty’s Acquisition by Viva

While the increase in energy consumption and lower domestic supply of natural gas is among the many reasons which are supporting the ASX oil & gas exploration companies, the recent stance to shift towards the renewable and cleaner source of energy is also playing a crucial role, with key players like Origin Energy Limited (ASX: ORG) trying to shift towards the natural gas for energy generation.

To Know More, Do Read: Origin Energy Joins the Cause of Reducing Carbon Footprints

In the status quo, the government is also supporting the clean and renewable energy sources through various programs, which could further support the ASX oil & gas exploration companies.

To get well acquainted further with the energy scenario in Australia, and to gain further insight into the changing trend towards cleaner energy in which natural gas plays a pivotal role read- Australian Government Policies and Programs To Attain A Net-Zero Carbon Emission.


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