Oil stocks up as global price sentiment improves

From The Oz


AWE’s gas processing plant at Lang Lang, in Victoria. Source: Supplied

Oil and gas stocks roared back yesterday on improved sentiment for global oil prices, delivering their strongest one-day performance in seven years as investors punted that long-awaited global production cuts were finally on the way.

US gas export hopeful LNG Limited led the charge on the ASX 200 energy index, gaining 22 per cent to $2.08, followed by AWE,which rose 14.4 per cent to 84c on the back of a well-timed announcement that its onshore Waitsia-1 conventional gas well in Western Australia had performed well during flow testing. That was also good news for AWE’s 50 per cent non-operating partner in the Perth Basin, Origin Energy, which had flagged selling its interest as part of $800 million of planned asset sales to mend its debt-laden balance sheet, in addition to a $2.5 billion rights issue in which it is in the middle.

Origin shares rose 10 per cent yesterday.

The ASX 200 energy index rose 6.7 per cent, its biggest one-day gain since November 2008, and is now at a one-month high, albeit still down 31 per cent since last November, when the OPEC oil cartel signalled its intention to maintain production despite falling prices.

Driving the stock surge higher yesterday were strong performances in oil prices the previous night.
Brent crude, the global benchmark, rose $US2.67, or 5.4 per cent, to $US51.92 a barrel, while New York crude futures rose $US2.27 to $US48.53.

The price moves came after the US Energy Information Administration said US crude production fell by 120,000 barrels a day in September; revelations that OPEC met with Russia; and Shell chief Ben van Beurden telling a London conference there were signs of recovery in the oil market.

Yesterday, Santos rose 12 per cent to $5.07, Origin rose 10 per cent to $6.10 (back to the price its shares last traded at before it announced the $2.5bn equity issue last month), Beach Energy rose 8 per cent to 52.5c and Woodside Petroleum rose 6 per cent to $32.10.

AWE outperformed the index after it said its Waitsia-1 well flowed gas at a rate of 24.7 million standard cubic feet per day, constrained by a 60/64 inch choke ...

And if the macro environment really is improving and oil prices stabilise, imagine what a BTA (or 2) might do. Not long to wait with some key dates coming up ...

~4/11/15 - KBR Q3 results (EPC prior?)
4/11/15 - GNR Q3 results & Strategic Update
11/11/14 E.ON Q3 results
16/11/15 - FEIS
19/11/15 - AGM

Go LNG!