Howdy all,
It's been a few months since my last post, but I do my best to read all NWE threads when I can and of course I have never taken my eye off what is happening with our precious NWE, and all that is happening not only in the Perth Basin but also the global energy markets.
Straight up, I can honestly say that nothing has changed in my view that 2022 will be a transformational year. Some here may feel the next few months will be hibernation mode for NWE but I don't think this will be the case. I never assume the only potential catalysts for value accretion are per the company's most recent investor preso. i.e Ringneck seismic results in June and first appraisal well to spud in Oct. There is, IMO, quite a few potential catalysts that can trigger a significant re-rate of NWE. Some developments that are happening across the PB as we speak and some things that will literally come out of left field. There will of course be traders that have exited or be looking to exit with the view to buying back in later this year... or when the "time is right"... just got to get the timing right! In any event, I am more than happy to wait another 3-6-12-18 months... after all, having been in NWE for 12 years now... what's a little bit longer to realise that "lifetime" opportunity that many of us are here for.
So since my last post, the good news is NWE is cashed up and completely funded for all planned E&P activities until Dec 2023. That is very significant and takes any funding pressure off the SP. NWE has never had a stronger balance sheet. Sure, I would have liked the CR to have been completed closer to 5c rather than 3c but what's done is done and move forward we shall.
Many here are likely investors in some other PB players...i.e. STX, WGO, TPD, BPT. I take great comfort in some of the news that STX has released recently regarding excellent flow rates in their current drilling campaigns, and with more activity to come not just in WE but across their southern permits. I think this bodes very well for all PB players as STX clearly said with all the recent onshore gas finds of late, the looming forecasted gas shortage for WA will likely be avoided. If the WA govt can be convinced the domestic market is well covered, there is every chance they will reverse the blanket export moratorium... and it would be game on for all & sundry. And if that were to happen, well what a huge SP catalyst for NWE that would be.
The reality is the world is very energy hungry and as much as the climate action / ESG movement is building momentum and activists would love for oil & gas to "go away overnight", globally we are still consuming 100 million barrels of oil PER DAY and something like over 132TCF of gas PER YEAR. Decarbonisation is very complicated and will take time.... and let's not forget how many wars have started over energy security.
So yes, lots going on in the gas / energy markets across Australia, the Asia region and globally, amplified by the conflict in Europe. You may have seen that Biden last month promised to increase LNG shipments to the EU to 50 billion cubic meters per year by 2030 – more than double the amount sent there from the USA in 2021. IMO, LNG will be a highly attractive commodity for years to come, regardless of all the pledges made by the OECD countries to reduce emissions. It really is a very complex balancing act.
Coming back to NWE... and other potential catalysts... an obvious one is MIN / NWE announcing that they have secured a drill rig for the upcoming 3-4 well campaign... which really is just around the corner - hoping they can spud in Oct 2022. Another catalyst could be NWE entering into a GSA. With domestic gas prices on the increase, forecast to possibly equal the east coasts $10+GJ... well this would make NWE of greater interest for investors... but of course if no GSA... then great from an M&A prospect with no gas yet committed for sale.
And of course a major catalyst will be any M&A activity in the PB... which IMO is only a matter of time. If some of the trading activity is anything to go of late then I believe we will see several larger players make a move in the next 6-12 months. Woodside have talked only last week about re-visiting the 2 mega offshore gas projects of Sunrise (8TCF+) and Browse (12TCF+) but both are highly complicated ventures, caught up in huge cost overruns, complexities with gas impurities and other geo-political sensitivities. IMO a more immediate and logical path will be the multi TCF onshore gas fields of the PB... to feed both domestic demand and the booming LNG export... especially important to feed the impending void for 2 of the 5 NWS's LNG trains. Third-party agreements have been struck with Waitsia (BPT) and Pluto but these only provide a stopgap as spare capacity is forecast to increase to more than 8 mmtpa by 2030.
So yes, lots going on in the PB and global energy markets... and Australia is well placed to make a very valuable, very strategic contribution. I am very comfortable with my investment in NWE and have full faith in the JV with MIN. I suspect the next few months will be filled with some very interesting, very positive developments... I look forward to posting again soon...
GLTA
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