The link wouldn't open for me but read this in the AFR. Is it the same article?
https://www.copyright link/companies/energy/why-oil-and-gas-stocks-are-a-bargain-20210913-p58r59Extract from the article;
Woodside’s share price is ‘mind-boggling’
Asian spot LNG prices rose past $US20 per million British thermal units last week,
according to Reuters, meaning they have risen ten-fold since their record lows just over a year ago.
Prices, which hit a low of less than $US2/MMBTU in the June quarter last year, could still head higher given the looming Northern Hemisphere winter, the peak buying season for LNG in major markets such as Japan, South Korea and China.
The global gas and LNG supply squeeze “sets the stage for record winter prices”, said Lindsay Schneider, an analyst and consultant at RBN Energy.
Meanwhile, Brent oil prices are trading at about $US73 a barrel, up from about $US40 about 12 months ago.
However, the share prices of the major oil and gas producers have failed to respond, unlike in past cycles.
Woodside has slid more than 20 per cent in the past six months, while Santos and Oil Search are down 10-15 per cent.
“It is astonishing; that Woodside’s share price is below $20 is in our opinion mind-boggling.” said Simon Mawhinney at value investor Allan Gray, which holds stakes in Woodside, Oil Search and Origin Energy.
“These companies would be making very, very significant amounts of money at the moment, which I feel is not at all factored into the share prices.”
Stock-specific factors are playing a part, with Woodside expected to issue almost 1 billion new shares to pay for the acquisition of BHP’s petroleum business under
the $41 billion merger deal announced last month. That is expected to create a stock overhang as some BHP investors sell their allocation.
Santos and Oil Search, meanwhile, have
agreed on their own scrip-based merger that is due to go before Oil Search shareholders in late November, in effect tying their share price movements to each other in the interim.
More broadly, analysts point to an escalation of environmental, social and governance issues affecting the sector amid heightened awareness about the climate impact of natural gas, which has been particularly evident this year.
But Mr Mawhinney said the sharp rally in coal stocks would suggest that the problem in the oil and gas sector was not just ESG related.
Five-year highs in prices for premium Australian coking coal and 10-year highs in thermal coal prices have propelled
stocks such as Whitehaven Coal and Coronado Coal up more than 100 per cent since May in defiance of ESG pressures.
Still, Mr Sala Tenna said he still believed the issue was indeed mostly due to ESG factors, but that the coal sector was well ahead of gas in terms of the impact on the share register.
He said ESG investors had essentially already sold out of coal producers, leaving the stocks able to re-rate, whereas in oil and gas the shake-up of the shareholding base was still under way.
“Coal ran its course probably 12, 24 months ago, when a lot of the ESG-conscious and the ESG-focused funds headed for the door, and then you’re left with people who were prepared to pick that up as an investment,” Mr Sala Tenna said.
“I do think we’re seeing the ESG brunt being worn by the E&P [exploration and production] guys now.”
(20min delay)