Where would we be without electricity, petrol and gas?
Each are invaluable in today’s society and will continue to be for many, many years to come. But it’s not until we go camping or fail to pay the bills that we realise just how reliant we are upon electricity and energy.
Many investors continue to overlook the resources sector and the potential for Australian companies to capitalise on the shortfall in energy supply both domestically and internationally in the near future. With that in mind, here are four promising oil and gas companies you should have on your watchlist and could even consider adding to your portfolio today.
The first of which is Santos Limited (ASX: STO). One of Australia’s biggest oil and gas companies. Although its share price appears to be trading on high multiples, it deserves its current price tag. With massive amounts of production set to come online in the next two years thanks to the completion of both GLNG and PNG LNG projects, earnings can be expected to jump higher.
Beach Energy Limited (ASX: BPT) is an oil and gas company which is focused on exploration and development in the Cooper/Eromanga basins. It recently provided its quarterly activities report which stated it expected revenues to total $1 billion in FY14 on the back of record quarterly production. Currently Beach trades on forecast FY14 earnings of just 8.5.
Senex Energy Ltd (ASX: SXY) is my favourite mid-tier Australian oil and gas producer. Its shares have been dumped around 10% the past two days as a result of its quarterly production report. I’m not sure exactly what spooked the market, but it appears investors responded to management’s expectation of FY14 total oil production coming in at the bottom end of its forecast range of between 1.4mmbbls and 1.6mmbbls. This resulted from lower than expected pressure at the company’s 60% owned Growler oil field. In my opinion, Senex remains an excellent long-term buy.
In the USA, Sundance Energy Australia Ltd (ASX: SEA) is another exciting oil and gas play. It has a number of promising interests in top locations such as Greater Anadarko, Denvur-Julesburg, South-Texas – Gulf Coast and Williston Basins. Its quarterly activities report released earlier this week added to the successful 2013 calendar year with a 285% increase in average daily production. As a result, revenues jumped 247% compared to this time last year.
Each of these four oil and gas companies deserve to be on your watchlist. They have increasing production and good balance sheets which will enable them to continue exploration and pay decent dividends into the foreseeable future.