2 big name oil and gas stocks I’d buy for the LNG export boom

Next month’s reporting season will be the first time we get to see the beginning of sales from one of the three major LNG projects that will expand the revenues of two big name companies.

In pole position, the PNG LNG project started shipping LNG in late May and the other two in Queensland, the GLNG project and the Australia Pacific LNG (APLNG) project, are due to start shipping soon. Woodside Petroleum Limited (ASX: WPL) already is benefiting greatly from its operational projects offshore near WA, but now it is time for Origin Energy Limited (ASX: ORG) and Santos Ltd (ASX: STO) to shine.

Both expect to have a step-change increase in earnings from their respective projects, but there are other perks that shareholders could look forward to.

Origin Energy

Investors may know Origin as a gas and electricity utility provider, however it is deeply involved in exploring and developing oil and gas resources. It is part-owner in the APLNG, which is scheduled to start exporting LNG in mid-2015.

Its retail electricity business has softened due to increased solar power generation and general energy conservation, so LNG export revenues will bolster overall earnings. An extra perk is the expected rise in the price of gas because overseas market prices are much higher than domestic prices here. Demand for gas will also rise domestically as the states try to lock in supply.


Santos has the enviable position of being involved in both the PNG LNG and the GLNG projects. Its next business report should show how the PNG LNG’s first export sales are proceeding and give investors better projections of the coming year’s revenue. The GLNG project is also running on schedule to start exports in 2015.

Both Santos and Origin are actively seeking more resources in the Cooper Basin region in SA. They are teaming up with companies like Beach Energy Limited (ASX: BPT) and Drillsearch Limited (ASX: DLS), which are greatly increasing their oil production recently from newly discovered resources. Santos will also benefit from any gas price rises from the export markets.

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Santos has a higher price/earnings ratio (25) than Origin Energy (21), but analyst consensus forecasts have Santos growing earnings potentially at a higher rate over the next two years. Origin Energy has a stable utilities service business, yet recent weakness means a possible drag on earnings in the near-term. Origin does currently pay a higher dividend yield (3.5% vs 2.2%). I would prefer Santos for exposure to the LNG export market.

However, there's one more company that could be an even better buy for growth and income. This small-cap ASX stock offers a 7% grossed-up dividend yield and strong track record for growth.

You can get its name and code of this ultra-promising stock for FREE! Just click here to download your free copy of "The Motley Fool's Top Dividend Stock for 2014-2015" today.

Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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