Oil and gas are two commodities which will be in demand for many years into the future. China knows it. Russia knows it. So does the USA.
But Australians are not paying enough attention to our own oil and gas industry.
From the Timor Sea to South Australia and Bass Strait, we have some truly world-class deposits. In the S&P/ASX200 Index (INDEXASX: XJO) (ASX:XJO) there are three producers vying for a spot in your portfolio.
The first is BHP Billiton Limited (ASX: BHP) who, according to statista.com, was the world's largest mining company as of March 2014 – with a market capitalisation of $US173.5 billion. BHP is focused on the production of four key commodities, namely iron ore, petroleum, copper and coal. With a much more diversified commodity base, it is perceived as less risky than counterpart Rio Tinto Limited (ASX: RIO), since it can counteract falling commodities by focusing on its other products.
Santos Ltd (ASX: STO) is another resources heavyweight with a proud history on Australia's mainland. With the PNG LNG project now online and the GLNG project over 80% complete and on track for first LNG production in 2015, the company is hoping to more than double cash flows in the next two years whilst revenues and profits are also expected to increase significantly. Unfortunately, Santos appears to have all its growth priced into its shares. As a result, I believe Santos is a hold.
The last company which I think deserves your attention is Senex Energy Ltd (ASX: SXY), which as Motley Fool writer Regan Pearson highlighted, is probably one of the best priced energy companies on the ASX. The $750 million company recently announced significant increases in oil reserves yet the share price has remained largely flat. With key infrastructure located near its operations, Senex will be able to continue to keep costs low and with no debt on the balance sheet, it's a potential cash cow waiting to be scooped up.
Our top 3 high-risk/high-reward resources stocks – Yours Free!
Some financial commentators are calling for a market correction saying Australia's stock market is in bubble territory. However as long as BHP, our biggest resources company, is at its current price, I'll continuing to be interested because I know it has a bright future ahead.
