The S&P/ASX 200 Energy Index (ASX: XEJ) rose by 25.5% over the 2022 financial year. That's an impressive outperformance on the benchmark S&P/ASX All Ordinaries Index (ASX: XAO), which lost 11% in value over the same period.
The commodities boom helped ASX energy shares in FY22. The price of crude oil rose by about 40% and the price of natural gas increased by about 55%.
Plus, geopolitical unrest over the Russian invasion of Ukraine, and lockdowns in China, caused many supply chain issues which boosted the fortunes of many ASX energy shares.
But not every share had a great time in FY22.
Here are the five worst-performing ASX energy shares for FY22, according to Capital IQ figures.
- Washington H. Soul Pattinson and Co Ltd (ASX: SOL) down 29.7%
- Wesfarmers Ltd (ASX: WES) down 28.5%
- Carnarvon Energy Ltd (ASX: CVN) down 26.4%
- Energy Resources of Australia Limited (ASX: ERA) down 25.5%
- Strike Energy Ltd (ASX: STX) down 22.7%.
Image source: Getty Images
Why these ASX energy shares tanked
Capital IQ categorises investment house Soul Patts as an ASX energy share because it owns 39.9% of New Hope Corporation Limited (ASX: NHC), which is a diversified energy company in southeast Queensland.
As my fellow Fool Tristan reported this week, Soul Patts has fallen out of favour with ASX investors. While New Hope had a great year — its share price doubled in FY22 — other ASX shares that Soul Patts owns took a dive. Example: Brickworks Limited (ASX: BKW) — its share price dropped 26%.
The conglomerate Wesfarmers is also categorised as an ASX energy share because of its chemicals, energy, and fertilisers division. One of its more recognisable brands is gas producer and retailer Kleenheat.
Tristan reported on the near 30% drop in the Wesfarmers share price in FY22 this week, too.
Wesfarmers reported in its half-year FY22 results that net profit after tax (NPAT) had fallen 14.2% to $1.2 billion. This was largely due to store closures and trading restrictions during COVID-19.
What about Carnarvon and Energy Resources?
Carnarvon Energy is an oil and gas explorer. It's not yet generating revenue, and this combined with the rising interest rate environment has probably put some investors off.
In January, Carnarvon announced that its drilling at the Buffalo-10 well found the oil column to be residual and uncommercial. In April, the company announced that drilling at the Apus-1 well did not yield a commercial hydrocarbon pool.
Energy Resources of Australia is one of the nation's largest uranium oxide producers. It operated the Ranger mine, Australia's longest continually operating uranium mine, in the Northern Territory.
The Energy Resources share price has been in a steady decline since September 2021. That's also when the company announced cost and schedule overruns with its Ranger Project rehabilitation program.
The program is being undertaken as part of the mine's closure. In October, the company told the ASX the overruns would be "material" but they weren't yet ready to reveal numbers.
The following month, the company's CEO and managing director Paul Arnold resigned to take a job at Rio Tinto Limited (ASX: RIO). He was formally replaced in February 2022 by Brad Welsh.
In February, the company said the rehabilitation was going to cost between $1.6 billion and $2.2 billion — up from the initial estimate in 2019 of $973 million.
It also said the estimated completion date could be as late as the fourth quarter of 2028.
That same month, Energy Resources reported its full-year results for FY21. It recorded a net loss after tax of $650 million for 2021 compared to a net profit after tax of $11 million in 2020. A big part of this was the increasing costs of the rehabilitation program.
And the Strike out?
The Strike Energy share price experienced a massive 56% decline in value between August and December 2021. It recovered in 2022 but remained in the red by more than 22% at the end of FY22.
The decline in August began after the company announced problems at its West Erregulla 5 (WE5) well.
In October, Strike disappointed the market with its maiden Perth Basin Gas Reserve, which revealed gross gas reserves "significantly below" the company's guidance, as my fellow Fool James reported.
Although Strike released a number of positive announcements, it appears investors lost interest in the ASX energy share in the first half of FY22 before reengaging in the second half.
