If you are searching for a way to invest in the energy sector, then it could pay to listen to what Morgans is saying.
That's because it has just named two ASX energy shares that it thinks could be buys for investors with a high tolerance for risk. Here's what it is recommending to clients:
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Beetaloo Energy Australia Limited (ASX: BTL)
The first ASX energy share that Morgans is positive on is Beetaloo Energy. Until earlier this week, it was known as Empire Energy Group Limited (ASX: EEG).
It is an energy explorer that holds 28.9 million acres of highly prospective exploration tenements in the McArthur Basin and Beetaloo Sub-basins in the Northern Territory.
Morgans highlights that it has been a big week for Beetaloo. It has announced the commencement of Carpentaria-5H hydraulic stimulation operations at the Beetaloo Basin and a neighbour has posted strong flow rates from its own operation. Morgans said:
A big week for Beetaloo Energy (previously called Empire Energy) as it kicks off the hydraulic stimulation of its key Carpentaria-5H well, just as a neighbour posts a stellar flow rate from its own in the basin. The Beetaloo Basin peer (Falcon/Tamboran JV) reported a flow rate of IP30 of 7.2mmcfpd gas from 1,671m lateral from their Shenandoah South 2H ST1 well announced this week.
We track BTL's progress with strong interest, particularly given the largescale C-5H well holds the potential to materially demonstrate play deliverability while testing possible upside scenarios through the upscaled well/completion designs. Significant cash of A$40.5m sees Beetaloo well supported through its pilot program.
The broker has a speculative buy rating and 73 cents price target on its shares.
Deep Yellow Ltd (ASX: DYL)
Another ASX energy share that has caught the eye of Morgans is Deep Yellow.
It is feeling increasingly bullish on the uranium producer thanks to some big industry news this week. The broker explains:
Following a US$200 million raise by the Sprott Physical Uranium Trust (SPUT) we are increasingly optimistic regarding the growing institutional confidence in the uranium investment case and confirms SPUT now has ample funding to purchase material volumes from the spot U3O8 market. The physical uranium spot market remains shallow and thinly traded.
Inflows into SPUT typically translate into immediate buying pressure, reinforcing upward momentum in spot prices with relatively small capital movements. We note the spot price is highly correlated to Uranium equity performance despite being a small portion of the traded market. In response to rising spot prices, increased buying activity, and improved macro sentiment, we have reassessed our uranium sector valuations to reflect stronger fundamentals and more durable price support.
In response, Morgans has retained its speculative buy rating with an improved price target of $1.92.
