Bell Potter has just named one ASX energy stock that it believes could rise over 60% from current levels.

Which ASX energy stock?

The stock that Bell Potter is recommending to clients is Comet Ridge Ltd (ASX: COI).

It is an energy exploration and development company focused on coal seam and conventional gas projects in eastern Australia.

Bell Potter notes that the company has announced a deal to acquire Santos' 42.86% interest in the Mahalo Joint Venture coal seam gas project. This takes its ownership to 100%.

Comet Ridge is paying $40 million on financial close and a further $20 million on meeting production milestones.

The broker is positive on the deal and believes it will simplify its structure. It explains:

The transaction will vastly simplify COI's Mahalo acreage, increasing development optionality and overall project funding capacity. COI previously held ground in the Mahalo JV and 100%-owned positions in adjacent permits; COI will move to owning all of the coal seam gas permits 100%. The acquired Mahalo area is fully permitted, FEED is nearing completion and Jemena is working on pipeline FEED.

Mahalo is expected to initially produce up to 60TJ/day into the east coast gas market with FID targeted for mid-2026. STO viewed the asset as non-core and not a near-term priority; COI will now have control to progress that asset under its own timeline. COI is in discussions with the Northern Australia Infrastructure Facility for debt financing and the simplified structure could now attract a strategic partner and gas prepayments.

Big potential returns

According to the note, the broker has responded to the news by retaining its speculative buy rating and 21 cents price target on its shares.

Based on its current share price of 13 cents, this implies potential upside of 61% for investors over the next 12 months.

Overall, the broker feels that Comet Ridge could be a good option for investors with a high tolerance for risk. It concludes:

Our COI valuation is underpinned by COI's Mahalo projects; we are yet to apply the acquisition of STO's Mahalo JV interest. The Mahalo JV was awarded a Petroleum Lease in mid-2020, making it one of the few development-ready gas projects capable of delivering near-term supply.

We are positive on Australian east coast gas markets, with supply shortfalls likely to support higher prices. COI is a gas development company with prospective operations and cash flows only. Our Speculative risk rating recognises this higher level of risk and volatility of returns.

The post Why this under-the-radar ASX energy stock could rise 60%+ appeared first on The Motley Fool Australia.

Shares in the S&P/ASX 200 Index (ASX: XJO) energy stock closed yesterday trading for $6.11. In morning trade on Thursday, shares are swapping hands for $6.04 apiece, down 1.2%.

For some context, the ASX 200 is down 0.2%, while the S&P/ASX 200 Energy Index (ASX: XEJ) is down a steeper 1.3% at this same time.

Now, here's why the Aussie oil and gas company is grabbing investor attention today.

Plunging oil price pressures Santos shares

The first reason Santos shares are under the microscope, and slipping, today is the sharp overnight fall in global oil prices.

West Texas Intermediate (WTI) oil is trading at its lowest levels since February 2021, currently fetching $US$55.27 per barrel.

The Brent crude oil price is also trading at near five-year lows, with Brent crude oil falling 2.7% overnight to US$58.92 per barrel.

As you'd expect, this isn't just throwing up headwinds for Santos. Woodside Energy Group Ltd (ASX: WDS) shares, for example, are down 1.8% today while Beach Energy Ltd (ASX: BPT) share have slipped 0.9%.

Goodbye to $363 million of debt

The second reasons Santos shares are on ASX investors' radars today is the company's early debt repayment.

This morning, Santos announced it has accelerated the final repayment under the PNG LNG project finance facility, bringing the facility to a close. Santos made its final $363 million payment six months ahead of the June 2026 repayment deadline.

Commenting on the early debt repayment, Santos CEO Kevin Gallagher said:

Final payment of the PNG LNG project financing facility strengthens Santos' balance sheet at a time when our major development projects enter production, positioning us to deliver sustainable long-term value for shareholders.

Santos has no further scheduled debt maturities in 2026.

Santos shares cashing up on divestments

Which brings us to the third reason Santos shares are grabbing ASX investor interest today.

This morning the company also reported that it has executed a conditional sale and purchase agreement to divest its 42.86% operated interest in the Mahalo Joint Venture, located in Queensland's Bowen Basin, to Comet Ridge Ltd (ASX: COI).

The divestment will see Santos receive $40 million up front with up to $20 million in contingent payments linked to production milestones.

Santos noted that it also recently completed the divestment to Eni Australia of its 42.71% interest in the Petrel fields and 100% in the Tern fields in the Bonaparte Basin offshore Northern Australia.

"I am pleased to agree commercial terms with our existing partners that will allow them to progress the development of these assets, unlocking future supply for the Australian domestic gas market," Gallagher said.

He added:

These two transactions reflect our commitment to capital discipline to deliver sustainable and competitive shareholder returns.

Santos' near-term priorities are to deliver Barossa and Pikka, and to progress the next phase of growth opportunities that leverage our existing operating footprint.

With today's intraday dip factored in, Santos shares are down 6.1% since this time last year.

The post 3 reasons everyone is talking about Santos shares today appeared first on The Motley Fool Australia.

Four ASX shares that are rising more than most today are listed below. Here's why they are climbing:

Comet Ridge Ltd (ASX: COI)

The Comet Ridge share price is up over 5% to 20 cents. This morning, this energy explorer revealed that it has been awarded a $5 million grant from the Queensland Government to undertake a pilot test in Comet Ridge's 100% held Mahalo East block. The company's managing director, Tor McCaul, said: "Comet Ridge is very pleased to be the recipient of a Frontier Gas Exploration Grant, a further endorsement of the significant position that Comet Ridge has established in the Mahalo Gas Hub area within the Bowen Basin."

Kingsgate Consolidated Limited (ASX: KCN)

The Kingsgate Consolidated share price is up 10% to $1.74. This has been driven by the release of an update on the company's Chatree gold mine in Thailand. That update reveals that Plant 1 at the gold mine has now been permitted to operate. This follows a successful inspection by the Department of Primary Industries and Mines. As a result, full commissioning of Plant 1 will commence immediately, followed by a ramp up to full operations.

News Corporation (ASX: NWS)

The News Corporation share price is up almost 4% to $38.72. This morning, analysts at Goldman Sachs responded positively to the media giant's quarterly update. The broker said: "Earnings were largely in-line with our prior expectations (EBITDA +1% vs. GSe), with strength in Digital Real Estate, books and News Media offsetting a softer Dow Jones & Other." In light of this, the broker has reiterated its buy rating with a $44.70 price target. This implies potential upside of over 15% for investors from current levels.

St Barbara Ltd (ASX: SBM)

The St Barbara share price is up 12.5% to 27 cents. Investors have been buying this gold miner's shares following the release of an update on its Simberi operation. St Barbara advised that its concept study supports 10+ years of production at Simberi. It estimates average annual gold production rising from 70,000 ounces to 75,000 ounces by FY 2027 and then to 230,000 ounces through to FY 2034. This will lead to total gold production of 2 million ounces. CEO Andrew Strelein said "We now have a road map we can pursue that can take us to increased, more profitable production at Simberi into the mid-2030s."

The post Why Comet Ridge, Kingsgate, News Corp, and St Barbara shares are rising today appeared first on The Motley Fool Australia.

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Chester Asset Management portfolio manager Rob Tucker recalls how painful long-term investing can be, but why it's worth sticking to it.

The ASX share for a comfortable night's sleep

The Motley Fool: If the market closed tomorrow for four years, which stock would you want to hold?

Rob Tucker: When I think about those sorts of questions, I do think about pricing power — when a company can raise prices without impacting customer engagement. 

I would say CSL Limited (ASX: CSL) has those attributes. It would be CSL or the Lottery Corporation Ltd (ASX: TLC) for me.

MF: Do you hold Lottery Corp?

RT: We do, yep. Since they've de-merged, they've shown a really strong ability to tweak prices with Powerball and some of the other games. It's certainly one that's got margin expansion through the ability to sell digital tickets, and some pricing levers. I like the Lottery Corp. 

There is probably a five-year wait in terms of the Victorian licence, so that's a near-term potential obstacle. That's why I'd err on the side of saying CSL on the five-year yields and I'd hold if the market was closed.

Looking back

MF: Is there a move that you regret from the past? For example, a missed opportunity or buying a stock at the wrong timing or price.

RT: One thing we've done occasionally with our fund, in the cyclical space, we'll value the asset in the ground and come up with a net asset value. That's how we value the company. Sometimes we've been a little early in the strategic merit of that asset base. Sometimes we have to be very patient and [cop] a fair bit of drawdown on individual stocks because we've been a bit early. 

I'll use a stock like Comet Ridge Ltd (ASX: COI) [as an example]. Comet Ridge we bought in 2018 on the premise that it is a large gas discovery in the Bowen Basin and at some point that asset will be the next cab off the rank in terms of production. They have a joint venture with Santos Ltd (ASX: STO) for half of it, and 100% owned the other half. 

Comet Ridge has been a painful stock for us, but as we sit here today five years later, we're really excited about what happens the next two years, because it is absolutely still a gas resource in the middle of Queensland that's going to be desperately needed to help solve the East Coast gas crisis. 

That's an example of one I've still got high conviction in, but I've been wrong for four years basically.

MF: That would be painful, especially for professional investors like yourselves, because you have to report performance periodically. Even if you have high conviction for a long time, it's a tricky balance, isn't it?

RT: Yep. And smaller caps tend to have more volatility. 

Large caps, if something changed fundamentally with CSL, our fund's of the size we could change our mind in the first two hours. With a small cap, you've got to be really vigilant and very, very detailed in why you're holding those interested companies. And they can move aggressively against you. 

The other point is just sometimes getting the portfolio weights wrong. Sometimes some of your best ideas, you've only got a 2% position and you wish it was a 4% position. Sometimes you've got a 4% position you wish was only a 1% position. 

When they're going down, you want less of them, when they're going up you want more of them.

It's always getting the portfolio weight right is as much a challenge in portfolio management [as] getting the right stocks.

The post This ASX share's halved in 5 years, but I'm still sticking with it appeared first on The Motley Fool Australia.

Eagle-eyed investors might notice all the best-performing energy stocks of September are oil producers. Of course, September was a brilliant month for oil prices.

In fact, rising oil prices might have been one reason the S&P/ASX 200 Energy Index (ASX: XEJ) gained an impressive 16.3% last month. For comparison, the S&P/ASX 200 Index (ASX: XJO) fell 2.6% over September.

According to data from CNBC, the price of West Texas Intermediate soared 9.5% in September to reach US$75.03 per barrel.

Meanwhile, the Brent crude oil price gained 7.5%, ending the month at US$78.52 a barrel.

So, that explains why oil producers reigned through September, but which producers performed best?

The 3 best performing ASX energy shares of September

Investors who held shares in these energy stocks in September, get ready to pat yourself on the back.

For simplicity's sake, only energy shares with market capitalisations of more than $100 million have been included in this list.

Beach Energy Ltd (ASX: BPT)

The Beach Energy share price came in at equal first place as one of two top-performing ASX energy shares over the month of September. It gained 42.8% over the course of last month.

While Beach Energy started off slow, its share price took off after the company released multiple announcements in late September.

First, Beach announced it had entered a heads of agreement with BP for the sale of all the liquid natural gas produced at its Waitsia Gas Project Stage 2. Then, it released a positive investor update.

The company's stock ended the month trading for $1.50 apiece.

Empire Energy Group Limited (ASX: EEG)

The Empire Energy share price was also best-in-show last month. The company's share price also gained an impressive 42.8% to finish September at 40 cents.

The company started the month strong, releasing an update on grants awarded to its wholly owned subsidiary.

The grants will offset 25% of the costs of seismic acquisition and drilling, fracture stimulation, and flow testing of three horizontal appraisal wells in its Beetaloo Sub-Basin tenement.  

It also announced it had received work program approval from the Northern Territory government.

Later in the month, Empire announced it was to restart operations at its Carpentaria-1 well after they were shut down in July due to COVID-19. It also provided an update on its Beetaloo operations.  

Comet Ridge Ltd (ASX: COI)

Finally, Comet Ridge made it onto the podium as the third best performing ASX energy share in September.

The Comet Ridge share price gained 40% over the course of last month, ending it trading at 14 cents.

In September, the company completed a $5 million placement ahead of an appraisal program at its Mahalo North blocks.

Later that month, Comet released a positive update on the block's program alongside an update on the company's cash position and commercial agreements.

The post These were the 3 best performing ASX energy shares in September appeared first on The Motley Fool Australia.

Below, we take a look at the ASX resource explorer's acquisition announcement.

What acquisition announcement did Comet report?

The Comet Ridge share price is soaring after the company reported it has entered into binding agreements to acquire Australia Pacific LNG's (APLNG) 30% interest in the Mahalo Gas Project.

Once the deal is complete, Comet Ridge's 40% interest in Mahalo will increase to 70%.

The company also reported it has executed a funding and option agreement with its joint venture (JV) partner on the project, Santos Ltd (ASX: STO).

Located in Queensland, the Mahalo Gas Project "encompasses the 'Shallows' strata from surface down to the base of the Lower Mantuan Coal". According to the release, interest in the "Deeps" will remain unchanged, with Santos and APLNG each holding 50%. Mahalo Deeps was last drilled in 1991.

On completion of the acquisition Comet Ridge will pay APLNG a cash consideration of $12 million, with an additional $8 million post-completion payment in deferred tranches.

Santos has provided the company with access to $13.15 million of debt funding, covering the cost of the upfront acquisition as well as $1.15 million in stamp duty costs.

In exchange for the loan funding, Santos has several rights to acquire interests in the project. That includes the right to acquire a 12.86% interest in from Comet Ridge at a proportional acquisition value, within 6 months of completion.

Commenting on the transactions, Comet Ridge's managing director, Tor McCaul said:

These transactions are transformational for Comet Ridge. Built on compelling acquisition metrics, they establish a streamlined joint venture with Santos to not only progress development plans for the Mahalo Gas Project, but the whole Mahalo Gas Hub area.

The terms we have been able to agree with APLNG and Santos unlocks the potential of the entire Mahalo Gas Hub area to become a significant supplier of gas to the east coast market where industry dynamics have strengthened considerably as we continue to see a tightening of gas supply.

The Comet Ridge share price could also be getting a lift from a separate announcement released this morning. In that release, Comet reported it has entered into a binding agreement with PURE Asset Management to access a term loan facility for up to $10 million.

Comet Ridge's chief financial officer, Phil Hicks said, "The Pure facility complements the funding arrangements that Comet Ridge has put in place with its joint venture partner, Santos Ltd, to support the company's Mahalo Gas Hub project development strategy."

Comet Ridge share price snapshot

Comet Ridge's share price is up 57% over the past 12 months. By comparison the All Ordinaries Index (ASX: XAO) is up 28% over that same time.

Year-to-date the Comet Ridge share price is also up 57%.

The post Why the Comet Ridge (ASX:COI) share price is rocketing up 22% today appeared first on The Motley Fool Australia.

Santos' joint venture partner Comet Ridge Ltd (ASX: COI) announced it has increased its ownership of the project and Santos will likely be able to do the same.

The Mahalo gas project is located near Gladstone in Queensland. The companies hope it will supply gas to the east coast of Australia in the future.

Right now, the Santos share price is $6.45, 0.62% lower than its previous close. At one point it was down as much as 0.93%, but also edged into the green during morning trade.

Let's take a closer look at today's news from Santos.

Santos might up its Mahalo holding

The Santos share price is slipping despite news it will be providing a loan to Comet Ridge in exchange for the option to increase its hold in the Mahalo project to 42.86% pro rata.

Comet Ridge will use a $13.5 million loan from Santos to acquire Australia Pacific LNG Pty Ltd's 30% share of the project, increasing its stake to 70%.

Santos will then have the option to negotiate with Comet Ridge to increase its stake up to a holding of 50%.

It will also be able to negotiate to acquire 50% of Comet Ridge's Mahalo North and Mahalo East assets.

The companies plan for Comet to drive it to a final investment decision, after which Santos will take over as the project's development operator.

The Mahalo project encompasses the shallow portion of the project. The deep portion of the area is owned in equal parts by Santos and Australia Pacific LNG.

The project's development has been slowed by COVID-19 and the price of oil declining during the pandemic.

Commentary from management

Santos' managing director and CEO Kevin Gallagher commented on the news that could be driving the Santos share price today. He said:

Santos is keen to continue to develop our Queensland resources and this transaction provides another option for additional gas reserves. We look forward to working collaboratively with Comet Ridge to assess the potential of the Mahalo gas project.

Santos share price snapshot

The Santos share price is in the green by the skin of its teeth.

Right now, it's about 2% higher than it was at the start of the year. Fortunately, it's gained about 21% since this time last year.

The post Santos (ASX:STO) share price wobbling on news of Mahalo project appeared first on The Motley Fool Australia.

Energy commodities bouncing back

Brent crude oil has staged a significant recovery to the US$52 per barrel level. This compares to being range bound around the US$40 mark since June 2020.

Thermal coal prices have increased over 50% during the December 2020 quarter, brought on by China ramping up imports on non-Australian thermal coal. 

LNG prices have also surged to a six-year high of around US$15 per million British thermal units (MMbtu), from US$2/MMbtu in mid-2020. 

A number of supply-demand, weather and political forces continue to work in favour of sturdy energy prices. Since March 2020, key energy producers including OPEC+ and Glencore have focused on managing supply and curbing greenfield and expansion projects.

More recently, a number of regional economies have also emerged from COVID-19-related lockdowns, which could help demand-side fundamentals.

Bell Potter upgrades ASX energy shares 

Bell Potter reiterated buy recommendations for a series of ASX energy shares on 7 January 2021.

Beach Energy Ltd (ASX: BPT) had a share price target of $2.29, or an 19% upside to its closing price on Friday of $1.92.

The Cooper Energy Ltd (ASX: COE) share price target was 47 cents. This represents an upside of 17.5% compared to its closing price last week of 40 cents. 

Finally, Senex Energy Ltd (ASX: SXY) also received a buy recommendation with a price target of 40 cents. The Senex share price closed at 33 cents last week. 

These companies received buy recommendations on the basis that they each had uncontracted medium- to long-term production and are positioned to expand their existing assets to meet increased demand.

Other preferred ASX energy shares that received speculative buy ratings from Bell Potter included Byron Energy Ltd (ASX: BYE) with a price target of 42 cents, Comet Ridge Ltd (ASX: COI) with a 17 cent price target and Blue Energy Limited (ASX: BLU) with a 17 cent price target as well. These companies are far more speculative in nature, with market capitalisations of less than $200 million. 

The post Broker thinks these 6 ASX energy shares could go higher appeared first on The Motley Fool Australia.

Four shares that have failed to follow the market higher today are listed below. Here's why they are dropping lower:

The AusCann Group Holdings Ltd (ASX: AC8) share price has crashed 9% lower to 20 cents. This means that the cannabis company's shares are now trading at its IPO price. Which is some distance from its highs of ~$1.80 in early 2018. Investors have been selling off pot stocks recently due to concerns over weaker than expected demand, high levels of competition, and an oversupply of cannabis.

The Clinuvel Pharmaceuticals Limited (ASX: CUV) share price is down 4.5% to $27.49 despite there being no news out of it. This decline appears to be a combination of profit taking from some investors and rising short interest. According to the latest ASIC data, Clinuvel's short interest has jumped to 6.6%. Short sellers may believe that Clinuvel's shares are overvalued at this level.

The Comet Ridge Ltd (ASX: COI) share price has plunged 11% lower to 20 cents. This morning the coal seam gas exploration company's shares returned from a trading halt after announcing plans to raise $13 million. These funds will be used to accelerate its gas to market plans. Comet Ridge is raising the funds at 19 cents per share.

The Rural Funds Group (ASX: RFF) share price has fallen 5.5% to $1.81. The agriculture-focused real estate property company's shares are sinking lower after a potential asset sale hit a stumbling block. According to the AFR, Kaizen Capital believes the sale price of the RF Poultry business to ProTen is too cheap. Rural Funds managing director, David Bryant, has reportedly rejected the claims. He said he was confident the transaction was in the best interest of all unitholders.

The post Why AusCann, Clinuvel, Comet Ridge, & Rural Funds are dropping lower appeared first on The Motley Fool Australia.

Four shares that haven't let this hold them back are listed below. Here's why they are ending the week with a bang:

The Bubs Australia Ltd (ASX: BUB) share price has charged over 4% higher to $1.24. Today's gain could be attributable to a broker note out of Goldman Sachs. Although the broker did not mention Bubs, its research showed very strong growth in infant formula sales on Chinese ecommerce platforms during the month of June.

The Comet Ridge Ltd (ASX: COI) share price has risen 4.5% to 24 cents following an update on its Galilee Basin seismic project. According to the release, the interpretation of seismic data identifies regional trends and multiple new leads at the project. It also provided confirmation of a closed structure at Lake Galilee, 24km south of Albany.

The Oil Search Limited (ASX: OSH) share price has raced 4% higher to $7.44. This gain appears to have been driven by a rise in the oil price during Asian trade. According to Bloomberg, the WTI crude oil price is up 0.5% to US$60.53 a barrel and the Brent crude oil price has climbed 0.5% to US$66.89 a barrel.

The Sheffield Resources Ltd (ASX: SFX) share price has rocketed 20% higher to 55 cents on Friday. Earlier this week the bulk minerals exploration company provided an update on its world class Thunderbird mineral sands project in the north west of Western Australia. That update revealed that management has updated its ore reserve estimate by 69 million tonnes to 748 million tonnes. This confirms Thunderbird as one of the largest undeveloped zircon-rich mineral sands deposits globally.

The post Why Bubs, Comet Ridge, Oil Search, & Sheffield Resources shares charged higher appeared first on The Motley Fool Australia.

In July, Comet's shares even briefly broke through the $0.40c barrier – a feat the company hasn't managed since late 2009, not long after it first listed on the ASX.

Comet Ridge focusses exclusively on coal seam gas.

This is a form of natural gas which is stored in coal beds located at relatively shallow depths below ground. It is an "unconventional" gas, a classification which refers to the type of geological rock the gas is found in.

While conventional gas reservoirs are typically found in sandstone and stored at high pressure beneath the earth, unconventional gas stores are trapped underground by water pressure. In order to extract it invasive and sometimes controversial methods such as hydraulic fracturing, or "fracking", are often used.

The gains in Comet Ridges' share price have been driven by a series of successful quarters' worth of activities. The company is particularly excited by developments at its Mahalo project near Gladstone in Queensland, where one of its gas wells is outperforming expectations. According to its most recent quarterly activity report, from June 2018, the well is now producing 1.4 million standard cubic feet of gas per day.

A number of large players in Australia's oil and gas sector have sizeable stakes in Mahalo, so it is a way for Comet Ridge to prove it can engage with the industry leaders. Comet Ridge owns 40% of the Mahalo project, with the remaining 60% split evenly between Australian gas major Santos Ltd (ASX: STO) and Australia Pacific LNG (APLNG).

APLNG is a joint venture between Origin Energy Ltd (ASX: ORG), American multinational energy corporation and Fortune 500 company ConocoPhillips and Chinese oil and gas giant Sinopec. It is Australia's largest producer of coal seam gas.

All this is to say that, for a small cap energy producer, Comet Ridge is rubbing shoulders with some pretty illustrious company. And this may be a big reason for the recent uplift in its share price.

The partnership at Mahalo sends a positive message to the market: if these international giants are willing to invest their cash and resources into the project, then there must be some real potential there.

But other developments have also helped stir up some added market interest. Comet Ridge, which owns and operates a number of other coal seam gas projects in Queensland and New South Wales, announced last week that it had successfully completed a $17.4 million institutional placement.

The cash injection should allow it to continue to pursue new gas exploration opportunities while advancing drilling operations at Mahalo as well as drilling and testing at its Galilee Basin project, not far from Rockhampton in Queensland.

Foolish takeaway

Any stock that surges over 50% in a matter of months is worth taking a look at, and with demand for gas as a source of energy tipped to increase there are reasons to be excited about Comet Ridge.

However, an investment in a pure play gas company like Comet Ridge does also require an understanding of the vagaries of global commodities markets.

If a giant like BHP Billiton Limited (ASX: BHP) can be caught out when global oil and gas prices go sour – as happened when it bought its US shale assets back in 2011 – what hope is there for us everyday investors?

Taken together with its small market capitalisation, current lack of profitability, and the environmental and ethical quagmire that is fracking, I would be more inclined to give this one a miss.

Investors who are more bullish on global gas prices and want some exposure to this commodity might do better to look to a company with a more diversified portfolio of conventional and unconventional onshore and offshore gas projects like Adelaide-based Beach Energy Ltd (ASX: BPT).

The post Is now the time to buy Comet Ridge Ltd (ASX:COI) shares? appeared first on The Motley Fool Australia.