Commodities: Gas
Probably a stock out of left field – but with a positive catch. Not many microcaps with $100m market cap have a recent history of generating real revenue, real cashflow, pay taxes and make a net profit. They operate and 63% own a single gas producing onshore well in Italy. They have 4 near term onshore wells going through regulatory processes with a Government very positively attuned to increase local gas production. They also have an offshore permit for a shallow water gas field close to infrastructure.
A very clean balance sheet with cash in bank and short-term Italian Gov’t bonds well ahead of total liabilities and are likely to fund the onshore new wells without extra borrowing or capital raise.
The share price has moved up 50% in the last month but welcome your quick evaluation whether further upside likely. I am a holder with a position acquired in July.
STO has lagged WDS gaining just 25% compared to WDS’s +40%, with the stock struggling to fully recover from an Abu Dhabi-led consortium walking away from a takeover deal last September. Similar to WDS, we would consider STO into weakness, ideally below $7.50, only 3-5% lower, but there’s no hurry yet.
Hi Market Matters Team
Your view on WDS, STO & BPT – If you held these oil & Gas stocks how would you be positioning yourself while the war in Iran is causing oil prices to surge on fear of energy supplies? How do you place a valuation on these stocks during these volatile times? While one does not want to benefit because of a war – I would expect these stocks would fall in value as soon as any news regarding the end of this conflict is made? Would you be selling now into this strength or hold for further upside?
regards
Debbie
Natural gas has surged to its highest level since 2022 helping drive Mobil shares to all time highs this week. However, while global energy stocks have been strong domestic names like Santos (STO) and Woodside (WDS) have struggled even with WDS’s revenue being heavily leveraged to gas/LNG, making it one of the most gas-centric energy companies on the ASX.
WDS has held firm for more than a year in the face of a US president whose determined to get the price of oil and gas lower to offset inflationary impacts of stimulus measures. There’s no real complicated story per se with WDS, when we see higher oil & gas prices, it will rally, that’s the determining factor, but we think there are too many competing forces at play to see that happen at the moment.
Hi M&M, can you shed some light on Neurizer NRZ continuing trading halt? Will they ever trade again or will they disappear. Also, if the market corrects do you think gold will go south with the correction? Thank you. Keep up the good work.
Hi, Merry Christmas, thanks for the ongoing work throughout the year and good luck with the new venture.
Another one for your view on American natural gas. Henry hub futures and spot prices
The price has gone vertical over the last two months, sitting at multi year highs. Can you give your views and opinions please, as I must be missing some detail.
I understand the concept of demand through northern hemisphere winter, along with higher US exports due to Europe coming away from Russian gas and need for more energy and coal phase out, however, from what I can see, supply is higher than ever, inline with demand, storage inventory is above 5 year average, the energy requirements and coal phase out is well known and future prices trending lower across later contracts.
I’m actually in a short and sweating on the position I hold on the spot cash price as I’m looking at the massive clear space above $5 if it breaks above; which is looking like a strong possibility even before the weekend. This is one of my worst read trades and have clearly missed something in my analysis.
Thanks, Simon
Hi guys,
Can you give your thoughts on U.S. natural gas, it’s ripped higher, lately. Obviously seasonal demands pick up now, along with world issues but I thought this was largely inverted with oil prices and there’s not really been any surprises to change the supply outlook as far as I’m aware.
Regards, Simon
Hi guys, I love being a bit of a contrarian and taking positions in really unloved sectors or sold off stocks is something I enjoy (of course acknowledging fully that strategy only works if its a contrarian play rather than a falling knife!) For instance, gold stocks were cheap and a bit unloved from 2021 to 2022 and i took positions then, sitting on stocks not moving for a while, I also bought into James Hardie when it had a big sell down end of 2022 (recently just bought back in). The point is, im willing to take a position if i think its cyclical or short term and it doesnt bother me if I’m too early. Is energy and oil stocks (putting aside uraniam) particularly unloved at the moment? If I were to say that at some point there will be a turn around in energy and oil, maybe in 6 months, maybe in 12, but if i was inclined to think at some point the cycle will turn – what do you think is the best way to play a turn around in energy and oil? Woodside? FUEL ETF (though that doesn’t seem to be particularly unloved). Also, if you could give some details about what do you think we would need to have a turnaround. Thanks so much for all your advice and work. Cheers, Josh
