Special Report: Things might look a little bleak for the US when it comes to oil and gas, but Down Under the industry is firing on all cylinders as bigger supply shortages loom.

After a bit of a hiatus, money is starting to flow back into the industry, investor interest is picking up and major new discoveries are being made.

The most recent big discovery was made in the Perth Basin by Strike Energy (ASX:STX)and Warrego Energy (ASX:WGO).

While it was a bit “nail biting” watching it all unfold, according to Argonaut director of research Michael Eidne, it is an extremely important discovery for Australia and the Perth Basin.

“It’s quite a game changing discovery,” Eidne told Stockhead.

“I don’t think people appreciate the fact that this is a whole new paradigm for the Perth Basin.”

Eidne is the opening keynote speaker at the upcoming RIU Good Oil Conferencebeing held in Perth on September 11 and 12.

View the conference line-up here.

Strike and Warrego’s big find will be one of his talking points.

“It’s a paradigm shift in terms of the geology because people are looking much deeper and they have proven that there’s gas much deeper,” he said.

This goes beyond the depths of the Waitsia gas discovery made by AWE Limited in the Perth Basin in 2014.

“People were thinking Waitsia was a once off, which clearly it isn’t,” Eidne noted.

“So that just opens up the entire Perth Basin and you’ve seen the share prices in all those little small Perth Basin operators go up.”

Warrego boss David Casey will be presenting on day one, while Strike managing director Stuart Nicholls will step up to the podium on the second day.

Casey, who has been attending the RIU Good Oil Conference for 15 years, told Stockheadgas was the best place to be right now given the East coast shortage and the less talked about shortage expected to emerge on the West coast.

“The East-West coast dynamic is real,” he said.

“The East Coast has a number of issues that need to be resolved and there’s a number of companies that are positioning themselves in the market to be that company that resolves those issues.

“Don’t assume that the same issues aren’t emerging on the West Coast. The North West Shelf is short gas in a couple of years.”

Casey said that right now there was no “logical supplier” to fill that shortfall.

“You’ve got infrastructure in place that needs gas, that needs a feedstock, and I think we can be that feedstock,” he said.

Meanwhile, Nicholls said Strike was looking to ensure gas markets were sustainable.

“Gas is an affordable, clean and abundant energy source as the world transitions into a lower carbon footprint,” he told Stockhead.

“It’s great that Strike has been able to find such a large quantity of high-quality gas because that will allow affordable gas to make its way into the market in a timely fashion.”

Money starts to flow

Argonaut is in the process of raising money for another Perth Basin producer, Triangle Energy (ASX:TEG), which Eidne said had been pretty easy.

“We got everything we wanted, we didn’t even have to struggle, which shows that people are actually looking at the space again.”

Triangle Energy managing director Robert Towner will be presenting on the first day of the RIU Good Oil Conference.

Eidne said the oil and gas sector was also witnessing a “resurgence” of exploration drilling, particularly in the offshore space.

From his conversations with service and drilling companies, he noted there are about 14 rigs in Australasia at the moment in various stages of mobilisation and demobilisation, which is “the highest it’s been for many years”.

“I think the US is looking a bit dire, but certainly in Australia we’re looking pretty good,” Eidne said.

Another topic Eidne will touch on is the growing belief that oil is on its way out, which he says just isn’t the case.

The push for electric vehicle uptake hasn’t taken off as quickly as many predicted and there is still the issue of cost and lack of infrastructure.

“You’ve obviously got this sort of overwhelming belief that oil’s time has passed, that batteries are going to take over the world and everyone is going to buy an EV,” Eidne said.

“Even though the evidence across the world is just not there that people are buying EVs at all because most people can’t afford them, and the charging infrastructure does not exist.

“I think every single drivetrain has got a place in the mix. It will come down to consumer choice at the end of the day.”

Oil’s potential also doesn’t just hinge on its use in transport.

“You’d hope that the fundamentals would reassert themselves because every single product around us has got hydrocarbons in it,” Eidne said.

“It’s not just about transport, it’s about the chemicals industry as well, which people have completely forgotten about.”

Hot line-up

Strike has been attending and/or presenting at the RIU Good Oil Conference for “several years”, Nicholls said.

But it will be the first time the company has presented on its West Erregulla gas find since the exploration campaign began.

This is expected to draw a crowd.

“Given that we are in possession of what is a truly remarkable and exceptional gas discovery in the Perth Basin, we do expect that the presentation of some of our results over that conference will be very interesting to both industry from a geological and drilling engineering and completion perspective, but also to investors from the size and strategic nature of a very high quality gas discovery right next to infrastructure,” Nicholls said.

Nicholls said the RIU Good Oil Conference was especially good for the presentation of project results or prospective project opportunities, and it was well attended by both industry and the investment community.

“Good Oil is really about running an energy business and also having that sort of collegiate atmosphere with your industry peers whilst being in the company of potential investors,” he said.

Attendees at this year’s conference will also get to hear from another player that has made a big “game changing” discovery, Carnarvon Petroleum (ASX:CVN).

Carnarvon revealed mid-last year that it had made a big oil discovery atits Dorado-1 well, in the offshore Carnarvon Basin.

The news propelled its share price to heights of 62c — a hike of over 726 per cent. Carnarvon is still up 380 per cent at 36c.

Carnarvon Petroleum managing director Adrian Cook will address attendees on the second day of the conference.

Norwest Energy (ASX:NWE), which has ground in the Perth Basin, has also been on a tear of late. It’s up 200 per cent since the middle of this year and MD Iain Smith will also tell his company’s story.

This story was developed in collaboration with Vertical Events, a Stockhead advertiser at the time of publishing.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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