More than half of ASX-listed oil and gas stocks are now ahead over the past year as oil cartel OPEC’s production cuts push up oil prices and local fears of gas shortages drive exploration and new production.

The best performer has been unconventional gas explorer Empire Energy (ASX:EEG) which doubled in price after the Northern Territory ended its moratorium on the controversial practice of fracking in April. It’s up 371 per cent since this time last year.

Horizon Oil (ASX:HZN) and Byron Energy (ASX:BYE) have each tripled in price over the past 12 months. The former is an oil producer and reaping benefits from the price rise, and the latter has brought its US oil assets into production as of this year.

But the key question for investors is which of the 100 or so ASX oil and gas stocks are likely to keep going up — and which are likely to stall.

>> Scroll down to see the performance of 100 ASX’s oil and gas stocks over the past year

Here are five key factors oil and gas investors need to keep in mind over the coming year:

Not enough gas

Australia’s East Coast gas supplies are secure for another few years but nationwide restrictions on unconventional gas mean that is unlikely to last.

Analysts spoken to by Stockhead say the squeeze on locations where unconventional gas can be explored and produced from — currently limited to Queensland and the Northern Territory — will take its toll on gas supplies.

Unconventional gas sources are often difficult to extract and may require controversial techniques such as fracking which is outlawed in some States due to environmental concerns. (More on this later).

Last week the country’s energy planner, Australian Energy Market Operator (AEMO) said the country is set for gas supplies for the energy sector until 2030, but showed total production barely rising in the years to 2022.

Wood Mackenzie analyst Nicholas Browne expects a 10 per cent decline in gas supplies over the next five years as mature fields decline and not enough large new fields are brought online.

“We do see some potential for new production in Australia,” he told Stockhead.

“For the smaller companies this is good if they do have gas production coming in, that gas is undoubtably needed and there is less competition.”

Let the price war begin

Less gas on the market means higher prices.

The government’s threat last year to requisition export gas for domestic supply helped to lower prices from $20 a gigajoule to about $14, but market forces indicate that can’t last.

S&P analyst May Zhong says Australia’s infrastructure shortage of pipelines and compressing stations, the lack of new supply coming on, as well as the moratorium on unconventional exploration would eventually push prices back up.

Wood Mackenzie’s Mr Browne says the shortfall will likely need to be fed by diverting gas from LNG exports — meaning local prices will need to be as good as what those companies can get from the export market — or imports from those offshore markets.

“We do think gas prices are going to head north becaus of that linkage into the wider energy market,” he said.

“Ultimately that is good for producers but bad for buyers and utilities.”

Here’s how 100 ASX oil and gas stocks have performed over the past year:

ASX code Company Price change one-year Price Jun 26 (intraday) Focus Region Market Cap
BKP BARAKA ENERGY 4 0.005 oil and gas Aust 13.2M
EEG EMPIRE ENERGY GR 3.71428571429 0.033 oil and gas Aust US 41.8M
GLL GALILEE ENERGY 2.73737373737 0.37 oil and gas Aust 69.2M
BYE BYRON ENERGY 2.48958333333 0.335 oil and gas US 226.0M
HZN HORIZON OIL 2.11111111111 0.14 oil and gas Asia 182.3M
FDM FREEDOM OIL AND 2.09782608696 0.285 oil US 264.0M
BPT BEACH ENERGY 2.00362976407 1.655 oil and gas Aust, NZ 3.9B
SEH SINO GAS & ENERG 1.85 0.228 gas China 487.3M
OEL OTTO ENERGY 1.65384615385 0.069 oil US 105.6M
COI COMET RIDGE 1.64 0.33 gas Aust 219.9M
HE8 HELIOS ENERGY 1.20833333333 0.053 oil US 75.0M
STO SANTOS 1.0101010101 5.97 oil and gas Asia, Aust 12.6B
BAS BASS OIL 1 0.004 oil Asia 10.4M
LKO LAKES OIL NL 1 0.002 oil Aust 57.6M
PCL PANCONTINENTAL 1 0.004 gas US, Africa 21.0M
TEG TRIANGLE ENERGY 0.98 0.099 oil Aust 21.6M
BRU BURU ENERGY 0.95652173913 0.315 oil Aust 136.1M
ATS AUSTRALIS OIL & 0.886363636364 0.415 oil US 371.0M
PVE PO VALLEY ENERGY 0.85 0.037 gas Italy 22.0M
STX STRIKE ENERGY 0.774193548387 0.11 gas Aust 120.4M
FZR FITZROY RIVER 0.733333333333 0.26 oil and gas Aust 23.0M
CVN CARNARVON PETROL 0.708860759494 0.135 oil and gas Aust 159.8M
EXR ELIXIR PETROLEUM 0.666666666667 0.06 oil US 13.3M
SXY SENEX ENERGY 0.653846153846 0.43 oil and gas Aust 629.6M
MEL METGASCO 0.628571428571 0.057 gas Aust 22.3M
CE1 CALIMA ENERGY 0.6 0.048 oil and gas Canada 26.7M
NGY NUENERGY GAS 0.538461538462 0.04 gas Asia 59.2M
EMP EMPEROR ENERGY 0.5 0.003 gas Aust 2.7M
GGX GAS2GRID 0.5 0.003 oil and gas PHP France 3.4M
UIL UIL ENERGY 0.481481481481 0.04 gas Aust 9.1M
FAR FAR 0.479452054795 0.108 oil and gas Africa 600.8M
AOW AMERICAN PATRIOT 0.470588235294 0.025 oil US 6.7M
BUL BLUE ENERGY 0.469696969697 0.097 oil and gas Aust 112.0M
BRK BROOKSIDE ENERGY 0.444444444444 0.013 oil US 12.9M
PVD PURA VIDA ENERGY (suspended) 0.378378378378 0.051 gas Africa --
TDO 3D OIL 0.368421052632 0.052 oil and gas Aust 11.9M
TAP TAP OIL 0.344827586207 0.078 oil and gas Aust 33.2M
OSH OIL SEARCH 0.301684532925 8.5 oil and gas Papua New Guinea 13.0B
PSA PETSEC ENERGY 0.3 0.195 oil US 64.1M
ENB ENEABBA GAS 0.285714285714 0.009 gas Aust 4.7M
AJQ ARMOUR ENERGY 0.285714285714 0.09 gas Aust 36.5M
SUR SUN RESOURCES 0.25 0.005 oil and gas US 3.0M
ELK ELK PETROLEUM 0.234375 0.079 oil US 120.7M
HPR HIGH PEAK ROYALTY 0.2 0.06 oil and gas Aust 9.3M
WPL WOODSIDE PETRO 0.185490802819 34.48 oil and gas Aust 32.7B
IPB IPB PETROLEUMI 0.166666666667 0.021 oil and gas Aust 3.4M
GRV GREENVALE ENERGY 0.125 0.027 oil Aust 2.5M
SEA SUNDANCE ENERGY 0.1 0.066 oil and gas US 460.1M
CUE CUE ENERGY RES 0.0754716981132 0.057 gas Aus, Asia 41.9M
CTP CENTRAL PETROL 0.0431654676259 0.145 gas Aust 102.5M
CRM CARBON MINERALS 0.0416666666667 0.125 gas Aust 2.4M
APA APA GROUP 0.0276392352452 9.89 gas Aust 11.6B
RLE REAL ENERGY CORP 0.0112359550562 0.09 gas Aust 23.0M
GGE GRAND GULF ENERG 0 0.003 oil and gas US 2.3M
JKA JACKA RESOURCES 0 0.002 oil Africa 1.2M
KEY KEY PETROLEUM 0 0.009 oil Aust 12.1M
NSE NEW STANDARD ENERGY 0 0.004 gas Aust 3.9M
NWE NORWEST ENERGY 0 0.003 oil and gas Aust 10.1M
IVZ INVICTUS ENERGY 0% 0.04 gas Africa 7.5M
TMK TAMASKA OIL & GA 0 0.003 oil and gas US 5.9M
WBE WHITEBARK ENERGY 0 0.007 oil Aust 6.9M
COE COOPER ENERGY -0.0188172043011 0.365 oil and gas Aust 592.4M
RAW RAWSON OIL AND G -0.0909090909091 0.04 gas Aust 3.9M
GAS STATE GAS (listed Oct 2017) -0.1 0.18 gas Aust 24.3M
TOU TLOU ENERGY -0.117647058824 0.105 gas Africa 37.5M
KPL KINA PETROLEUM -0.117647058824 0.075 oil and gas ASia 28.7M
ODY ODYSSEY ENERGY -0.125 0.056 oil and gas US 18.3M
MAY MELBANA ENERGY -0.133333333333 0.013 oil US 21.7M
KAR KAROON GAS AUSTR -0.1640625 1.07 oil and gas Brazil, Aust 262.8M
ADX ADX ENERGY -0.166666666667 0.01 oil and gas Italy, Romania 11.3M
INK INDAGO ENERGY -0.166666666667 0.075 Oil US 13.1M
ETE ENTEK ENERGY -0.190476190476 0.017 oil and gas US 5.5M
MMR MEC RESOURCES -0.2 0.02 oil Aust 6.6M
GBP GLOBAL PETROLEUM -0.212121212121 0.026 oil and gas Africa 5.3M
LIO LION ENERGY -0.225 0.031 oil and gas Indonesia 4.4M
ICN ICON ENERGY -0.28 0.018 oil Aust 10.8M
BUY BOUNTY OIL & GAS -0.285714285714 0.005 oil Aust Africa 4.8M
XST XSTATE RESOURCES -0.285714285714 0.005 oil and gas US 3.9M
88E 88 ENERGY -0.304347826087 0.032 oil US 155.6M
ENX ENEGEX -0.318181818182 0.015 oil and gas Asia 1.2M
OEX OILEX -0.333333333333 0.002 oil and gas Aust Asia 4.0M
TPD TALON PETROLEUM -0.375 0.005 oil US 5.1M
ABL ABILENE OIL AND -0.428571428571 0.004 oil and gas US 1.6M
CEL CHALLENGER ENERGY -0.5 0.012 oil and gas South Africa 4.7M
PGS PLANET GAS -0.5 0.004 oil and gas Aust, US 2.2M
PGY PILOT ENERGY -0.5 0.025 oil and gas Aust 1.6M
EWC ENERGY WORLD COR -0.507462686567 0.165 gas Asia, Aust 305.3M
WOF WOLF PETROLEUM -0.555555555556 0.012 oil and gas Mongolia 8.6M
RRS RANGE RESOURCES -0.571428571429 0.003 gas US 22.8M
ROG RED SKY ENERGY -0.6 0.002 oil and gas US 1.2M
SPB SOUTH PACIFIC RESOURCES -0.6 0.006 oil Papua New Guinea 993.1k
SAN SAGALIO ENERGY -0.615384615385 0.005 oil Kyrgyzstan 1.0M
SGC SACGASCO -0.625 0.03 gas Aust 7.7M
WEL WINCHESTER ENERG -0.6625 0.027 oil US 7.7M
E2E EON NRG -0.666666666667 0.008 oil US 3.3M
TNP TRIPLE ENERGY -0.71875 0.045 gas China 1.9M
JPR JUPITER ENERGY -0.74 0.065 oil Asia 10.0M
FPL FREMONT PETROLEU -0.740740740741 0.007 oil US 4.8M
OXX OCTANEX -0.870588235294 0.011 oil and gas Asia 3.0M
CNX CARBON ENERGY -0.895833333333 0.125 gas Aust 8.4M
PRL PETREL ENERGY -0.909090909091 0.002 oil Uruguay 3.5M

Frack off

A major reason for that lack of production — and rising prices — are the moratoriums on hydraulic fracturing, or fracking, for unconventional gas.

Unconventional gas is seen as the main gas opportunity in Australia today.

Unconventional covers shale gas, coal seam gas and tight gas — gas that is trapped in small holes in rocks which requires massive fracking, or hydraulic fracturing, to release it.

Only Queensland and Northern Territory — with some restrictions — allow fracking which is one of the only ways to access unconventional gas.

Ms Zhong says Australia is not short of gas reserves but so long as governments fear to open areas up to unconventional exploration that gas is stuck in the ground.

Anyone close to infrastructure is onto a winner

The East Coast is where Australia’s biggest gas demand lies.

As a result, companies with assets near Australia’s minimal gas transportation infrastructure, such as the soon-to-be-finished Northern Gas Pipeline that will deliver Northern Territory gas to the coast, could be well placed to take advantage of any future price upswings.

For example, on Monday Northern Territory company Central Petroleum signed a deal to supply Incitec Pivot’s Gibson Island fertiliser plant with 20 TJ/d of gas.

Its gas fields are close to the Northern Gas Pipeline, due to be up and running in December, which will deliver its gas to the East.

Armour Energy (ASX:AJQ) and Empire Energy (ASX:EEG) are two other Northern Territory companies with land close to pipeline infrastructure.

The $800 million Northern Gas Pipeline is expected to start work in December. Pic: Jemena

Building on OPEC’s latest promise

Oil and gas companies led the ASX upwards this week after promises at OPEC last week to lift production — but not by too much — caused relief in the market.

“Because of the recovery in the oil prices, the companies’ internally generated cash flows now are higher than what they were in the past two years, so in theory that should give them enough internally generated cash flows to fund exploration activities which may translate into more discovery and production,” S&P’s Ms Zhong told Stockhead.

OPEC committed to reducing compliance to the 2016 production cuts agreement from 158 per cent to 100 per cent.

It’s a 1 million barrels a day increase over the next six months, which has eased market concerns about a supply oversupply or undersupply, and likely prevent any unsustainable price swings.

Brent crude, the European and Asian standard, touched $US74.92 at close of business on Tuesday as this graph shows:

The US WTI oil benchmark hit $US68.31 at close of business on Tuesday:

Mergers and acquisitions

Wood Mackenzie analyst Angus Rodger says while merger and acquisition activity began humming in 2017, all was quiet in Australia until the start of this year.

He says it’s the higher oil price putting more cash into producers’ pockets, and continued uncertainty on both Australia’s East and West Coasts about supply and demand.

Companies like Senex (ASX:SXY) and Central Petroleum are looking to get gas to market in a hurry and that is driving foreign private equity interest here.

Just last month Key Petroleum sold part of a licence area in Queensland to some Americans.

Key Petroleum boss Kane Marshall told Stockhead at the time he was seeing more interest from Americans in particular in lower risk gas assets that could supply the East Coast gas market.

Mr Rodger says Australia has good regulations and is a transparent market, and crucially does not have any National Oil Companies to make things complicated.