LNG stability and an oil price rally has these ASX stocks waiting in the wings
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The Henry Hub natural gas spot price is holding steady, trading today at $3.63/MMbtu – and the outlook for the rest of the year looks good.
The US Energy Information Administration (EIA) predicts that prices will stay higher than $3.00/MMBtu for 2021, driven largely by continuing record US natural gas exports and rising demand for natural gas outside of the electric power sector.
In 2022 it’s expected to settle at $3.00/MMBtu and dry natural gas production in the US is forecast to rise 2.3% from 2021 to average 94.7 Bcf/d.
And LNG’s trusty sidekick oil could be set to climb – with the EIA, the Organisation of the Petroleum Exporting Countries (OPEC), and the International Energy Agency (IEA) all forecasting a demand-led recovery.
Brent is trading at $US75.27/b today and could hit $80 a barrel in Q4 (according to the OPEC), with some analysts even forecasting as high as $100 a barrel by the end of the year.
But the EIA thinks an average of $71/b is more likely and that the deceleration of oil demand growth will lead to prices of $67/b next year.
Then there’s West Texas Intermediate (WTI) which is sitting at $74.17 today and predicted to average $3/b less than Brent prices in 2021 and $4/b less than Brent prices in 2022.
Here are some of the Aussie players who could be set to benefit.
The company has completed production testing at the West Erregulla 4 well part of its West Erregulla appraisal campaign (onshore Perth basin) confirming high productivity of the Kingia Sandstone.
Basically, flow rates of 35 mmscf/d were observed during sustained testing at various choke settings, and the flow rates and pressures were stable throughout the extended flow period with no evidence of depletion.
Plus, gas sample analysis indicates WE4 has a similar gas composition to the WE2 well, with WE4 also producing a small amount of regionally anomalous low salinity water.
The West Erregulla 4 will be retained as future Phase 1 producer and will now be shut in to observe a long-term pressure build-up – then it will be suspended and placed on inventory for the proposed Phase 1 87TJ/d development of the West Erregulla gas field.
Strike expects to begin flow testing of the WE5 well later this month.
The company has received formal notification that the Gurvantes XXXV coal bed methane (CBM) production sharing agreement (PSA) with Telmen Resource was approved at a meeting of the Mongolian Cabinet.
This is a kind of a big deal, because Gurvantes XXXV covers 8,400km2 in one of the most prospective coal seam gas basins globally, and sits less than 20km from the Chinese-Mongolian border and close to the Northern China gas transmission and distribution network.
It’s also smack bang next to several large-scale mining operations with high energy needs and future gas sales could satisfy both local Mongolian and Chinese energy requirements.
“Planning for initial exploration work on Gurvantes XXXV is well underway, as is preparation of an independently certified prospective resource, where we expect to see multi-TCF potential,” Talon managing director David Casey said.
The initial exploration work program (including the drilling of at least four core holes) is expected to begin once the formal PSA has been issued in the coming weeks.
An independent resource estimate has confirmed a sizeable recoverable carbon dioxide (CO2) sales gas resource from the company’s Nangwarry Field in the onshore Otway Basin.
The revised estimate – gross recoverable CO2 best case of 25.9 Bcf (12.9 Bcf net) – followed the successful production test of the Nangwarry-1 well.
The Nangwarry-1 well produced raw gas (~93% CO2, ~6% methane and ~1% nitrogen), at raw gas flow rates of 10.5-10.8 MMscfd, measured through a 48/64” choke at a flowing wellhead pressure of 1,415 psi over a 36-hour period.
The company will now focus on commercialising the field, which has the potential to provide a stable and reliable source of food grade CO2 – currently in high demand since the depletion of onshore Otway Basin well Caroline-1 in 2017.
Natural gas and helium producer Renergen’s had a helium surprise at its P12 well – which it previously advised would be plugged and abandoned.
The well commenced flowing gas (at low rates) in the days following rig release and the flow rate has increased – currently more than 30,000 standard cubic feet per day with the measured helium concentration in the gas stream at 1.9%.
It’s common practice to use lost circulation material (LCM), to temporarily seal any fractures intersected when drilling and allow water laden with drill cutting to circulate back to the surface.
When drilling is complete the LCM usually dries and shrinks but in the case of P12, it took the LCM over a week to shrink enough to allow gas to flow to surface.
“The significance of this discovery cannot be overstated,” CEO Stefano Marani said.
“Whilst drilling the well was risky with a low conviction of success, the team did its homework and we decided to drill the well to confirm if this fault is gas-bearing, and more importantly whether it contains helium.”
The flow rate has been steadily climbing daily and is expected to continue to do so until all the LCM has been completely dried out over the coming weeks.
Bass announced its plans to acquire Australian oil and gas production assets from Cooper Energy in South Australia for $650,000 – in a move that the company believes will provide a platform from which to secure additional interests in this prolific hydrocarbon province.
The producer already has a 55% operator interest in the producing Tangai-Sukananti licence in the prolific South Sumatra Basin in Indonesia, and following the acquisition, would increase its 2P reserves by 54,000 barrels or 10% and 2C contingent resources by 200,000 barrels.
After completion, the company will be in JV with a subsidiary of Beach Energy (ASX:BPT) who operate the assets.
Bass will also acquire a 30% interest in the Worrior oil field – which currently produces over 40 bopd (JV share) with material upside potential.
“We are pleased to announce the addition of this new arm to our business and our entry, as an oil producer, into the South Australian Cooper Basin, which remains one of the more prolific basins in Australia,” managing director Tino Guglielmo said.
“From a Bass perspective, this acquisition represents a low-cost entry into the Australian energy market and provides us with substantial growth potential.”