Oil and gas stocks were scorching hot in FY2021
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The 2021 financial year was one of contrasts for the oil and gas industry with low crude prices making life challenging for many ASX companies earlier in the year before a strong recovery improved conditions.
Oil prices traded below the US$45 per barrel level for the early part of the financial year on concerns about the impact COVID-19 and its associated restrictions on movements – particularly air travel – had on demand.
However, improving sentiment amidst concerns that oil supply would not match growing demand has sent prices soaring in the second half of the year with the West Texas Intermediate threatening to break past the US$75 per barrel mark towards the end of the financial year (and actually doing so in July before sliding down again).
Rising crude prices has also been reflected in the share price of ASX oil and gas plays with the majority of companies on our watchlist reporting gains in FY2021.
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Red Sky Energy (ASX:ROG) has been on a tear in the last quarter of FY2021, thanks in no small part to the Killanoola oil field in South Australia that it acquired from Beach Energy (ASX:BPR) in February 2021.
Shares in the company soared after investors had a bit of time to digest its revelation in March that a petrophysical evaluation of Killanoola Southeast-1 well had identified 16m of net oil pay.
The potential of the field was expanded further after the company identified a further 37m of potential net pay in the Killanoola-1DW-1 well, which was previously thought to have just 5m of proven oil pay.
Post FY2021, Red Sky has been progressing the restart of the field with recent work indicating that the existing production equipment appears to be in good condition.
Meanwhile, Mongolia-focused coalbed methane play Elixir Energy (ASX:EXR) has also been making significant strides with the drilling of several successful appraisal and exploration wells.
It has also booked the country’s first best estimate contingent CSG resource of 24 billion cubic feet of gas for the Nomgon project as a key milestone towards developing another first – Mongolia’s first gas-fired power plant.
A feasibility study is already underway and the company has also discovered a new coal-bearing sub-basin.
Upcoming activity will include the drilling of more appraisal wells and the acquisition of further 2D seismic data.
Shares in Talon Energy (ASX:TPD) also climbed after the company announced in March that it was making a foray into Mongolia’s CBM sector.
The Gurvantees XXXV production sharing contract covers 8,400sqkm in one of the world’s most prospective CBM basins.
Importantly, it is close to the Chinese border and the extensive Northern China gas transmission and distribution network.
Throughout FY2021, Invictus Energy (ASX:IVZ) has been progressing its Cabora Bassa project in Zimbabwe towards drilling.
Cabora Bassa hosts the Mzarabani prospect that was defined from a robust dataset acquired by Mobil in the early 1990s and which has been independently assessed to host prospective resources of about 9.25 trillion cubic feet of gas and 294 million barrels of condensate.
Post FY2021, the company is focused on completing the 2D seismic program of at least 400km to refine the location and path of its planned Mzarabani-1 gas exploration well.
Over in Alaska, 88 Energy (ASX:88E) has been progressing its oil projects with the focus shifting from Project Icewine to Project Peregrine.
The former had been tested by the Charlie-1 well that intersected excellent oil saturations though no flow testing was carried out. This led to the company estimating that Project Icewine could host prospective resources of 1.77 billion barrels of oil equivalent.
It then drilled Merlin-1 in Project Peregrine, which intersected 41m of net oil pay across three reservoir intervals,
Work conducted after the end of the 2021 financial year confirmed that Merlin-1 had hit light oil with the company making plans to drill the Merlin-2 appraisal well in the first quarter of 2022.
88E also acquired the Umiat oil field where the Umiat-23H well had flowed oil at a sustained rate of 200 barrels per day during testing by Linc Energy in 2014.
NuEnergy Gas (ASX:NGY) has progressed its Tanjung Enim production sharing contract in Indonesia, securing its first plan of development for the project under a gross split scheme.
The approval, which the company claims is also the first for coalbed methane in the country, allows the company to carry out field development and surface facility construction.
Tanjung Enim covers about 33sqkm and hosts certified reserves of about 164.89 billion standard cubic feet of gas.
NuEnergy also secured an extension for the Muralim PSC to complete exploration and production testing activities.
Prior to the end of the financial year, Brookside Energy (ASX:BRK) completed the drilling of the Jewell well and farmed out interests to a subsidiary of ExxonMobil and Citation Oil and Gas.
It also closed on the acquisition of 11 producing wells and associated reserves in the STACK play, repaid all debt and listed on the Frankfurt Stock Exchange.
The company is currently carrying out a multi-stage stimulation of the Jewell well.
All three wells intersected better than expected net gas pay with the company flagging after the financial year that the results would positively impact on an upcoming reserves estimate.
Joint venture approval to commercialise Vali/Odin is also expected later in 2021.
Other companies that had significant activities during FY2021 include Strike Energy (ASX:STX) and Warrego Energy (ASX:WGO), who progressed their West Erregulla gas field in the Perth Basin; and Melbana Energy (ASX:MAY) and its moves to prepare for a two well drilling program in Cuba.
At Stockhead we tell it like it is. While Invictus and Metgasco are Stockhead advertisers, they did not sponsor this article.