Over the past few months, Australian Prime Minister Anthony Albanese has repeatedly and publicly doubled down on natural gas as the fuel to drive the energy transition.

While sparring with the Australian Greens over energy policy, Albo has thrown his weight behind natural gas as the fuel baseline required to usher in a greener future.

Now the PM may not be as heavy as he once was – he made national headlines in October after sharing his weight loss journey during the last federal election (yes, really) – even a trimmed down PM’s weight is usually weight enough as an endorsement of things to come.

And if it’s not, his climate minister Chris Bowen is working to push the government’s emissions reduction Safeguard Mechanism legislation through the Senate and insists it won’t hinder investment in new gas projects.

You’d want that to be the case, because new gas projects look critically important. Australia needs reliable gas supply to fuel its transition.

You only need to look at the East Coast gas market calamity of 2022 to see what happens when reliable supply isn’t forthcoming.

No one wins.

True to its reputation as ‘more of a thought follower’ on the green energy narrative, Australia’s recognition of the importance of gas to the energy transition follows in the footsteps of nations and legislative bodies abroad.

The EU sourced around 50% of its gas from Russia in 2021, and 83% of its gas overall. Since the invasion of Ukraine, Russian imports have dropped below 15%. That’s a problem since natural gas, while flagged by the European Commission as transitory, has long been considered a key step towards a climate-neutral Europe.

The resultant and ongoing European Gas Crisis unfortunately does what it says on the box, prompting policy responses from governments across the continent. The value proposition of new supply in a huge market which suddenly turned off 50% of pre-existing supply is worth considering.

Meanwhile in a largely coal-fuelled Asia, gas is viewed through a somewhat greener lens against the status quo – 55% of China’s enormous energy requirement in 2021 came from coal.

The gas market is ever-changing, but the global theme seems to be that more gas projects, not less, will be required in the medium term to fuel the energy transition.

Stockhead spoke with experts to their picks on which ASX-listed juniors could be best place to make the most of it.
 

ADX Energy (ASX:ADX)

Tim Neesham – CPS Capital Group

Already producing to fuel a hungry European market, the appeal of ADX Energy is obvious to CPS Capital Group associate director Tim Neesham.

The ~$22 million market cap company is currently generating cash from its producing Anshof-3 oil discovery well in Austria and was recently granted licences to expand the development of its oil field at the 80%-owned Anshof project.

But in unison, it is gearing up to drill the potentially transformational Welchau gas prospect, which has a best estimate technical gas prospective resource of 807 billion cubic feet of gas.

The drilling is to be 50% funded by TSX Venture Exchange listed MCF Energy Limited, which will earn a 20% stake in the project for its investment right in the middle of gas-starved Europe.

Welchau is expected to spud mid-year, and ADX is also exploring green energy solutions including green hydrogen to meet the longer term energy needs of Europe.

“2023 looks like it will be a transformational year for ADX,” Neesham told Stockhead.

“You’ve got the underpinning asset at Anshof, which could be significantly expanded, and then you’ve got the opportunity at Welchau providing significant blue-sky potential extremely close to existing European gas infrastructure.

“You’ve got your blue sky story in European gas, which could plug and play into the European gas system, and then you’ve got your producing well at Anshof which means they shouldn’t have to come back to the market too much – if they do it’s for accelerated growth.

“Underpinning all of that is the longer-term green energy story, which isn’t costing them much at the moment.”


 

Omega Oil & Gas (ASX:OMA)

Jonathon Feil – Prenzler Group

Prenzler director Jonathon Feil picked a play a little closer to home, throwing his backing behind Omega Oil & Gas, a company with an exploration focus in Queensland’s Bowen and Surat basins.

OMA spudded the Canyon-2 Permian Deep Gas exploration well in March, the first tangible activity focused on Permian Deep gas in the region since British Gas executed wells in 2012.

The company listed in October last year with a 3TCF gas resource at its core assets – ATP 2037 and 2038.

“Omega has a multi-TCF resource, with an associated condensate play, and is critically close to infrastructure,” Feil said.

“You’re only about 50km from gas infrastructure in a very good jurisdiction, with backers including the Flannery family and Tristar who are proven operators in terms of finding major exploration assets.”

Feil said Omega was well poised to benefit in an environment where domestic gas supply was a hot topic.

“How do we logically execute a transition to greener energy? Gas is the answer,” he said.

“What we’re seeing is that Australia has been in a quandary where even in Queensland the CSG discoveries are coming to the end of their life and there is a gas shortage looming.

“Finding highly prospective assets so close to infrastructure, in an area with a low footprint in terms of things like farmland and Native Title, is rare. When you stack it all up it looks like a rare opportunity.”


 

TMK Energy (ASX:TMK) and Talon Energy (ASX:TPD)

Dermot Woods and Tony Kenny – Precision Funds Management

Executive directors Woods and Kenny from Precision Funds Management in resources powerhouse Western Australia were unable to split their prospective gas picks, throwing their weight behind two companies with a shared feature.

TMK Energy and Talon Energy are joint venture partners in the Gurvantes XXXV coal seam gas project in Mongolia, less than 20km from the Mongol-China border, with the latter farming in to a 33% stake in the project by funding pilot production wells in a program poised to begin this month.

Talon’s spend at Gurvantes is likely to be subsidised by imminent production at the Walyering gasfield in the Perth Basin, where it has a 45% non-operated participating interest in a project with a gross 2P reserve of 54.2PJ gas and 0.31MMbbl condensate.

That will mean cashflow in CY2023 for Talon, which is also exploring what it says could be the Perth Basin’s largest untested Jurassic wet gas structure at the 100%-owned Condor project.

“It’s pretty unique for an oil and gas exploration company to have cashflow, which is what Talon will have to fund their ongoing exploration activities in the Perth Basin and in Mongolia,” Kenny said.

“While some struggle to raise in the energy space, TPD will soon be self-funding.”

Meanwhile in Mongolia, TMK is working with blue sky potential as a fully-funded rig mobilises to begin its pilot well program.

“The opportunity at Gurvantes is around 8500sqkm, and they’ve published a risked 2U prospective resource of 5.96 trillion cubic feet of gas on just a small fraction of it,” Woods said.

“The speed they’ve been able to move at in Mongolia is incredible too. It’s not a known story, and it’s in a sector that’s been largely ignored, so a lot of people may not recognise the huge potential there.”

Last month, TMK signed a landmark cooperation and electricity offtake agreement with Mongol Alt LLC, which will use gas produced from the pilot wells at Gurvantes for modular power generation.

At Stockhead we tell it like it is. While ADX Energy, Omega Oil & Gas and TMK Energy are Stockhead advertisers, they did not sponsor this article.

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