Euroz Hartleys Energy Snapshot Review

Euroz Hartleys hosted a virtual Energy Conference late last week. We had eight companies present throughout the day with significant interest shown by institutional clients throughout.

The O&G macro remains topical and certainly the supply demand dynamics of some agencies paint an optimistic picture for O&G producers over the next 25+ years. We note the oil price is well off its all time highs, circa 43% below its 2008 highs. Energy Information Agency (EIA) has compiled an illustration on their forecast supply demand out to 2050. The cumulative supply gap in all demand scenarios presented by EIA should reflect higher oil prices, whilst concurrently seeing exploration dollars going into the ground to fill the supply hole.

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Below, we consider the performance of the eight participating names vs Brent over the last 12 months. Clearly, the challenging oil price environment has made for difficult operating conditions for the O&G sector over CY21. Notwithstanding this, there is a clear disconnect between oil price and share price performance with just NWE, ATS & KAR outperforming Brent over the time period. We anticipate equities will start to reflect stronger oil price through CY22.

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In our view, the spud of CVN’s Buffalo well later this month is of real interest. We want to highlight well spudding as a clear catalyst and one that we anticipate should materially move the needle. The risk at CVN’s Buffalo target is reservoir size, not presence of oil or quality – production was shut in at 4,000 bopd. With that in mind, we see CVN as a trading buy into spud later this month. History paints a clear path way for stocks to run in the lead up to spud. We look at BRU.ASX and 88E.ASX who spud Rafael 1 and Merlin-1 respectively this year and clearly demonstrated the appetite for exposure to potentially new discoveries.

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We have some summarised notes from the presentations over the course of the day. Please reach out for more detail on any of the names.

FAR Limited
Market Cap: $84M
Share Price: $0.84
Sector: Oil & Gas

Cooper Energy (COE)
Market Cap: $465M
Share Price: $0.285
Sector: Oil & Gas

Beach Energy Limited (BPT)
Market Cap: A$2,977m
Share Price:  $1.30
Sector: Oil & Gas

Australis Oil & Gas (ATS)
Market Cap: A$70m
Share Price:  $0.058
Sector: Oil & Gas

Carnarvon Petroleum (CVN)
Market Cap: A$493m
Share Price:  $0.31.5
Sector: Oil & Gas

Buffalo Oil Field, Timor

Dorado / Bedout Basin

Strike Energy (STX)
Market Cap: $354M
Share Price: $0.17
Sector: Oil & Gas

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Karoon Energy Ltd (KAR)
Market Cap: A$1B
Share Price: $1.815
Sector: Oil & Gas

Norwest Energy (NWE)
Market Cap: $133M
Share Price: $0.0.24
Sector: Oil & Gas