Oil stocks have had a very volatile year due to the volatility in the underlying commodity. With demand for energy decreasing during the pandemic, it has not been good news for the commodity. In the last couple of months, however, oil prices have climbed due to increased economic activity in markets such as India and China. Crude oil has been the most volatile of all major commodities during the crisis. We even saw negative oil prices due to the excess supply in the market as economic activity fell. In the long-term, however, much of the oil prices are controlled by OPEC – an organisation in the Middle East that determines the supply levels for the commodity. This adds a lot of risk that is not diversifiable. Weak USD has not helped the cause for oil either. But, with the emergence of a vaccine and the return in economic activity, it may be a good time to look at oil stocks.
Origin Energy is one of the best oil stocks on the ASX. It demands a market capitalisation of over $8 billion. The performance in 2020 for all oil stocks has been miserable. However, in the last 3 months ORG has returned 9.13% to investors.
Origin Energy reported September 2020 quarter production was stable compared to the prior quarter, with higher operating production offset by reduced non-operated production due to planned maintenance. Origin has reaffirmed its FY2021 guidance. With electricity demand set to rise and the firm’s halted expansion project estimated to resume soon, Origin Energy is still one of the best oil stocks on the ASX.
Beach Energy has returned -25% year-to-date. But so have all the oil stocks delivered negative returns. In the past 3 months, however, Beach Energy has returned 37% to investors. Total sales revenue in the latest quarter was 13% higher than the prior quarter, driven by higher LPG and condensate sales volumes and higher realised liquids pricing, as energy markets recovered from the earlier impacts of COVID-19 in Q4 FY 2020.
BPT mainly operates in the Cooper Basin and Beach Energy announced that it has executed an Asset Sales Agreement (ASA) with Senex Energy to acquire its Cooper Basin assets for $87.5m – expanding the project. There are tailwinds on the horizon and BPT is an ASX oil stock to look out for.
Santos has recovered most of the losses from the crash in March. The oil stock has a market capitalisation of over $13 billion and in the past 3 months, it has returned 25% to investors. Santos also operates in the Cooper Basin along with other locations in Australia and the PNG.
Santos reported a record 3rd quarter during the financial year. Production was 25.1 mmboe and it was 22% higher than the previous quarter. The firm also generated US$143 million in cash flows. Recently, Santos has entered into a new debt facility worth US$750 million and matures in 5 years. The firm has also updated its production guidance forecast and there is still a lot to come from one of the largest oil stocks on the ASX.
Woodside Petroleum is another large cap oil stock on the ASX. We have seen a rebound in share price performance in WPL as well. After a drip in March, the stock has returned 31% in the past 3 months.
Woodside Petroleum provided a third quarter report for the period ended 30 September 2020. It delivered production of 25.3MMboe, up 2% from Q3 2019; delivered sales volume of 26.7MMboe, up 10% from Q3 2019. It concluded the first phase of the Greening Australia and Woodside Native Reforestation Project.
With a dividend policy of 50% of underlying net profit after tax and incoming tailwinds, Woodside Petroleum makes into our list of top oil stocks.
Oil Search took a heavier beating than its ASX peers during the crash in March. The performance year-to-date is -49%. But this has been slightly offset in the past 3 months as the stock has gained 29%. The Sydney based company operates via the PNG unit, Alaska unit, and the Centre unit.
In the latest quarter update, OSH reported sustained outperformance of PNG, which operated at an annualised rate of 8.9MTPA during the quarter and delivered the highest first nine months of production since the project commenced in 2014. In Alaska, a 33% increase in 2C contingent resources has been seen, taking total gross Alaskan North Slope 2C resources to 968 mmbbl. Going forward, Oil Search has reiterated that it will focus on the resources that matter the most and they will look to drive costs lower and simplify operations. OSH is thus an oil stock to keep a close eye on.
There has been a lot of positivity with the news of a vaccine and economic activity is set to recover globally. This may be a good time to gain exposure to the oil and gas sector at prices that are relatively much lower than it was prior to the pandemic. Find out what oil stocks we are holding at Shares in Value to make a fully informed decision prior to investing.