Investing in ASX energy shares offers potential benefits of exposure to a fundamental sector having consistent demand. The investment in ASX energy stocks lends some stability as well as diversification to the portfolio. Two such stocks with growth potential are
Strike Energy Limited (ASX: STX)
Strike Energy Limited has announced multiple successful gas discoveries in the Erregulla Deep-1 (ED-1) well in EP469 on September 3, 2024.
It reported two high-quality, low-impurity gas discoveries in the Erregulla Deep-1 well in EP469, with a combined 28m of net gas pay at unprecedented depths for the Perth Basin. The discoveries include 26m of net gas pay in the Kingia Sandstone with 13% average porosity and 7,623 psia reservoir pressure, and 2m in the High Cliff Sandstone with 11% porosity and 7,807 psia pressure. Additionally, a highly prospective over-pressured zone with 4m of net gas pay was found in the Irwin River Coal Measures. The well, drilled to 5,225m, is the deepest onshore in Australia and extends the Permian gas play eastward, where Strike holds 100% ownership in EP503, 504, and 505.
Strike Energy Limited has highlighted significant advancements across its key projects. The Walyering Project saw gas and condensate sales increase by 7% to ~2.4 PJe, boosting revenue by 13% to $20 million. The Walyering-7 well confirmed a conventional gas and condensate accumulation with 23m of net pay. At South Erregulla, Strike submitted a proposal for an 85 MW Peaking Power Plant and re-certified 82 PJ 2P plus 2C reserves. Meanwhile, West Erregulla received primary environmental approvals, and its gas supply agreement reverted to a previous option. The company also achieved gross sales of 2.4 PJe, including 2.3 PJ of gas and 15,661 barrels of condensate, with total sales revenue rising 13% quarter-on-quarter. Capital expenditure for the quarter was $26.4 million, covering activities such as the Walyering-7 drilling, Kadathinni 2D seismic acquisition, and preparations for the Erregulla Deep-1 and Booth-1 wells. Strike ended the quarter with $86 million in liquidity, comprising $39 million in cash and $47 million in undrawn debt.
Strike Energy Limited has shown a remarkable increase in its Enterprise Value, rising from A$83.75 million on 30-06-2019 to A$1,333.0 million by 31-12-2023. This reflects growing investor confidence and the company's potential for future growth. Additionally, the Net Book Capital has also expanded significantly, moving from A$90.90 million to A$413.1 million over the same period, indicating a solid capital foundation to support ongoing and future projects.
Strike Energy Limited is positioned for substantial growth, with a targeted focus on key projects and sustainable energy production. While the company faces risks such as market fluctuations and execution challenges, the overall positive sentiment and the potential for significant returns make it an attractive investment opportunity in the Australian energy sector for FY24 and beyond.
Woodside Energy Group Limited (ASX: WDS)
Woodside Energy Group Limited on half-yearly basis reported production growth year on year with increment in production cost. However, production cost between H1 2023 reduced from $8.8 boe from H1 2023 to $8.3 boe. Group reported EBITDA of $4.4 billion, driven by strong operational performance and gain on sell-down of interest in Scarborough Joint Venture.
In 1H 2024, WDS reported fully franked Interim dividend of $1.3 billion, representing a half-year annualized dividend yield of 7.3% Maintaining 80% payout ratio, top of the target payout range.
Forecasted dividend cash flows indicates variations with a general trend of increasing payments over time. The average dividend payment is about $0.72.
Woodside has recently commenced oil production from its highly anticipated Sangomar Oil Project in June 2024, marking a notable advancement in its strategy for production expansion across its operational portfolio, where this new initiative is expected to play a crucial role. The company is actively evaluating additional organic resource growth opportunities and is continuously reviewing its portfolio with the aim of achieving further increases in oil production in the future. Concurrently, the Scarborough and Pluto Train 2 project are also 62% complete, with plans to deliver the first LNG cargo by 2026. Additionally, the Trion project is making significant strides, with the first oil production anticipated in 2028. Woodside's overall exploration efforts also remain vigorous, focusing on the discovery of new projects within its pipeline to support long-term growth.
Woodside's solid operational foundation, coupled with its historical financial growth, has resulted in a threefold increase in revenue and nearly a fivefold rise in earnings over the past five years. This strong performance has strategically positioned the company to provide substantial financial returns to its shareholders. With further promising short-term production growth and significant long-term scalability through its comprehensive development and exploration initiatives, the company is anticipated to maintain and enhance its robust distributions while also offering considerable potential for capital appreciation for investors.
Source: Company’ Report
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