Investing in ASX Oil Shares
During 2020 and 2021, the pandemic era and the Russia-Ukraine war have left the whole world grappling with supply chain bottlenecks for commodities, which have led to mounting oil and gas prices skyrocketing to an all-time high. When oil prices are high, investors in ASX oil stocks can benefit from attractive dividend rewards along with share price appreciation. Oil is considered pivotal to economic activity and is a vital source of energy to power the global economy.
As the whole world is stepping ahead towards renewable sources of energy generation, oil and gas remain high priorities.
Download your free ASX Dividend Report Now
What are ASX Oil Shares?
Oil and gas companies listed on the Australian Securities Exchange are commonly known as ASX oil shares. Crude oil is the most traded commodity in the world, and two global benchmarks in particular set the price: West Texas Intermediate (WTI) and Brent.
There are many oil and gas projects operating in the exploration and extraction process in Australia. The oil price has taken a sharp correction from its all-time high after 2022, when the central banks globally started hiking aggressive interest rates. Examples of ASX oil shares are as follows:
• Woodside Energy Group Limited (ASX: WDS)
• Santos Limited (ASX: STO)
• Ampol Limited (ASX: ALD)
• AXP Energy Limited (ASX:AXP)
• Bass Oil Limited (ASX: BAS)
Pros of Investing in ASX Oil Shares
There are specific benefits that investors might expect from oil companies. Oil companies that are ASX oil shares make massive profits when there is a substantial increase in demand for oil, and thereby, oil prices as a commodity can potentially generate returns with attractive profits and cash flows for the investors. Surplus income generated makes it possible to efficiently invest in drilling with additional wells to increase production, repay debt, repurchase ASX shares, and pay good dividends for shareholder commitment.
On the flip side of it, commodities as a whole are cyclical in their demand and supply scenario, which means that investors might have to confront both ups and downs. Supply chain bottlenecks for major commodities caused havoc during the Ukraine War.
The price fluctuation of oil has a strong correlation with oil share price evaluation. When oil prices tend to go down, the stock market badly hammers down oil shares. Volatility sometimes provides an attractive buying opportunity for traders to make a profit if it can be predicted in the right direction. On the other hand, negative price direction makes some investors panic.
Top Oil Shares on the ASX: The Biggest Oil Companies in 2023
Australia has various oil companies listed on the ASX, which can give investors exposure to oil prices. There are specifically the biggest ASX oil stocks by market cap, as follows:
Woodside Energy Group Ltd.
Woodside Energy Group Limited (ASX: WDS), which has a market cap of $72.91 billion and a current market price of $38.40 (as of August 18, 2023), is an Australian oil and gas company engaged in hydrocarbon exploration, evaluation, development, production, and marketing.
The operational overview of the company, the Ngujima-Yin FPSO, has successfully completed a planned 5-year maintenance turnaround in a Singapore dry dock, with production anticipated to start in July 2023.
The Enfield P and A campaign continued with four wells permanently plugged and three Christmas trees removed. The plugging of 13 of 18 Enfield wells and the removal of 16 of 18 Christmas trees has been fully completed.
Santos Limited (ASX: STO)
Santos Limited (ASX: STO), with a market cap of $25.24 billion and a current market price of $7.77 (as of August 18, 2023), is a low-cost producer of oil and gas committed to cleaner energy and clean fuel production with operations across Australia. Santos Limited has been supplying energy to Australia and the Asia-Pacific for more than fifty years.
The company has been constantly evaluating feasibility studies for opportunities to capture and transport CO2 emissions from local industrial and international sources for long-term storage in a number of its gas reservoirs. Santos Limited is actively involving several nearby large emitters and international industrial groups to support the concept and development of de-carbonization solutions for a range of heavy industries.
Ampol Limited (ASX: ALD)
Ampol Limited (ASX: ALD), which has a market cap of $7.76 billion and a current share price of $32.57 (as of August 18, 2023), is an independent Australian company involved in transporting fuels.
The company reported that EBIT for the first half of FY2023 was around $575 million and EBITDA was approximately $800 million. The group result reflects strong earnings growth from the non-refining divisions compared to the first half of the 2022 financial year. Fuels and infrastructure delivered double-digit growth in the first half.
The EBIT for the first quarter of 2023 was $345.4 million, up 82% on the prior corresponding period, representing the company’s second strongest quarterly result in its history and reflecting continued strong performance across all areas of the business. Refined product markets were strong, with LRM for the first quarter of 2023 reaching US$14.90 per barrel.
Download your free ASX Penny Report Now
Frequently Asked Questions (FAQ)
What are the best oil and gas stocks to Look at?
Australia has many listed oil and gas ASX oil shares, but there are particularly some of the best energy sector stocks, such as Ampol Limited (ASX: ALD), AXP Energy Limited (ASX: AXP), and Bass Oil Limited (ASX: BAS).
What are the top 5 oil companies in Australia?
Australia has dozens of oil companies, but some of the well-known oil companies are significantly recognized as Australia’s top oil companies due to their well-developed oil and gas infrastructure. Some top Australian ASX oil companies are: Woodside Energy Group Limited (ASX: WDS); Santos Limited (ASX: STO); Ampol Limited (ASX: ALD); AXP Energy Limited (ASX: AXP); and Bass Oil Limited (ASX: BAS).
Who is the largest oil producer on the ASX?
Woodside Energy Group Limited (ASX: WDS), which has a market cap of $72.91 billion, is an Australian oil and gas company. The company delivered second quarter production of 489 Mboe per day, down by 5% from Q1 2023 due to planned turnaround and maintenance activities. The company has provided full-year production guidance, which remains unchanged at 180–190 MMboe.
Veye Pty Ltd(ABN 58 623 120 865), holds (AFSL No. 523157 ). All information provided by Veye Pty Ltd through its website, reports, and newsletters is general financial product advice only and should not be considered a personal recommendation to buy or sell any asset or security. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation, or needs. You should look at the Product Disclosure Statement or other offer document associated with the security or product before making a decision on acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide for more information. Any recommendation contained herein may not be suitable for all investors as it does not take into account your personal financial needs or investment objectives. Although Veye takes the utmost care to ensure accuracy of the content and that the information is gathered and processed from reliable resources, we strongly recommend that you seek professional advice from your financial advisor or stockbroker before making any investment decision based on any of our recommendations. All the information we share represents our views on the date of publishing as stocks are subject to real time changes and therefore may change without notice. Please remember that investments can go up and down and past performance is not necessarily indicative of future returns. We request our readers not to interpret our reports as direct recommendations. To the extent permitted by law, Veye Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss, or data corruption) (as mentioned on the website www.veye.com.au), and confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing this report. Veye Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services.