From the cars we drive to the homes we live in, energy is integral to the modern day-to-day.
But as global warming and climate change capture global attention, a new question is emerging: where will our future energy come from?
It’s an interesting quandary for traditional energy players: oil and gas prospectors and producers who live and breathe the market are in increasingly uncertain territory.
Coupled with geopolitical instability and a global pandemic, where the market heads next is anyone’s guess.
Future focus aside, there are imminent supply issues to contend with. A looming energy crisis on Australia’s east coast, for one, indicates that oil and gas still has an important role to play in the global energy transition.
So, where does this leave ASX-listed energy stocks, and what are their plans to adapt and evolve as the world prioritises cleaner, greener energy sources?
Give me the elevator pitch
The International Energy Agency (IEA) says global oil markets are gradually recalibrating after three turbulent years, characterised by the pandemic, Russia’s invasion of Ukraine and the solidifying renewable energy initiatives.
In the agency’s Oil 2023 report, it provided a five-year outlook on ever-evolving supply and demand dynamics, noting that upstream investment, sources of new supply growth, spare capacity and shifting oil demand patterns are the trends to watch.
The IEA highlights what it’s calling a global reset, and while it warns the market could tighten in coming months as OPEC+ production cuts temper an upswing in global oil supply, the outlook improves over the five-year period.
“Russia’s invasion of Ukraine sparked a surge in oil prices and brought security of supply concerns to the fore, helping accelerate deployment of clean energy technologies,” the report stated.
“At the same time, upstream investments in 2023 are expected to reach to their highest levels since 2015.”
The energy agency also believes an energy crisis in recent years will accelerate the transition away from oil, although demand for oil from combustible fossil fuels is forecast to peak in 2028.
Source: IEA.
The report continues: “While a peak in oil demand is on the horizon, continued increases in petrochemical feedstock and air travel means that overall consumption continues to grow throughout the forecast.
“We estimate that global oil demand reaches 105.7 million barrels/day in 2028, up 5.9 million barrels/day compared with 2022 levels.”
In the spotlight: ASX energy stocks
Blue Star Helium
Breaking out from the traditional energy pack is Blue Star Helium Ltd (ASX:BNL, OTC:BSNLF), which, as the name suggests, is on the hunt for helium in the heart of North America.
The company’s banner second-quarter news came right at the end of the 2023 financial year; Blue Star commissioned mid-stream provider IACX Energy LLC to deliver and operate an initial helium recovery plant at its Voyager discovery in Las Animas County, Colorado.
The helium recovery plant will have a throughput of 2 million cubic feet per day to produce about 98% pure helium product gas, with first output expected in the fourth quarter.
Recapping the news, managing director and CEO Trent Spry said the team was pleased to partner with a well-credentialled and proven mid-stream helium operator.
“As well as delivering significant de-risking benefits in terms of upfront capital, time and operating profile, adopting this pathway has also eliminated any requirement for Blue Star to commit to price concession offtake agreements,” he explained.
“We are excited to be advancing along the development pathway toward targeted first production from Voyager during Q4 2023.”
In other news, Blue Star has landed approval for three of its proposed helium wells at the Galactica/Pegasus Project and secured the final rubber stamp to drill the first two helium wells at Voyager.
A development well drilling program is slated to kick off this month at the latter asset, bringing the team one step closer to its helium production vision.
Brookside Energy
There was no sign of slowing down in 2023’s June quarter for Oklahoma oil and gas player Brookside Energy Ltd (ASX:BRK).
Production continued at the company’s four SWISH AOI wells in the Anadarko Basin, which collectively delivered nearly 240,000 barrels of oil equivalent over the three-month period.
Post-quarter end, Brookside hit its millionth-barrel production milestone — less than two years after the Jewell well came online.
"I would like to thank all of our stakeholders, shareholders, advisors and the team that have all played a role in taking the SWISH AOI discovery from concept to production,” managing director David Prentice told the market.
“We continue to pursue our goals in a financially disciplined way, always with an eye on maintaining our leverage to higher oil prices as we look to monetise this liquids-rich reserve base.”
On the financial front, Brookside delivered a record A$17.5 million in cash receipts and A$9.3 million in positive operating cash flow.
And as the company’s exploration focus turned to the Bradbury Area of Interest (AOI), Brookside also made progress on production tests at the Juanita well in Oklahoma’s Ardmore Basin.
Buru Energy
Buru Energy Ltd (ASX:BRU, OTC:BRNGF) has set its sights on development at its wholly-owned and operated Rafael discovery in Western Australia’s Canning Basin — the first proven significant conventional gas and condensate field in the region.
The energy stock has decided to pursue a partnership model to support Rafael’s development following a pre-feasibility study that confirmed the project’s technical and economic viability.
In other news, a production restart at the Ungani Oilfield this quarter was also cause for celebration after ex-Tropical Cyclone Ellie shuttered operations in January.
Reflecting on the quarter at large, CEO Thomas Nador said Buru’s execution discipline had again yielded positive results.
“Buru will continue to invest its efforts, capital, and capability to bring this game changing development to fruition through structured processes, discipline, capability, and partnerships,” he explained.
“Looking ahead, we are excited by the opportunities that lie before us, and I look forward to keeping you informed of our progress.”
The road ahead is clear for Buru: just yesterday, the company reaffirmed its development strategy, charting the course for commericalisation at Rafael.
The energy stock is pressing ahead with a comprehensive, multi-phase development strategy after it completed concept studies over the full gamut of Rafael’s contingent resources.
Phase one of Buru’s development strategy revolves around a scalable, hybrid gas-to-power and renewables project, while phase two will involve concept selection and front-end engineering and design (FEED) work to underpin a methanol, ammonia or liquefied natural gas (LNG) project.
Empire Energy Group
Empire Energy Group Ltd (ASX:EEG, OTC:EEGUF) remains focused on its EP187 licence at the heart of the highly prospective Beetaloo Basin in the Northern Territory.
The headline result this quarter was a “nationally significant” 270% increase in 2C contingent resources — made up of high calorific, low CO2 gas that could play an important role in mitigating a domestic gas shortfall.
At the end of the quarter, EEG had A$23.3 million in cash to support the rest of its activity pipeline.
Managing director Alex Underwood said June capped off “another successful quarter”, characterised by the resource increase and flow-on effects from the 2022 field season.
“While Empire’s team carries out its work to seek the board’s approval to enter into pilot production, we are keenly aware of the importance of being responsible stewards of our shareholders’ capital, particularly in light of challenging capital market conditions.”
“With cash balances materially enhanced during the quarter, and further inflows anticipated later this year as described below, Empire has sufficient cash at bank to fund the value-accretive work we are doing to reach a final investment decision for the EP187 pilot project later this year.”
Beyond exploration and development, Empire has also seen some changes at the board level. In late March, the company farewelled chairman and non-executive director Paul Espie AO.
Oil and gas veteran Peter Cleary has since stepped up to fill Espie’s shoes, with his 29-year energy career and longstanding board experience poised to guide EEG in the years to come.
Elixir Energy
Elixir Energy Ltd (ASX:EXR) is walking in two worlds: at the “world class” Gobi H2 Green Hydrogen and Nomgon Coal Bed Methane projects in Mongolia and the Grandis Gas Project in Queensland’s Taroom Trough.
The company has bankable renewable energy data in hand for its green hydrogen asset — information that supports its development plan for a project on the doorstep of the world’s largest energy importing market.
Meanwhile, at Nomgon, Elixir has flagged plans to expand its pilot production project and leverage the Mongolian asset’s commercial upside.
“Our strategy to invest in Mongolian CBM rests on the strong regional combination of high gas prices and low costs and the results to date are highly encouraging in this context,” managing director Neil Young explained.
Finally, at Grandis, the company has procured a rig for its Daydream-2 well — slated to spud in October this year.
In a boon for the bank balance, the Australian Government’s Department of Industry, Science and Resources has confirmed that activity at Daydream-2 well will qualify for R&D tax credits.
Young says work at Daydream-2 is poised to materially increase Grandis’ 395-billion-cubic-feet 2C contingent resource, with plans to drill the well to around 4,200 metres deep.
Kinetiko Energy
Kinetiko Energy Ltd (ASX:KKO, OTC:KKOEF) is operating at the heart of energy-hungry South Africa, where much of the June quarter focused on an underexplored block next to one of the world’s largest synthetic fuels and chemicals production facilities in Secunda.
Back in June, the energy stock completed the first two wells within its ER272 tenement — just weeks after spudding kicked off in early May.
The rigs soon moved to the 272-06C and 272-08C wellsites, where wireline logging established significant sandstone gas intervals in both wells.
CEO Nick de Blocq said: “We are very excited by the fantastic log results from all four core holes to date.
"For the shallowest core holes in our entire acreage, to achieve an average of over 147 metres of gas-bearing sediments from our most recent pair is astounding.”
Since the June quarter concluded, Kinetiko has spudded two more new core wells just 4 kilometres from South Africa’s largest gas pipeline and other major energy infrastructure.
The company says a maiden gas reserve certification is imminent — an important part of the company’s mission to feed South Africa’s insatiable, and growing, demand for new energy sources.
Talon Energy
Talon Energy Ltd (ASX:TPD) spent the June quarter advancing its Walyering gas field as part of a joint venture with operator and fellow ASX-lister Strike Energy Ltd (ASX:STX).
The project is making strides towards commercial production, with a June update indicating that construction is advancing without incident and in line with a revised schedule.
In the lead up to daily production, Strike’s production team has been executing production rehearsals and other operational readiness exercises.
The joint venture has also executed a condensate transportation services agreement with Road Trains Australia, which has direct experience in trucking, handling and delivering condensate liquids from WA to Port Bonython.
Like Elixir, Talon is also walking in two worlds — over at the Gurvantes XXXV Coal Seam Gas Project (where it’s in partnership with TMK Energy Ltd), the company recently commenced production testing initiatives following a three-well pilot campaign.
It seems that work is already paying dividends; in late July, Talon welcomed the first flow of gas to surface at its Mongolian joint venture.
Talon managing director and CEO Colby Hauser said: “We are pleased to announce the positive results from the extended production test and the promising early signs from the performance of the three pilot wells and we look forward to updating the market further.”