Listed oil and gas companies active in the Cooper Basin have lost an average 70% of market value since the oil price rout of the past year, according to a report by EnerqyQuest.
This has increased the likelihood of the Basin becoming the hotbed for new merger and acquisition plays, according to EnergyQuest analysis of the share price impact on Australia’s listed energy companies of the oil price slump.
It isn’t all doom and gloom, however, among stakeholders in Australia’s energy market with the Queensland Government looking at a yearly $500 million royalties bonanza from new LNG-linked gas projects, notwithstanding the fall in oil prices.
In his latest quarterly report, EnerqyQuest Chief Executive Officer, Graeme Bethune, said global oil supply growth had continued to outstrip growth in demand over the past year to a point that oil prices had not only slumped but showed no signs of exiting the doldrums for some time to come.
“In a comparison of oil and gas company share prices as of 11 September this year compared with early June 2014, prior to the oil price weakness, the only Australian company in the group which has escaped the impact of lower oil prices is AGL, which has minimal oil price exposure,” Bethune said.
He added that the biggest falls have been for Cooper Basin players, averaging 70% and raising the likelihood of consolidation.
As a supplier of east coast gas, the Cooper Basin is supplying one of the few tight gas markets in the whole world with increasing prices. The European gas market is in the doldrums, US gas prices have slumped to US$2.77 per million British Thermal Units, and LNG spot prices in Asia have halved.
“However, Australian east coast gas prices are increasing and small Cooper Basin players are actively developing new gas supply projects to meet strong east coast demand. This presents great consolidation and takeover opportunities for new players with stronger balance sheets,” Bethune said.