The energy sector plays a key role in the Australian and global economy, providing essential services ranging from the generation and distribution of electricity to the exploration and production of oil, gas and renewable energy.
These companies play a pivotal role in various aspects of the energy supply chain and their activities include:
- Exploration and production - Locating and extracting oil and gas, which are not only used for energy generation but also serve as raw materials in numerous products.
- Electricity and gas distribution - Supplying electricity and natural gas to retail and business consumers.
- Renewable energy advancements - Participating in the renewable energy sector by manufacturing components or operating facilities that harness renewable sources like solar, wind and hydropower.
Undeniable economic signficance
The energy sector's economic significance is undeniable. It is intricately linked to the global economy, with the values of oil and gas often used as barometers for assessing economic health.
These commodities are not just energy sources but are also fundamental to various industries, impacting global markets and economic trends.
Moreover, the essential nature of energy cannot be overstated. It forms the backbone of nearly all human activities and industries.
As the global population and levels of industrialisation continue to escalate, the demand for energy is expected to rise correspondingly.
This growing need underscores the sector's long-term relevance and potential for sustained demand.
With its consistent demand, the energy sector has historically been a source of robust revenue streams.
The industry's vast scale and its critical role in powering economies and societies ensure a continuous and potentially expanding market.
Transition towards renewable energy
As the world grapples with climate change, the ASX energy sector is undergoing a significant transformation.
Historically dominated by fossil fuels, there is a growing shift towards renewable energy.
This transition is also being adopted by traditional energy companies, recognising the long-term investment potential and sustainability of clean energy sources.
A few ASX players that generated strong news flow during Q3
Brookside Energy
Brookside Energy Ltd (ASX:BRK, OTC:RDFEF) had a busy September quarter showcasing a period marked by significant financial growth and notable operational achievements.
A remarkable achievement was the record free cash flow of A$5.2 million, indicating a 20% increase in the company's cash position compared to the second quarter of 2023, reaching a net balance of A$28.1 million, net of A$2.8 million spent on the total on-market share buy-back costs.
Brookside also reported substantial cash receipts, amounting to A$12.9 million, coupled with a positive operating cash flow of A$6.3 million.
Operational highlights
The company achieved a net production rate of 1,517 Barrels of Oil Equivalent (BOE) per day, with liquids comprising 67% of this output - just shy of last quarter’s record production.
Four operated SWISH Area of Interest (AOI) wells contributed significantly to the company's production, delivering a gross production of 214,267 BOE and reaching a cumulative production of 1.4 million BOE by the end of the quarter.
A notable milestone was the production of 1,000,000 BOE, achieved in less than two years since its first operated well kicked off production, inclusive of 715,000 barrels (BBLS) of liquids.
In terms of acreage, the company expanded its presence in the Woodford 'Oil Window' by 12.5%, adding approximately 400 gross acres.
Approvals in place
There was significant progress in obtaining the necessary approvals for the development of the Flames Drilling Spacing Unit (DSU).
Additionally, the company secured regulatory approval to establish a 1,280-acre unit in the Bruins DSU, marking a 33% increase in the size of this DSU.
Juanita Well
The Juanita Well testing demonstrated promising results with a peak production test rate of 258 Barrels of Oil Equivalent Per Day (BOEPD), of which 78% was oil.
This development paves the way for establishing new Areas of Interest (AOI) with high-return potential.
Buru Energy
During the September quarter, Buru Energy Ltd (ASX:BRU, OTC:BRNGF) outlined significant advancements in its exploration, appraisal and production activities with a particular focus on the Rafael conventional gas and condensate discovery in Western Australia’s Canning Basin.
The quarter saw the completion of the Rafael 3D seismic survey, covering about 200 square kilometres, to enhance understanding of the Rafael discovery – data that is pivotal for the 2024 appraisal drilling program.
Buru confirmed its phased development approach for the Rafael discovery, marking it as the first significant conventional gas and condensate field in Western Australia's Canning Basin.
The company's receipt of approval from the Department of Mines, Industry Regulation and Safety for the Declaration of Location in exploration permit EP 428 is a noteworthy step towards a Production Licence.
Financially, Buru has shown resilience through the sale of its interests in the onshore Carnarvon Basin permit to Energy Resources Limited for A$5 million. This decision aligns with the company's focus on its core projects.
Other interests
The Ungani Oilfield, in which Buru regained full ownership following Roc Oil's exit, produced approximately 21,500 barrels of oil in the quarter.
Buru's share of the revenue from this production was around A$4.7 million, demonstrating a solid financial return.
Innovation continues to be a priority, with Buru's subsidiary, 2H Resources, partnering with the Commonwealth Scientific and Industrial Research Organisation (CSIRO) for a research project on natural hydrogen flow. This initiative underlines Buru's commitment to exploring new energy solutions.
Buru has initiated a strategic partner selection process for the Rafael gas condensate resource, engaging Miro Capital as an advisor.
This move, coupled with the awarding of the pre-front engineering design scope to GHD Pty Ltd for the Rafael Phase 1 development, signals the company's readiness to advance its key projects.
Carnarvon Energy
In its latest quarterly report, Carnarvon Energy Ltd (ASX:CVN) outlined significant progress in its transition from an exploration company to a producer.
The key highlights for the quarter ending September 2023 include the strategic divestment of a 10% interest in Bedout assets to CPC Corporation, Taiwan, for US$148 million.
This move not only bolsters funding for the remaining share of the Dorado development but also marks a strategic partnership with CPC Corporation.
As far as finances are concerned, Carnarvon boasts a strong balance sheet with A$183 million in cash, no debt and a US$90 million Dorado development cost carry.
Exploration and development plans
During the quarter, Carnarvon identified significant prospective resources in the Bedout Sub-basin following new 3D seismic interpretations.
The company is actively maturing drilling plans, targeting five strategic prospects within the Bedout Exploration Permits.
These efforts could unlock considerable resources, estimated at 9 trillion cubic feet (Tcf) of gas and 1.6 billion barrels of liquids (Pmean, gross).
The company is also finalising key construction contracts and operating costs, aiming for a streamlined and cost-effective development of Dorado and Pavo resources.
Empire Energy
Empire Energy Group's September quarter outlined significant developments at its Carpentaria Pilot Project in the Beetaloo Basin.
During the quarter, the Carpentaria-3H well (C-3H) completed its extended production testing phase and was subsequently shut in. Notably, the well achieved an initial production rate (IP90) of 3.1 Terajoules (TJ) per day.
The Carpentaria-2H and C-3H wells are now poised to be integrated into the Carpentaria Pilot Project well inventory.
This integration is a strategic move, aiming to connect these wells to the necessary facility infrastructure for production.
Funding support
In a notable development, APA has committed to investing up to A$5 million in Engineering and Design Concepts.
Furthermore, APA may also provide funding support for midstream gas infrastructure facilities.
The Carpentaria Pilot Project is steadily moving towards a final investment decision (FID).
As of the end of the quarter, Empire reported a cash balance of A$15.1 million. Following the receipt of a Research and Development Tax Offset totalling A$15.6 million after the quarter's end, the company’s cash balance has risen to A$29.3 million.
Empire is exploring various funding options, benefiting from its 100% working interest in all properties and the absence of private royalties. The company is open to potentially selling down an asset-level interest to an industry player and has initiated conversations with potential joint venture partners.
Transitioning to production phase
Empire Energy Group managing director Alex Underwood expressed optimism about the company’s progress.
He noted the successful flow testing at C-3H and the ongoing preparations for the FID on the EP187 pilot project.
Underwood highlighted the improvement in productivity post-shut-in at C-3H and the valuable insights gained from post-flow testing analysis.
These insights are expected to enhance the fracture stimulation of the Middle Velkerri B as the project transitions to the production phase.
Forward plan
With the formal gas marketing process underway and the current tightness in Northern Territory and East Coast gas markets, Empire is well-positioned to sell pilot project gas volumes at attractive terms.
The substantial R&D tax refund has further bolstered Empire’s financial position, ensuring it is well-funded for its upcoming activities as it approaches an FID decision in the coming months.
Elixir Energy
Elixir Energy Ltd (ASX:EXR) has released its quarterly activities report for the period ending September 30, 2023, highlighting a period of significant activity and development in Queensland and Mongolia.
Key developments in the quarter include:
- Daydream-2 Appraisal Well - Elixir is on the brink of drilling the Daydream-2 appraisal well in Queensland, described as the most impactful in the company's history. This development is anticipated to significantly de-risk the company's gas resources.
- Nomgon Pilot Project Expansion - The expansion of the Nomgon Pilot Project and the discovery of new coal bed methane (CBM) in the Nomgon Production Sharing Contract (PSC) are notable accomplishments.
- Funding initiatives - Elixir secured multiple forms of finance, including qualifying for Research and Development (R&D) cash rebates from the Federal Government, new equity and a debt facility secured on the R&D rebate.
Forward plan
Looking ahead, Elixir's Daydream-2 well is strategically poised to increase and de-risk significant gas resources.
In Mongolia, the Nomgon coal bed methane pilot is showing promising characteristics, with gas production expected to increase gradually based on practical experience and learning.
In summary, Elixir Energy's report demonstrates a blend of strategic progress and prudent navigation of global market challenges, positioning the company well for future growth and contribution to the energy sector.
Kinetiko Energy
Kinetiko Energy Ltd (ASX:KKO, OTC:KKOEF) has published its quarterly activities report for the period ending September 30, 2023, highlighting significant advancements in health, safety, regulatory compliance and strategic partnerships in South Africa
On the health and safety front, the Petroleum Agency of South Africa (PASA) visited the worksite, providing positive feedback on the systems in place.
As far as regulatory compliance, Afro Energy, a subsidiary of Kinetiko, has completed the minimum work scope for its original exploration rights and kicked off work for the renewal periods.
Exploration Rights ER270, ER271, and ER272 are due for renewal in June and February 2025, respectively.
Joint venture
Afro Energy is in negotiations with the Industrial Development Corporation of South Africa (IDC) to co-develop a Special Purpose Vehicle (SPV) for appraising, developing and producing wellfields in Block ER271.
The project aims to produce natural gas for midstream LNG infrastructure, starting with a 50MWe project and potentially expanding to 500MWe, making it South Africa's largest onshore LNG project.
The IDC has an option to participate in further projects, potentially reaching 1.5 GW in total.
Corporate restructure/merger
In September, Kinetiko completed the acquisition of a 51% interest in Afro Energy from Badimo Gas (Pty) Ltd through the issue of 495,482,590 fully paid ordinary shares.
This acquisition makes Kinetiko the sole owner of the Mpumalanga Gas Project's exploration rights.
Capital raising
Kinetiko raised A$6,500,000 through the issue of 72,222,222 ordinary shares at A$0.09 each to Talent 10 Holdings (Pty) Ltd (T10).
This capital raising facilitated the acquisition and restructuring of Afro Energy, subsequently making Kinetiko the majority stakeholder with approximately a 95% interest in Afro Energy.
Talon Energy
Talon Energy Ltd (ASX:TPD) marked significant strides during the September quarter in operational and corporate spheres, in what the company claims is a “transformative” quarter.
A major highlight was the commencement of production at the Walyering Gas Field towards the end of September.
This significant step marks Talon's transition from exploration to production, a milestone that underscores the company's growth trajectory.
The Walyering project's initiation is anticipated to boost Talon's production capabilities in subsequent quarters.
At the office
In a strategic corporate move, Talon entered a binding Scheme Implementation Deed (SID) with Strike Energy Limited.
Under this agreement, Strike aims to acquire all issued shares of Talon through a scheme of arrangement.
Upon successful completion, Talon shareholders are set to receive 0.4828 new Strike shares for every Talon share held at the scheme record date.
This acquisition is expected to enhance Talon's market presence and operational capacity.
Furthermore, Talon announced a binding Heads of Agreement with TMK Energy Ltd (TMK) post the quarter's end.
This agreement is focused on consolidating the ownership of the Gurvantes XXXV Project, subject to requisite shareholder approvals.
The consolidation is poised to yield significant synergies in exploration and production at the Gurvantes XXXV Project.
Additionally, it offers Talon shareholders the opportunity to realize value through continued exposure to this promising asset via a shareholding in TMK.
Triangle Energy
An active player in the energy sector, Triangle Energy (Global) Ltd (ASX:TEG) continues to make significant progress in its exploration and production activities in Perth Basin in Western Australia, according to its September 2023 quarterly activities report.
In exploration, technical work is advancing on the L7 and EP437 Exploration Permits.
The company has employed advanced artificial intelligence (AI) techniques for seismic data interpretation, enhancing fault and structural analysis.
This approach has led to the identification of additional prospects, notably in both the shallower, oil-prone section and the deep basement section, signifying potential for further exploration ventures.
Production
In the production domain, the Cliff Head Oil Field has reported the production of 47,923 barrels of oil during the quarter, with an average daily production of 521 barrels of oil per day (bopd).
This figure is slightly lower than the usual average, attributed to berthing slot congestion and production interference from the CH-10 workover at Geraldton.
The current production rate stands at 600 bopd. Additionally, Triangle Energy has executed an agreement with Pilot Energy for the divestment of a 78.75% interest in Cliff Head, expecting to receive staged payments totalling $7.5 million plus royalties - as the company diverts
Corporate
From a corporate perspective, Triangle Energy reported a cash reserve of A$7 million.
Notably, the company is a major shareholder in State Gas Limited, holding approximately 9%.
The receipt of oil sales revenue amounted to A$5.4 million, net to Triangle's 78.75% share, as payment for the fifth crude oil sale.
The next oil delivery to Asia is scheduled for early November.
What’s more
Expanding its horizon, Triangle Energy has applied for four groups of permits in the UK's 33rd round of licensing, with results anticipated in the fourth quarter of 2023.
The company is also exploring new ventures in Australia and Asia, including a new permit application in Asia and negotiations for a Petroleum Service Contract with the Philippines Department of Energy.
Tamboran Resources
The September quarter saw Tamboran Resources Ltd (ASX:TBN, OTC:TBNRF) make major leaps in its operations within the Beetaloo Basin wells.
During the quarter, the company drilled and cemented two wells, the Shenandoah South 1H (SS1H) and Amungee NW 3H (A3H), in permits EP 117 and 98 respectively, using the high-efficiency H&P super-spec FlexRig® Flex 3 rig – with notable improvements in drilling efficiency observed
The SS1H well intersected a 90-metre section of high-quality Mid Velkerri B Shale, marking the thickest section encountered in the Beetaloo Basin depocentre to date.
Logging results from this shale formation revealed higher porosity and gas saturation compared to adjacent wells. In another achievement, the A3H well was drilled and cemented in under 18 days, setting a record for the fastest well completion to Total Depth (TD) with a horizontal section in the Mid Velkerri B Shale.
This operation was completed approximately 20 days faster and at about 30% lower cost than the A2H well, drilled from the same pad.
Further enhancing its asset base, Tamboran announced a 32% increase in the Beetaloo Basin's unrisked 2C contingent gas resources, now totalling 2.0 trillion cubic feet (TCF), following the drilling of the Maverick 1V (M1V) well in EP 136.
Domestic market interest
The company also secured significant domestic market interest, signing six Letters of Intent (LOIs) with some of Australia’s largest gas and energy retailers.
These agreements, varying between 600 – 875 terajoules (TJ) per day (equivalent to 220 – 320 petajoules (PJ) per annum) for periods of 10 – 15 years, underscore the long-term domestic demand for gas from the Beetaloo Basin.
Re-domicile to the United States
In October, Tamboran announced plans to re-domicile to the United States through a Scheme of Arrangement, while maintaining its listing on the Australian Securities Exchange (ASX) under the TBN ticker via CHESS depositary interests (CDIs).
Additionally, the company commenced Concept Select engineering studies with Wood Group for its proposed NTLNG development at Middle Arm.
September saw the appointment of Stephanie Reed and Ryan Dalton as non-executive directors to the board of Tamboran Resources.
On the financial front, Tamboran reported a cash balance of A$33.5 million, positioning the company for continued operational growth and development.