Local Oil Names Drop Sharply After WTI Spikes Lower

Posted on | by Todd

Shares of ASX oil names are under pressure in early trade as West Texas Intermediate Crude Oil (WTI) prices dropped over  4% overnight.

WTI prices fell by close to $4.00 per barrel to $70.40 as a confluence of bearish news hit the market.

Increased trade friction between the US and China pushed WTI lower in Asian tarde, while news that Liyba and Saudi Arabia have increased production by a combined 800,000 barrels per day pushed the market through key support levels.

As illustrated in the chart below, WTI has rallied more than $10.00 over the last 5 weeks, which now places initial support $3.00 lower near $67.00.

Similarly, local oil names, OSH, STO, WPL and ORG have rallied over the last month and appear to have more downside price potential over the near-term.

OSH will announce their quarterly production report next Tuesday and STO and WPL will release their reports next Thursday.

We have traded both sides of these names over the last 12 months and will update with specific entry levels near lower technical support areas over the medium-term.

WTI Crude Oil

Origin Energy

Oil Search

Santos

 

Woodside Petroleum

ORG Slips Lower In Front Of FY18 Report

Posted on | by Todd

On May 30th, ORG was added to the ASX Top 20 index to replace the dissolved  WFD entity.

Since many Super funds and managed equity firms have a mandate to hold a percentage of listed index shares, we expected ORG to get a boost from the listing.

Since then, the share price has risen by over 8% and posted a 3-year high at $10.27 on Monday.

ORG will release its Quarterly report on July 31st and it looks like the share price could slip lower in front of that announcement.

With the expectations of FY18 NPAT rising by up to 2.6%, we see scope for the stock to hold the $9.20 support level and reach the $10.60 price range after the quarterly report.

Origin Energy

 

 

 

Opportunities As WFD Exits The ASX Indexes

Posted on | by Todd | Leave a Comment on Opportunities As WFD Exits The ASX Indexes

As the takeover of WFD by Unibail-Rodamco moves into its final stages, the ASX has decided which stocks will be added to their benchmark indexes.

In the ASX 20, WFD will be replaced by ORG: in the ASX 50 index, TAH will replace WFD: and in the ASX 200, ELD will fill in from the departing WFD.

Since many Super funds and managed equity firms have a mandate to hold a percentage of listed index shares, we see good value in these names once the takeover is completed.

We will update these shares with specific entry levels over the next few days.

Origin

TabCorp

Elders

 

 

Orgin Energy Is Approaching Full-Value

Posted on | by Todd | Leave a Comment on Orgin Energy Is Approaching Full-Value

Shares of ORG have a stable outlook, but are approaching an overbought condition relative to its fundamentals.

A mild Summer combined with reduced weather related events has seen a drop in demand which could act as a headwind to significantly higher share prices.

Our ALGO engine triggered a buy signal for ORG on February 13th at $8.30. Since then, the share price has run into resistance twice at $9.40.

We suggest that investors can look to sell the $9.50 calls to increase cash-flow enhance overall portfolio returns.

Origin Energy

 

Energy Names – Best Buy-Side Opportunities

Posted on | by Leon Hinde | Leave a Comment on Energy Names – Best Buy-Side Opportunities

Within the ASX 50,  OSH, STO, WPL, ORG & BHP are the names investors consider when looking for exposure to Oil and LNG.

Currently WPL, ORG and BHP remain in our ASX50 model following a series of structural “higher low” formations.

OSH is not currently in our model portfolio.

The negative we see in the stock relates to market concerns surrounding their stretched balance sheet.

Oil Search has committed to substantial projects in PNG and Alaska and should oil prices fail to hold $60 – $80 per barrel, Oil Search may need to raise capital.

This week, Oil Search reported solid 4Q17 production at the upper end of their guidance range, with revenue of US$389mn.

Our preference remains adding long exposure on any pullback in BHP, WPL & ORG.

We are also watching for the next Algo Engine buy signal in the oil ETF OOO.AXW.

 

 

Origin Energy – Hits Profit Target

Posted on | by Leon Hinde | Leave a Comment on Origin Energy – Hits Profit Target

Our Algo Engine has triggered a number of buy signals in ORG, as the two year downtrend reversed and a new uptrend of “higher lows” commenced in early 2016.

The recent buy signal at $6.75 means the stock is still in our ASX 50 Model Portfolio, however, shorter-term investors may wish to consider taking profit, as the stock now looks fully valued.

Origin – Reaffirmed FY18 Guidance

Posted on | by Leon Hinde | Leave a Comment on Origin – Reaffirmed FY18 Guidance

 ORG indicated it’s targeting a Crude Oil price of US$40 per barrel distribution break-even for FY20.

ORG hosted its 2017 investor day,  this week, at which time they reaffirmed their FY18 guidance with respect to capital expenditure, debt management and APLNG.

The market is encouraged by the potential for up-to $500m in cost savings,  ($110m OPEX and $400m CAPEX), over the next 2 – 3 years.

ORG will likely reinstate dividend distributions, building to $0.40 per share in FY19 and $0.50 in FY20.

These targets have ORG trading on a FY19 forward yield of 5%.

We continue to see ORG as a buy on the dip opportunity and look to keep exposure to the name in portfolios over the next 3 to 5 years.

Origin Energy

 

 

 

 

 

WPL And ORG Are Looking Good, Technically

Posted on | by Todd | Leave a Comment on WPL And ORG Are Looking Good, Technically

Over the last several months, there have been many questions asked about the likely direction of energy-related stocks.

The fundamentals in the Crude Oil market are difficult to forecast and the political climate, domestically, may impact the future revenue of electricity markets.

However, from a technical perspective, both ORG and WPL look like they may be setting up for a move higher.

We currently see reasonable upside targets at $30.75 in WPL and $8.00 in ORG.

Woodside Petroleum

Origin Energy