| DBS Group in a report yesterday (23 Jan) said: "Oil price momentum continues to look positive. Brent crude oil price has had a much more positive start to the year than expected, hovering at US$65-70/bbl, a significant uptrend compared to 2017 average of US$55/bbl. "In addition to the continued capacity cuts by OPEC and friends, improving global demand and falling crude oil inventory levels in the US have contributed to the positive sentiment, as have several one-off supply disruptions and increased geopolitical risks. "Limelight could slowly switch to O&G service providers. We maintain our Overweight stance on the sector. The recent oil price rally has driven up O&G stocks, with oil majors leading the rally as direct beneficiaries. "While potential oil price pullback might cap the upside of upstream plays, sustainable oil price above US$60/bbl level should drive capex expansion and benefit players down the value chain." |
What are some stocks which will directly benefit from higher oil prices? NextInsight presents two:
|
Stock price |
16.1 c |
|
52-week range |
8.4-19.8 c |
|
PE (ttm) |
13 |
|
Market cap |
S$80 m |
|
Shares outstanding |
496 m |
|
Dividend yield |
-- |
|
1-yr return |
85% |
1. GSS Energy: It struck oil and (surprise) gas in its first well in Indonesia on 13 Dec 2017.
It will monetise the gas first but this will require about 12 months of preparation.
Meantime, it is drilling another well and expects to produce about 100 barrels of oil a day by 1QFY18F.
It expects to deliver an additional 70 barrels of oil per day in 2Q and another 30 barrels of oil per day in 3Q.
By end of 3Q, GSS plans to produce a total of 200 barrels of oil per day.
|
GSS ENERGY: First oil discovery with sweet gas surprise |
|
Stock price |
6.9 c |
|
52-week range |
4.4 - 7.7 c |
|
PE (ttm) |
-- |
|
Market cap |
S$89 m |
|
Shares outstanding |
1.28 b |
|
Dividend yield |
-- |
|
1-yr return |
0 |
2. Rex International: In Dec 2017, Rex said it would be targeting "substantially higher revenue" from 2018 from its key discovery assets in Norway and Oman and from its proprietary Rex Virtual Drilling (“RVD”) technology.
"This window of opportunity to achieve production at an economically viable breakeven price is much better than it has been for the last three years due to the current higher prices for oil and lower costs for services," said Dan Broström, Executive chairman, REX International.
For more, see: REX INTERNATIONAL: Targets substantially higher revenue from 2018