Favourable Prospects of European LNG Demand May Fuel the Oil & Gas Sector

Company Overview

MMA Offshore Limited (ASX: MRM) is an Australia-based company, engaged in providing vessels and a comprehensive suite of marine and subsea services for the government and defense, maritime industries, and offshore energy sector. Santos Limited (ASX: STO) is a domestic gas supplier with a portfolio of high-quality liquified natural gas (LNG), pipeline gas, and oil assets. STO is largely involved in the production of natural gas (LPG, ethane, methane, CSG, LNG shale gas, condensate), and oil. The Kalkine’s Sector Report covers the Investment Summary, Sector Overview & Supporting Catalysts, Data Insights & Analysis, Financial Metrics, Financial Commentary, Risks, Outlook, Technical Analysis along with the Valuation, Target Price, and Recommendation on selected stocks.

Investment Summary

Sector Overview and Supporting Catalysts

Data Insights and Analysis

Index Performance

Key Drivers versus Key Constraints

Investment theme and stocks under discussion (MRM, STO)

After understanding the sector, let us now look at two companies listed on the ASX. The price potential of the companies under discussion has been analysed based on the EV/Sales multiple valuation method.

1. ASX: MRM (MMA Offshore Limited)

(Recommendation: Speculative Buy, Potential Upside: Low Double-Digit, Mcap: AUD 518.53mn)

MRM is an Australia-based company, engaged in providing vessels and a comprehensive suite of marine and subsea services for the government and defense, maritime industries, and offshore energy sector.

The stock has witnessed a dip of ~6.16% in last 1 month, and over the last 1 year, it has surged by ~83.69%. The stock has a 52-week low and 52-week high of AUD 0.660 and AUD 1.450, respectively and is currently trading above the 52-week high-low average. MRM was last covered in a report dated ’7 September 2023’.

2. ASX: STO (Santos Limited)

(Recommendation: Hold, Potential Upside: Low Double-Digit, Mcap: AUD 25.81bn)

STO is a domestic gas supplier with a portfolio of high-quality liquified natural gas (LNG), pipeline gas, and oil assets. STO is largely involved in the production of natural gas (LPG, ethane, methane, CSG, LNG shale gas, condensate), and oil.

The stock has witnessed a dip of ~5.84% in last 1 month, and over the last 6 months, it has surged by ~3.92%. The stock has a 52-week low and 52-week high of AUD 6.725 and AUD 8.090, respectively and is currently trading above the 52-week high-low average. STO was last covered in a report dated ’27 April 2023’.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 5 October 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual’s appetite for upside potential, risks, holding duration, and any previous holdings. An ‘Exit’ from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Disclaimer

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