Australian-based gas companies could become the next big growth industry if the trend of rising gas prices continues to gather momentum over the next five years.
Many small and mid-tier operators have already started to book big growth in the first half of the year, and supported by advanced technology and smart financing arrangements, are cutting risk for investors.
For investors looking to profit from the growth the big range of listed energy companies there is something for every kind of portfolio. Here are three of my top picks:
The core-portfolio
Energy major Santos Limited (ASX: STO) is well established and could fit well amongst other core blue-chip companies in a portfolio. Santos is set to become a central player in the coming gas boom with shares in the Papa New Guinea LNG (PNG LNG) and Gladstone LNG (GLNG) projects as well as others in the Asia Pacific region.
Production growth is forecast at 6% per annum for the next six years and the company expects to start paying out progressively larger dividends as this happens.
The growth portfolio
The Cooper Basin is home to a wave of companies reporting rapid growth in oil and gas production as fracking unlocks previously inaccessible gas.
The anticipated price rise for gas driven by the country's east coast states, combined with moderate drilling costs, puts companies including Senex Energy Limited (ASX: SXY) and Beach Energy Limited (ASX: BPT) in prime positions for growth.
The speculative boomer
Slightly more speculative is Strike Energy Limited (ASX: STX), a smaller oil and gas developer with substantial undeveloped resources.
Gas is notoriously expensive to develop, but Strike is utilizing gas sales agreements to lock in buyers and deliver 'option fees' – upfront payments to fast track development and reduce the reliance on debt and shareholder capital raisings.
Foolish takeaway
Natural gas is a compelling area for investors with a long-term focus as gas prices rise and production and reserves grow. Many companies are still priced attractively given their potential.
