There's no doubt where most bargain-hunting investors will be shopping after Monday's big price falls in ASX-energy stocks backed up those incurred last week.
The declines have seen much armchair analysis explaining how a supply glut and falling demand equal lower prices, but there may be other factors at work. The claims of Russian President Vladimir Putin that the oil price falls have been engineered by political forces also look to have some basis in reality.
Indeed, just as geopolitical factors can conspire to bring down energy prices, they can also conspire to bring them up. This suggests some of the below businesses may now be entering bargain buying territory for investors with an eye on the long term.
BHP Billiton Limited (ASX: BHP) has dropped $1.65 or 5.34% today to $29.27. Its chief executive Andrew Mackenzie has made no secret of the fact that he sees the company's future in the oil and gas space as much as in the mining and minerals space currently dominated by coal and iron ore. This strategic realignment and divestment of several business lines is what may enable BHP Billiton to leave a trading range it has occupied for more than three years as a result of its cumbersome business model.
Woodside Petroleum Limited (ASX: WPL) is another price taking business that has been something of a range trader's playground in recent times due to its leverage to energy prices. This is unlikely to change anytime soon and with energy prices likely to settle higher over the medium and long term, Woodside's position at the bottom of its recent trading range suggests a buying opportunity.
Santos Ltd (ASX: STO) is another large pure-play oil and gas business with economies of scale that investors could look towards if they expect energy prices to recover over the medium term.
It lost nearly 10% of its market value today as investors worry that the U.S. shale gas revolution has further to run as a competitive threat to Santos's local efforts. However, given that the energy-hungry Asian markets look set to support prices for Santos's key products, today's sell off may be an opportunity for value investors.
Liquefied Natural Gas Limited (ASX: LNG) has likely fallen furthest of all the companies featured today due to the fact it's still several years off bringing in any substantial revenues or profits. The business is counting on high demand for LNG exports out of North America placing a premium on demand for its LNG processing services and technologies. If LNG-energy demand is not supported as well as expected into the future then the attraction of the company's business model diminishes.
