Energy stocks remain under pressure including Woodside Petroleum Limited (ASX: WPL) after the oil and gas giant's sales revenues for the third quarter nearly collapsed in half compared to the prior corresponding quarter. The sales slump the result of the huge falls in energy prices that were approaching the edge of the precipice around this time last year.
Although on a quarter on quarter basis the sales revenues and production volumes were both up around 20%-25% as the oil price spent most of 2015 tracking at similar levels around multi-year lows.
The increase in production volumes was attributed to higher LNG and associated condensate volumes at its flagship Pluto LNG project, with the group updating its forecasts for total production in the range of 88 to 93 MMboe across 2015.
More trouble ahead?
This week one of the world's most famous short sellers Jim Chanos claimed on Bloomberg television that taking short positions in LNG-exposed businesses would be one of the most profitable trades in the year ahead.
As usual Chanos spent much of his media appearance spruiking his short positions including those in LNG operators as he predicted a coming supply glut in the LNG markets similar to that what has been experienced in the iron ore market. This as demand from Asia softens just as far more supply comes online.
If the hedge fund guru is correct in his bearish outlook on LNG producers then Woodside's bid for the LNG-centric Oil Search Limited (ASX: OSH) comes into a different light.
It would be no surprise if the management team at Woodside were to lift its Oil Search offer as a ploy to tempt shareholders into accepting a moderate premium to its current valuation that may not be reached again for a long time yet.
While the problems of the heavily indebted LNG producer Santos Ltd (ASX: STO) are also likely to magnify given the consensus that energy prices are unlikely to enjoy a sustained rebound anytime soon.
