Australia's biggest investment bank, Macquarie Group Ltd (ASX: MQG), has been quietly making moves in the oil and gas sector over the past 12 months. First there was the joint buyout of unlisted Quadrant Energy (formerly Apache) last year, and more recently Macquarie has been buying other assets owned by listed companies.
Santos Ltd (ASX: STO) sold the remaining half of its Meereenie gas field to Macquarie as part of its divestment project recently, while Macquarie itself has been quietly bidding for Central Petroleum Limited (ASX: CTP) shares.
A possible IPO?
Is Macquarie angling to cobble together a few gas assets and list them on the ASX next year? Fairfax Media has reported that Quadrant Energy is considering a listing, although whether Macquarie and partners would seek to combine other recently acquired assets into the new company is uncertain.
Also uncertain is whether Macquarie would intend to keep part of its stake in the company after the float, or divest it. Buying oil assets during periods of low oil prices and seeking to repackage and sell them a few years later is classic hedge fund work, but investment bank Macquarie also has a track record of longer-term shareholdings – notably Sydney Airport Holdings Ltd (ASX: SYD), which was formerly known as Macquarie Airports.
With Macquarie upping its bets on oil and gas recently, ordinary investors will be wondering if they should do the same. There is certainly potential to earn attractive returns if oil prices continue to recover, but investors need to remember that they can't cherry-pick individual assets like Macquarie can. Instead, they must buy shares representing a tiny portion of an entire company, encompassing both its positive and negative attributes.
In my opinion, some of the smaller producers with lower debt look interesting at today's prices.
