Top oil and gas stocks to buy now in Australia

Analysts believe that these stocks could energise portfolios with some big returns.

| More on:
An oil worker in front of a pumpjack using a tablet PC.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

sdf

There are a number of oil and gas stocks to choose from on the Australian share market.

But which ones could be top options for investors right now? Let's look at two ASX oil and gas stocks that analysts rate as buys. They are as follows:

Santos Ltd (ASX: STO)

The first ASX oil and gas stock that could be a buy according to analysts is Santos.

It is a global energy company with operations across Australia, Papua New Guinea, Timor-Leste and the United States.

Analysts at Ord Minnett are bullish on the company due to its positive free cash flow (FCF) outlook. They explain:

An estimated FCF yield of 20% once Pikka and Barossa LNG start producing, and rigorous control of how that extra cash is spent, implies to us that Santos will have plenty of room to return excess capital to shareholders either via an increased payout ratio or share buybacks. In our view, the medium-term prospects for Santos offer a compelling investment opportunity.

Ord Minnett currently has a buy rating and $8.50 price target on its shares. Based on the current Santos share price of $6.74, this suggests that upside of 26% is possible for investors over the next 12 months. A dividend yield of ~6% is also expected in FY 2025.

Woodside Energy Group Ltd (ASX: WDS)

Another ASX oil and gas stock that could be a buy in December according to analysts is Woodside.

That's the view of analysts at Morgans, which think that Australia's largest energy producer could be undervalued at current levels. Particularly given its positive growth profile, strong balance sheet, and high margins. The broker said:

The tide is certainly out in terms of investor sentiment on WDS. Despite Brent oil trading in line with our long-term forecast, WDS' share price implies a near cycle-low oil price level. We do not see this as capable of being explained by WDS' growth profile (comfortably funded) or risks around non-core assets such as Browse.

While the share price performance has been disappointing, supported by a strong balance sheet and high margins, we see WDS investors as capable of being patient. Investment view: We maintain an ADD recommendation believing WDS offers attractive long-term value.

Morgans has an add rating and $33.00 price target on Woodside's shares. Based on its latest share price of $24.86, this implies potential upside of approximately 33% for investors over the next 12 months. In addition, a dividend yield of 6.1% is expected in FY 2025.

Motley Fool contributor James Mickleboro has positions in Woodside Energy Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Energy Shares

An oil worker in front of a pumpjack using a tablet PC.
Energy Shares

Why did ASX 200 energy shares rip up the charts on Friday?

Analysts say oil prices are on track for their best week since February 2022.

Read more »

A male oil and gas mechanic wearing a white hardhat walks along a steel platform above a series of gas pipes in a gas plant.
Energy Shares

$10,000 invested in Santos shares 5 years ago is now worth…

Have Santos shares beaten the ASX 200 over five years? Let’s find out.

Read more »

a man in a business suit looks at a map of the world above a line up of oil barrels with a red arrow heading upwards above them, indicting rising oil prices.
Energy Shares

Woodside, Santos, and this ASX energy stock are storming higher on oil price jump

Oil prices jumped overnight amid escalating tensions between the US and Iran.

Read more »

Young man in shirt and tie staring at his laptop screen watching the Paladin Energy share price tank today
Energy Shares

Looking for opportunity? This sector has fallen the furthest in 2025

Whilst the ASX 200 has largely rebounded from a turbulent start to the year, this sector is yet to recover. 

Read more »

A female coal miner wearing a white hardhat and orange high-vis vest holds a lump of coal and smiles as the Whitehaven Coal share price rises today
Share Gainers

The Coronado Global share price just surged to a 114% weekly gain. Here's why

Investors have sent the ASX coal stock flying higher in June. But why?

Read more »

Worker inspecting oil and gas pipeline.
Dividend Investing

Should I buy Woodside shares today for their 8% dividend yield?

With an 8% dividend yield and a resurgent share price, should I buy Woodside shares right now?

Read more »

Happy coal miner.
Share Gainers

Up 75% this week, why is this ASX All Ords stock rocketing again today?

Investors are piling into this ASX 300 stock on Wednesday. But why?

Read more »

Man pointing at a blue rising share price graph.
Share Gainers

Guess which ASX 300 stock just rocketed 43% on big news!

Investors are piling into this ASX 300 stock on Wednesday. But why?

Read more »