When investors think of opportunities in the future of The New Green Energy Revolution, the choices that usually come to mind first are solar, wind, and nuclear. But in fact, one of the most plentiful, cheapest, and efficient sources of green energy, with a surprisingly low carbon footprint, is natural gas. What is tricky about natural gas, is how to get it to market efficiently and effectively, at the lowest cost possible. And that is not easily accomplished in many jurisdictions around the world.
But one diversified energy company that
Stockhouse recently introduced to our investor audience, just happens to have the right combination of high-grade deposits, top-notch infrastructure, an energy mining-friendly jurisdiction, an experienced management team, and a reliable pipeline to get gas and oil to Australia’s east coast – a major conduit to the massive Asian market.
In Part 1 of this 3-part series we’re going to take a deep dive into how Australia’s vast gas & oil reserves in the southwest corner of the State of Queensland, and the commodity’s pipeline ease of access to Asian markets, should be of equally vast interest to energy sector investors looking for extreme value and opportunity ‘Down Under.”
Calgary-based
Bengal Energy Ltd. (
TSX.BNG,
OTCMKTS: BNGLF,
Forum) is an Australian-focused oil and gas exploration and production company with producing and prospective light oil-weighted onshore assets in the Cooper Basin – a region that contains the most important on-shore petroleum and natural gas deposits in Australia.
Bengal Energy is engaged in the exploration, development and production of oil and gas reserves primarily in Australia’s underdeveloped, yet prolific, Cooper Basin. It holds one non-operated producing asset and both 100% operated and non-operated prospecting licences in the Cooper Basin that hold a combination of development, appraisal, and exploration opportunities. Outside of the Cooper Basin, the Company also holds a high impact prospect near the Jabiru and Challis oil pools in offshore Western Australia.
East Coast Australian wholesale, or spot, gas prices increased sharply from 2015, and in subsequent years averaged roughly double the level in the first half of the decade. Natural gas prices in new longer-term contracts, which underpin supply to large users such as energy retailers, also increased strongly as legacy contracts expired.
In fact, spot gas prices in wintry Victoria have recently hit a five-year high at an eye-watering $20 per gigajoule.
Bengal Energy is now on track to ride the wave of increasing prices and international demand for natural gas and transportable Liquid Natural Gas (LNG).
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About the Cooper Basin
Bengal offers unique exposure to high potential impact exploration projects underpinned by lower risk current production and cash flow. The Company’s production stream consists predominantly of ultra light, sweet crude oil out of Australia, which commands a premium price to the Brent benchmark.
As Bengal transitions from a pure exploration play to one with both production
and exploration capabilities, the company has successfully been able to book highly prospective, high yielding reserves. As Bengal continue to drill, appraise, and develop its assets, the company says it anticipates seeing additional activity reflected in positive revisions to its oil and gas reserve report.
The significant and continuing growth in Bengal’s reserve base is a direct result of the drilling and development activities undertaken in the Company’s Cuisinier Field in the Cooper Basin, and demonstrates the inherent value of this large, natural gas and ultralight oil weighted asset base.
According to company CEO Chayan Chakrabarty – a 20-plus year energy sector veteran who holds a PhD in Petroleum Engineering from the University of Alberta and an MBA from the University of Calgary – over 75% of total gas production today in Australia is on the continent’s East Coast of which 75% is going to LNG. And it’s the Australian East Coast that has the geographic advantage of proximity to get LNG to Asia’s massive industrial and consumer markets that have a voracious appetite for LNG.
Finally. We are excited about our asset portfolio and are looking forward to the activities and results to come.
CEO Chayan Chakrabarty, Chief Executive Officer, Bengal Energy Ltd.
Wholesale natural gas prices on the East Coast of Australia have become linked to LNG export prices since 2015. And it’s all about getting product to market quickly, efficiently, and cost-effectively. Because local gas producers can now sell into international markets through the three Queensland LNG export terminals, wholesale prices will continue to be influenced by LNG export prices as long as this option is available. Contracted prices apply to the bulk of east coast gas demand and production, and according to the Reserve Bank of Australia are likely to remain structurally and significantly higher than their pre-2015 levels over coming decades, reflecting higher marginal costs of domestic production. Australia also possesses one of the world’s most modern and advanced oil & gas pipeline systems on the planet.
All of this is great news to Bengal shareholders and potential investors.
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At present, the biggest LNG consumer out of Australia is Japan at about 38%. At present, Japan, China, South Korea take about 88 to 89% of Australia's LNG. And these are fixed long-term contracts. After that there's Taiwan, India, and some other Asian countries. As a result, Asia’s proximity to Australia's East Coast LNG terminals and the stronger Brent oil price is why pricing is so strong right now.
According to the CEO, the other big factor is supply in the East Coast. Supply is tight. Supply is not enough. And it's simple Economics 101. It's the supply / demand imbalance that is causing this.
Investor Update: What is LNG Netback Pricing?
An LNG netback price is a measure of an export parity price that a gas supplier can expect to receive for exporting its gas. It’s calculated by taking the price that could be received for LNG and subtracting or ‘netting back’ the costs incurred by the supplier to convert the gas to LNG and ship it to the destination port.
The Australian Competition & Consumer Commission (ACCC) publishes the LNG netback price series as one of the measures to improve transparency of gas prices in the east coast gas market.
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From the CEO
In an engaging Q&A conversation with Stockhouse Editorial, CEO Chayan Chakrabarty detailed how Bengal Energy’s strategic plan for exploration, development, and portfolio growth has been carefully designed for optimal shareholder value.
SH: When an investor buys Bengal Energy stock what are they getting?
CC: The investor is buying access to a balanced portfolio of development and exploration opportunities in a world class jurisdiction with extremely attractive commodity prices all of which are backed by existing production and positive cash flows without any debt.
SH: Can you explain to our Canadian audience, and draw any parrels between the Australian East Coast Australia major pipeline and LNG Canada’s west coast project? (Interest: Shell (40%), PETRONAS (25%), PetroChina (15%), Mitsubishi Corporation (15%) and KOGAS (5%).
CC: Eastern Australia is in almost a complete inverse situation to Western Canada in that there is an abundance of LNG export capacity and insufficient natural gas production to meet that demand. While natural gas prices in Canada are constrained by access to markets, prices in Eastern Australia are being driven upwards by excess demand.
SH: Why is your east coast location so intriguing and what should investors know about its potential?
CC: Success on our near-term development and exploration projects will add natural gas production to our portfolio all of which is located in the Cooper Basin within the State of Queensland of eastern Australia. This will allow Bengal to be a supplier in a vastly under-supplied natural gas market, ensuring future profitability and world class returns on successful development and exploration.
SH: Let’s talk a bit about LNG Netback Pricing and what it means visa vis Bengal Energy?
CC: The recent publishing of LNG netback pricing by the Australian authorities has provided greater transparency into the market and supports our near and long term natural gas development projects at sales prices of A$8 to 10/GJ which is three times higher than offtake prices in North America.
SH: Finally, Mr. Chakrabarty it’s been a roller coaster ride in energy stocks over the past 12 months. Can you tell our investor audience what you think 2021-22 looks like on the road to profitability?
CC: We expect increasing prices, stability for crude oil and stable increases to natural gas pricing led by the imbalance of supply and demand in Eastern Australia. This will improve the profitability of our existing operations, and support significantly accretive returns from our near term growth projects.
In Closing
For savvy investors looking for an international exploration energy play with strong ESG standards, ultra-high potential impact, and equally high revenue production, this debt-free energy exploration and development company is positioned at the right time in the right place…and at a very attractive share price.
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For more information, visit
bengalenergy.ca.
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.