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Energy News: Latest Developments in the Global Power Sector

There are a significant number of listed energy stocks in Australia. They range from multi-billion-dollar companies like Woodside Petroleum Ltd [ASX:WPL], all the way down to tiny explorers with a part interest in one exploration permit. Energy stocks also include coal miners, as thermal coal is a major source of electricity generation. Uranium stocks are also included in the sector. You can break the companies in the sector down into three parts. They can be producers, developers, or explorers. The larger producers cover the whole spectrum. They usually have a portfolio of producing assets, as well as assets in the development stage and exploration targets.

Industry Insights & Renewable Energy News

All fossil fuel energy assets have a finite life, so it is important for companies to be on the lookout for new reserves to replace production. For this reason, the energy sector is capital intensive. That is, it requires a lot of money to explore for new reserves, and then to develop the resource. For explorers, it can be years between discovery and first production (when the cash flow finally starts).

What are the best energy stock companies?

When it comes to producers or developers, you want to look for assets with a long production life and low costs. That way, if the price of the underlying commodity falls significantly, the company will be able to manage and not go out of business. With explorers, the best bet is to look at the experience of the board and the geologist, and to see whether they have had prior successes.

Not Dead Yet: ‘Hydrocarbon Man’

Oil is threatening to break US$100 again. We also have diesel ‘cracks’ at roaring levels now. Diesel prices are up 40% since May. Refiners — the businesses that buy crude oil and process it — are making a fortune for every drop of diesel they can bring to the market. That gives them every incentive to keep bidding up crude oil while this continues. That’s not a great signal for the economy in general. However, that doesn’t mean you can’t make a buck from this dynamic in the stock market…

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