Natural gas is back in fashion in Europe and domestic sources, in combination with renewable energy, are the only real answer to energy security. Here are the stocks to keep an eye on.
The energy crisis that hit Europe after Western sanctions on Russia following the invasion of Ukraine caused losses of hundreds of billions of dollars to the continent. Now, the crisis in the Middle East and the Houthi attacks on the Red Sea could threaten future energy supplies.
In early February, Germany allocated $16 billion to build four natural gas power plants to complete a push to expand renewable energy. Austria recently made its largest natural gas discovery in four decades, enough to increase domestic production by 50%.
However, all this is threatened by the recent Biden administration pause on new LNG projects.
One thing is certain: natural gas is back in fashion in Europe and domestic sources, in combination with renewable energy, are the only real answer to energy security.
Last summer, EU lawmakers voted to include natural gas and nuclear energy in the list of sustainable activities in line with the fight against climate change and the goal of achieving climate neutrality by 2050.
All this makes Europe one of the best places for new energy opportunities, and that means huge opportunities for companies to develop gas fields overlooked by the supermajors, who have dedicated themselves to finding bigger projects in the offshore frontiers.
Let’s see the top 10 European companies to take advantage of the EU’s new energy security climate.
1. TotalEnergies
France’s TotalEnergies (TTE) is the main player in the LNG sector in Europe. In a joint venture, TTE is collaborating with QatarEnergy on Qatar’s North Field East and North Field South projects. Last fall, the JV signed two long-term contracts - 27 years - to supply LNG to France, starting in 2026. TTE holds a 6.25% stake in the North Field East LNG expansion project and a 9.375% in the North Field South project.
Earlier this month, TTE reported its highest profit in history, supported by the performance of its LNG and electricity divisions, which helped push net profit to $21.4 billion, or 4% more than in 2022. All of this puts TTE ahead of its giant competitors, including Exxon, BP, and Shell.
Going forward, the focus on upstream growth will be driven by TTE’s bet on oil and gas to grow earnings, as well as exploration success, new oil projects, and the expansion of its LNG portfolio. Offshore exploration in Suriname could see $9 billion invested, and observers are closely watching the new Venus oil discovery off Namibia.
2. MCF Energy
MCF Energy is convinced that this is the right time to promote European energy security through national natural gas production. Germany and Austria are key positions for this.
MCF Energy is the first new public company to consolidate major exploration projects in Europe and is the first since Russia’s invasion of Ukraine to offer investors the opportunity to help build domestic natural gas resources in Germany and Austria.
The company is aiming for large-scale natural gas exploration and production here, with two drillings in the coming months, the first of which has already begun in Austria, prospecting for Welchau, near the Austrian Alps. Strategically positioned just 18 kilometers from a gas pipeline, Welchau is adjacent to an outcrop of a discovery that has previously intercepted at least one 400-meter gas column. According to MCF, all the elements are in place here for a significant discovery.
Thanks to the 100% acquisition of German Genexco last year, MCF Energy is now ready to probe for much-needed domestic energy resources for Germany.
MCF’s second drilling, scheduled for March, is in Bavaria, where the company’s Lech and East Lech concessions are located, covering 10 km² and 100 km² respectively. Lech has three previously drilled wells and two discoveries. Adjacent to this, Lech East, in southwestern Bavaria, is a large-scale concession covering approximately 100 square kilometers, with significant 3D seismic and AI data showing further potential ahead of MCF Energy’s planned exploration program of 4, 6 million euros.
About a week into a 40-day drilling cycle in Austria and just months away from first drilling in Germany’s proven resources, MCF Energy is convinced it is on track for a success that could give Germany a partial solution to its ongoing problems of energy security.
3. Halliburton Company
One of the largest oilfield services companies globally, it offers a wide range of services and products for the oil and gas industry. Its presence in Europe, through operations and technology solutions, supports oil and gas exploration and production activities in the region, emphasizing efficiency, innovation, and lower carbon emissions.
The company focuses on the development of sustainable technological solutions, such as hydraulic fracturing and shale gas production technologies, in keeping with Europe’s growing emphasis on environmental responsibility and energy security.
4. Schlumberger Limited
It is the world’s leading supplier of technologies and services to the oil and gas industry. It plays a key role in the European energy sector with a broad portfolio of innovative technologies for reservoir characterization, drilling, production, and processing. Schlumberger’s commitment to innovation and efficiency drives its operations in Europe, where it helps maximize recovery, reduce costs, and improve the environmental performance of oil and gas operations.
5. Enbridge Inc.
A giant in the North American energy sector, it also extends into Europe through investments in offshore wind energy projects and energy transportation infrastructure. Renowned for operating the world’s longest oil and liquids transportation system, Enbridge’s commitment to innovation and sustainability is reflected in its significant entry into renewable energy, particularly in Northern Europe’s growing offshore wind market.
Operational excellence and forward-thinking investment strategy place Enbridge in a leading position in the global energy transition, making it an attractive choice for investors interested in resilient and sustainable energy portfolios with a presence in Europe.
Enbridge is also leading efforts in carbon capture, utilization, and storage (CCUS), aiming to further mitigate the environmental impact of energy systems around the world, including in Europe. This initiative is part of Enbridge’s broader strategy to lead in sustainable energy by reducing greenhouse gas emissions and enhancing the transition to green energy.
6. Golar LNG Limited
A pioneer in the liquefied natural gas (LNG) industry, with a diversified business model including LNG transportation, floating LNG liquefaction, and floating storage regasification units. Golar’s innovative approach to LNG solutions, particularly floating liquefaction technology, positions it strategically in Europe’s evolving energy landscape, where LNG plays a critical role in diversifying energy sources and enhancing energy security.
The company’s commitment to unlocking new markets for natural gas around the world aligns with Europe’s energy transition goals, offering investors a unique perspective on the dynamic LNG sector that connects traditional energy supplies with future energy demand.
7. Transocean Ltd
A global leader in offshore drilling, it offers critical services for the exploration and extraction of oil and gas beneath the ocean’s surface. With a fleet specializing in drilling in deep water and harsh environments, Transocean’s technological and operational expertise provides access to some of the most challenging and resource-rich areas in the world, including the North Sea region of Europe, an area critical for oil and gas production with rigorous environmental and safety standards.
Transocean is enhancing its technological capabilities to address the emerging needs of the offshore drilling industry, with investments in next-generation drilling platforms that offer greater efficiency and lower environmental impact. These advances are crucial to maintaining competitiveness in Europe’s offshore drilling sector, characterized by an aging infrastructure and increasing regulatory pressures.
8. Imperial Oil Limited
A Canadian oil company operating across the entire oil and gas value chain. As one of Canada’s largest integrated oil companies, it operates numerous assets, including oil sands projects in Alberta, conventional oil and gas operations, and a network of retail fueling stations. For the fourth quarter of 2023, the company announced lower earnings due to lower crude oil prices but beat analysts’ forecasts with record levels of production at its Kearl oil sands mine.
The Calgary-based company also increased its quarterly dividend by 20%, underscoring its commitment to returns to shareholders. Despite lower fourth-quarter returns, earnings, and cash flows were higher than many analysts’ forecasts.
9. Keyera Corp.
Keyera Corp. is a Canadian midstream company active in the transportation, storage, and processing of petroleum products and natural gas. Its vast network of midstream infrastructure spans multiple regions of Canada, supporting oil and gas production and distribution operations across the country. The company recently announced its fourth quarter 2023 financial results, highlighting strong operational and financial performance.
Keyera reported a significant increase in gross margin compared to the fourth quarter of 2022, benefiting from higher natural gas prices and increasing demand for midstream services. Additionally, the company has completed several growth projects, including the expansion of its natural gas gathering and processing system in the Simonette region of Alberta.
10. ARC Resources Ltd.
An oil and gas exploration and production company with operations concentrated in the western regions of Canada. ARC Resources recently announced its decision to separate its midstream businesses to create a new company, further advancing its strategy to focus on core businesses and creating shareholder value.
The separation of the midstream business will position ARC Resources more competitively in the exploration and production sector, allowing the company to maximize value from its energy assets and capitalize on growth opportunities.
