The first few months of 2024 have been anything but predictable for energy stocks. Geopolitical jitters and volatile oil prices continue to buffet the sector, leaving investors scratching their heads. But amidst the uncertainty, some experts see opportunity. Enter Kingsley Jones, Chief Investment Officer at Jevons Global, who believes the energy landscape holds promise, particularly for those with a keen eye on international players.
Jones pinpoints the potential of “big geopolitical shifts” and casts his vote for Petrobras, the Brazilian state-owned oil giant. This “deepwater oil play” boasts assets with remarkable longevity, according to Jones.
While the company has faced political headwinds in Brazil, Jones believes the situation has settled, making Petrobras an attractive “yield play” with its hefty 15%+ annual dividend. In a world increasingly focused on sustainable energy sources, Jones views Petrobras as a strategic player. “Europe needs oil, and some of that will come from Brazil,” he emphasizes. “We believe Petrobras is well-positioned to be one of the last folks standing in that game.”
Looking beyond the immediate horizon, Jones sets his sights on a longer-term bet: Woodside Energy, the Australian petroleum company. This player recently made waves with merger talks with fellow Australian firm Santos, a potential move that would create an oil and gas powerhouse valued at $52 billion.
While Jones concedes the deal may not materialize in the near future, he expresses optimism for Woodside’s long-term prospects. As a shareholder, he’s keen to see the merger happen, but only at the right price.
A consolidated entity, he argues, could provide more efficient management and unlock further value. Despite a recent dip in share price, Woodside still enjoys positive analyst sentiment, with eight out of thirteen predicting upside potential.
In essence, Jones navigates the complexities of the energy sector by acknowledging the challenges but actively seeking opportunities.
He recognizes the role of geopolitics in shaping energy markets and identifies companies that stand to benefit from strategic positioning and sound fundamentals.
While Jones’ specific stock picks may not align with every investor’s strategy, his approach underscores the importance of careful analysis and a forward-thinking mindset when navigating the dynamic world of energy investments.
