Australia's Inflation Pushes Energy Stocks into Focus
Australia's inflation has accelerated to 4%, with interest rates reaching a 15-year high of 4.6% due to rising housing and transport costs, particularly oil prices.
This increase in transport costs puts local energy exposure under the spotlight. To help investors understand this theme, three global oil and gas producers are highlighted: Tamboran Resources (ASX:TBN), Woodside Energy Group (ASX:WDS), and Santos (ASX:STO).
Tamboran Resources is a Sydney-based gas developer focused on unconventional natural gas projects in Australia's Beetaloo Basin. The company has a market cap of A$2.0b and is expected to start producing from the Beetaloo Basin Pilot Area by the third quarter of 2026, supported by an 88% complete compression facility and an APA-owned pipeline.
Woodside Energy Group is a Perth-based producer and seller of LNG, pipeline gas, crude oil, and condensate across global projects. The company has operations in Australia (US$7.3b), internationally (US$4.6b), and marketing activities (US$1.9b), with a market cap of A$60.6b.
Santos is an Adelaide-based hydrocarbon producer focused on upstream natural gas and LNG, plus crude oil and related liquids across Australia and Papua New Guinea. The company generates revenue mainly from Papua New Guinea (US$2.4b) and has a market cap of A$27.9b.
The valuation of these companies allows for the production of Scarborough and Pluto Train 2 as planned, with Scarborough targeting its first LNG cargo in the fourth quarter of 2026. However, there are concerns about what happens if unseen pressures on cash generation shift the balance between paying dividends and funding large projects.