Angus Energy stock rally outpaces Shell and Diversified Energy

The share prices of Shell, Diversified Energy and Angus Energy have performed well in 2022 amid soaring oil and gas prices. While prices have since pulled back over the past couple of weeks, there are still signs profits could remain high for these three UK energy players.

It’s no surprise that the share prices of Angus Energy [ANGS.L], Diversified Energy [DEC.L] and Shell [SHEL.L] have soared this year. However, with the price of oil dropping to a seven-month low on 7 September, the global demand for energy is being squeezed amid rising inflation and recessionary fears.

Since the start of September, oil has been in flux. Even though OPEC+ cut its output last week, prices were tumbling because of recession fears and a strong dollar. Prices then rose at the start of this week on 12 September as the ban on all Russian oil imports into the European Union loomed larger.

Despite this, the operations of Angus, Diversified and Shell aren’t overly exposed to the OPEC+ region so are unlikely to be impacted by its recent production cut. And while the production cut did prompt a rise in oil prices, OPEC’s Secretary General Haitham Al Ghais pointed out to Reuters that the reason for elevated energy prices was because of policymakers and insufficient investments in the sector.

Angus Energy boosted by Saltfleetby project

The UK company was the target of a takeover by Sound Energy [SOU.L] earlier this year, but the latter backed out of a deal following a period of due diligence. According to Morningstar, Sound Energy, which holds the largest area of onshore petroleum licences in Morocco, had made as many as four bids.

In May, Angus announced it had acquired 100% of the Saltfleetby project that it was previously a joint partner in for roughly £14m.

Earlier this month, Angus said it achieved flow rates from well A4 at the Saltfleetby project of 4 million cubic feet a day and over 4.5 million from well B2.

This announcement caused the Angus share price to jump on 9 September, having set a 52-week high of 2.95p on 6 September. Though the stock has since pulled back, closing on 14 September at 1.8p, it’s up a staggering 188.4% since the start of the year.

Expanded well retirement at Diversified Energy

The US production company operates out of the Appalachian Basin in the US. In July, it announced that it had agreed to buy plugging and well services firm ConServ, its third decommissioning acquisition in 2022.

Following the agreement, Diversified’s plugging — sealing pipelines prior to abandonment — programme includes 15 well rigs, up 70% from the end of the first quarter of 2022. The company has pledged to retire 200 well rigs annually across the Appalachian region.

“With our expanded asset retirement capacity, we are efficiently delivering on our plugging comments as well as servicing the needs of other companies and state governments as the premier Appalachian plugging service provider,” commented executive vice president and CEO Brad Gray.

The Diversified share price is up 37.5% year-to-date through the close on 14 September at 131p. It recorded an all-time high of 144p on 19 August.

Bumper profits at Shell

Shell posted mammoth profits of $11.5bn for Q2, more than double the $5.5bn reported in the year-ago quarter, and up from $9.1bn in the first quarter of 2022. The company announced a quarterly dividend of $0.25 as well as a $6bn buyback programme that is due to complete by the end of September.

The healthy profits will enable “Shell to slice tens of billions off net debt, and fund capital expenditure into new gas fields as well as low carbon alternative fuels,” Hargreaves Lansdown equity analyst Laura Hoy wrote in a research note following the second quarter earnings.

Although Shell has targeted cutting emissions from operations in half by 2030, this will require extensive investment in renewable technologies and business restructuring.

“Shell is still likely to remain an oil and gas giant for decades. Our greatest concern is that oil & gas groups in general risk the fate suffered by tobacco companies,” Hoy added, citing how cigarette stock valuations have dropped “to what would ordinarily be considered unsustainable lows”.

The Shell share price is up 48.4% year-to-date to 2,341p and 7.2% in the past month to 14 September. It recorded a 52-week high of 2,459.23p on 9 June and set a 52-week low of 1,421.4p on 13 September last year.