The global oil benchmark had touched $80 per barrel level as seen in last couple of months, underlining concerns that an unexpectedly strong rally in crude could eventually begin to weigh on economic growth. The combination of U.S. sanctions potentially on Venezuela and on Iran, a strong demand, a rising geopolitical risk premium and few other factors took the speculation to $100 per barrel for crude. Indeed, the market was prone to price spikes. However, measured in constant dollars as compared to the spikes in the past recessions this was still smaller. Nonetheless, the oil prices were seen to fall steeply in the past few days and this ended the continuation of the rally seen so far (US oil price being $US68.63 a barrel as at July 18, 2018).Primarily, a few days back, Brent touched a three-month low with talks of supply increases from Russia and other producers coming into limelight with Libyan ports being reopened. With this, ASX-listed oil stocks also slipped. While oil plays do not as such proffer great dividends unless we are talking about blue-chips such as BHP Billiton which has been our long-term pick of yesteryears under dividend shares to buy and has a dividend yield of 3.8%; the following gives a view on 2 other big names and their dividend scenario.
Oil Search Limited (ASX: OSH), trading at a market price of $8.58 (market open on July 19, 2018) has seen a price change or a decline of -$0.190 and a percentage change of -2.159% a day before. Twelve percent higher than in the first quarter, total Production in the second quarter of 2018 was 5.40 million barrels of oil equivalent which reflected the recommencement of production following the February PNG Highlands earthquake. PNG LNG Project was seen to have performed at an annualized production rate of 8.5 MTPA in May and June months of 2018, against the production rate of 8.3 MTPA for 2017. The Agogo Production Facility, Agogo and Moran fields, which were closest to the earthquake’s epicenter, remained offline, while the Kutubu and Gobe fields came back on-stream during the quarter. A higher proportion of LNG cargoes were sold on the spot market following the earthquake, while the average realized oil and condensate price was 3% higher than in the first quarter, with the second quarter LNG and gas price being 4% lower. P’nyang field resulted in the tripling of gross certified 1C resource to 3.51 trillion cubic feet, and an increase in 2C gross resources to 4.36 trillion cubic feet, was announced in April, under an independent re-certification of gas resources.
OSH when looked through the lens of dividend shares to buy in oil segment, demonstrates trading at a higher side with dividend yield of 1.28% only.
Origin Energy Limited (ASX: ORG) lately touched a market price of $9.380 and has seen a price change or a decline of -$0.030 and a percentage change of -0.319% as at July 18, 2018. To significantly increase the gas reserves and production in the area, Origin has announced activity that has the potential to help attain a better position. From H2 FY2018 as material plays progress, the group increased exploration activity. The Board has determined not to pay a dividend for the first half of 2018, given the continued focus on debt reduction and prudent capital management. Then the latest update on Barikewa 3, highlights the objective to test the potential resource upside in the field and assist in selecting the optimal commercialization pathway for the resource. FY2018 guidance, for Energy Markets of Underlying EBITDA has been said to be in the range of $1.78–$1.85 billion. From Australia Pacific LNG for FY2018, Origin’s share of production is expected to be 245–265 PJ. Origin’s Interaction Net Promoter Score increased from 16.1 at the end of FY2017 to 18 which demonstrated the Origin customer experience. Lately, Origin has also agreed to sell its metering business of Acumen for about $267 million which is to be jointly owned by Landis+Gy and Pacific Equity Partners.
Given the dividend scenarios, both OSH and ORG may not be great to be considered as dividend shares to buy but an exposure can be maintained given the past run-up and performance in on-going reporting season with resilient fundamentals still at hand.
