SA Business Index: Oil and gas weighed down by not-so-slick performers
Oil and gas companies traditionally dominate the South Australian Business Index, but some poor performances dragged the sector down as a whole in 2024.
The size of Santos – a $23 billion global giant – means the oil and gas sector makes up the lion’s share of the South Australian Business Index.
The 2024 edition of the list – to be unveiled on Friday – is no exception with the oil and gas sector comprising 44.2 per cent of the Index’s entire value.
In fact, Santos makes up 38 per cent of the entirety of the list that, as a whole, is worth $61.7 billion.
But this year, oil and gas companies experienced a significant decline in revenue across almost all companies.
Notably, Jade Gas saw revenue decreases of approximately 204 per cent, while Elixir Energy’s revenue fell 81 per cent in FY24.
Despite this, most companies in the sector managed to maintain or increase their market capitalisation, and their positions have not materially changed on the 2024 Index.
HLB Mann Judd director Jake van der Hoek, whose team prepared the 2024 SA Business Index, said that while revenue in the Australian oil and gas industry increased overall in the five years since FY19, FY24 revenue saw a sharp decline.
“The industry experienced a significant revenue boost in the years prior, driven primarily by rising oil and gas prices. The impact of the Russia-Ukraine conflict led to a significant price increase, which, combined with strong demand from Asia and supply constraints, pushed industry revenue,” van der Hoek said.
“Australia also benefited from its position as a major LNG exporter, with high global prices enhancing revenue. Additionally, expansion in natural gas production to meet growing LNG export demands contributed to the surge in revenue.”
Stay informed, daily
He said the revenue decline and moderation of prices was driven by global supply and demand conditions stabilising.
“Profit margins are anticipated to decrease as falling oil and gas prices exert downward pressure,” van der Hoek said.
“Voluntary production cuts by OPEC+ and increased production from non-OPEC countries such as the US, Guyana, and Brazil have further contributed to the moderation in prices. Moreover, the shift of Australian LNG producers to short-term spot market contracts, away from long-term agreements, has increased market volatility.”
The South Australian Business Index is Adelaide’s most trusted and comprehensive ranking of the top 100 companies in the state.
The full Index will be unveiled on Friday at a lunch where attendees will hear insights into the state’s business landscape from keynote speaker David Koch.
