Garimpeiro is expanding his horizons to take in oil and gas exploration and production because the world is consuming as much in the way of hydrocarbons as ever yet precious little is being spent finding more of the stuff.

By their very nature oil and gas fields are depleting all the time. So the longer the investment strike in finding and developing new fields continues, the more pressure there will be on supply, leading to higher prices.

The idea that there is no need to worry about long-term supplies because of rising renewable and battery storage of energy is a bit of nonsense. Hydrocarbons remain critical to industries like fertilisers, plastics, petrochemicals and so on.

There is not much that you can see and touch that doesn’t have a hydrocarbon fingerprint on it.

And as for the death of internal combustion engines, Garimpeiro notes that there are still no electric vehicles to be found in his neighbourhood, or his Mum’s.

So good demand and pricing for hydrocarbons will be around for multi-decades to come.

But Garimpeiro’s had a problem in searching for ASX exposure to that thematic as Australia is about as hostile a place as there is in which to be an oil and gas explorer/developer. If governments here aren’t banning fracking or letting farmers lock the gates, then they are distorting the investment case with domestic reservations and price caps.

So Garimpeiro had to venture offshore to seek out more friendly climes. It’s no surprise that his attention was drawn to the Asia-Pacific, the fastest growing energy market in the world, and one day soon the biggest.

Garimpeiro couldn’t match that locale with an ASX stock of interest. But he did find a gas exploration and development company that looks to be carving out a big future for itself in the region – Conrad Asia Energy (ASX:CRD).

It joined the ASX in October last year through a $45 million IPO at $1.46 a CDI (1:1 over fully shares in the Singaporean company). Much of the IPO money came from existing shareholders that had backed the company in its private years, leaving about $15m that went to new shareholders.

Conrad traded up to $1.54 on listing but was back at $1.31 mid-week. Clearly some of the new shareholders were in the thing for a stag. Good luck to them. But Garimpeiro reckons things would have been more rewarding for them if they had stuck around.

Conrad came to the market with a big gas discovery (Mako, owned 76.5% by Conrad) in Indonesia’s west Natuna sea.

It is about as good an address in Asia Pacific for a gas development as could be hoped for. That’s because there is billions of dollars’ worth of existing infrastructure that is already connected and sending gas to Singapore and Malaysia.

Mako can tap into that infrastructure. Add in its shallow water location and the high deliverability of the reservoir (less development wells are needed), and Mako stands as a low capital intensity development ($US275m on a 100% basis) for a project of its size.

And size it has with its 413 billion cubic feet gas resource capable of generating gas sales of about $US4.5 billion, or $US2.4 billion net to Conrad. The company’s share of an independent valuation of the project in the IPO was $US442 million, a multiple of its current market cap.

But none of that mattered until the project had approval from the Indonesian government for the proposed plan of development (POD).

That came through within days of Conrad’s successful IPO, indicating the government is keen for Mako to be developed.

It means that Conrad can now work on concluding a gas sales contract in coming months with a Singapore gas buyer and SKK (the Indonesian regulator). First gas sales could be possible from 2025.

So the POD was a re-rating event in itself for the post-IPO Conrad. There has been another – the award of two production sharing contracts in shallow and deep waters offshore Aceh.

The shallow area contain four gas discoveries made in the 1970s that have been flow tested, allowing for a certified reserves estimation to be put together, as well as a valuation that analysts will be able to plug in to their Conrad valuations.

The deeper water area is creating bit of a buzz in the stock because of the multi-trillion cubic feet gas potential of several structures that need to be tested with the drill bit.

The Mako development, the near-term production potential of the shallow gas offshore Aceh, and the big-time potential of the deeper water offshore Aceh, makes for a useful combination in our newest oil and gas stock on the ASX.

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