Portfolio Update – Purchase of Worley & Santos

By October 12, 2021Portfolio

Across investor accounts, we have bought Worley and Santos.

Before discussing the fundamentals of the companies, we feel some context around the decisions is required. As a team, we agree with the view that over the coming years, renewables will continue to expand in all parts of the world rapidly. This unstoppable decarbonisation of economies will offer attractive investment opportunities via companies focused on multi-decade, potentially multi-trillion dollar energy transition towards net-zero. Not zero emissions, but net-zero, for now at least.

The task ahead is enormous, and it requires not only that affordability and reliability are not threatened, as intermittent power supply increases and coal generators are shut down, but also needs to recognise that total global energy consumption will continue to grow, driven by developing countries as their wealth increases. So, on the path to net-zero, we believe gas, including LNG, will play an essential part in supporting the transition, helped by the fact that gas generators are now typically built to be hydrogen-ready.


Worley is a global consulting firm that provides services to Oil & Gas, Chemicals, Mining, Infrastructure and Electricity generation. The services they provide involve project delivery, engineering, procurement, and construction.

We are positive on the outlook for Worley over our investment time frame for the following reasons:

  • Worley is a leading player in the global energy consulting space. They are positioning the business to benefit from the new energy transition but still have the stability provided by their strong incumbent position in the oil & gas space;
  • Incumbent position means they are well placed to benefit from the design & construction of new renewable generation assets, as oil & gas companies look to meet their ESG targets;
  • Following strategic acquisitions, the businesses revenues are less cyclical. This reduction in the cyclicality is currently not reflected in the share price;
  • Worley’s has two cost reduction programs running at the moment that are expected to provide further earnings uplift.

We are selling Ampol, a convenience store operator and fuel refiner, importer and seller, to fund the purchase.


Santos is Australia’s biggest domestic gas supplier. On successful completion of the merger with Oil Search, it should also fulfil its aim of being a leading Asia-Pacific LNG supplier.

We are positive on the outlook for Santos over our investment time frame for the following reasons:

  • Santos is a leading Australian LNG producer – a diverse portfolio of low cost, reliable and well-managed assets;
  • The combined entity has a slightly stronger balance sheet than Santos alone, with increased optionality and flexibility to optimise a diversified portfolio of high-quality, attractive growth projects;
  • Margin expansion as economic improvement drives higher oil prices and unit costs remain flat.

Fortuitously, Santos, in our view, provides an opportunity to achieve three objectives. Firstly, to get exposure to an attractive standalone investment opportunity. Secondly, to retain exposure to the thematic of gas and LNG as a firming power source despite selling Beach Energy to fund the purchase. Finally, with the sale of Beach Energy in addition to Ampol, ensure we adhere to the policy restrictions – Due to the recent quarterly ASX index rebalancing, we were required to sell another holding outside the Top 50 Index to ensure we do not breach the policy restrictions.

As always, thank you for your ongoing support; it is very much appreciated. If you have any questions or would like more information, please contact your SBB Wealth Representative.


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