Guess which ASX energy shares are buys and could deliver huge 12-month returns

Are you wanting some exposure to the energy sector in May? If you are, then it could be worth checking out the two ASX energy shares listed below.

They have just been named as buys by analysts at Morgans. Here’s what the broker is saying:

Karoon Energy Ltd (ASX: KAR)

The first ASX energy share for investors to look at buying is Karoon Energy. It is an oil and gas company operating in Australia, Brazil and Peru.

Analysts at Morgans like the company due to its strong production growth outlook and robust balance sheet. The broker explains:

Unique as a reasonable scale pure conventional oil producer, benefitting directly from rising oil prices. Karoon has significant net cash and is fully funded through a doubling of production over the next 12 months. There are also potential catalysts just around the corner with Karoon flagging at its recent result that it plans to shortly update the market with more detail on its growth plans, Bauna’s outlook, and its ESG approach.

Morgans has an add rating and $2.80 price target on its shares. This implies potential upside of 47% for investors.

Woodside Energy Group Ltd (ASX: WDS)

Morgans is also a big fan of Woodside and sees it as an ASX energy share to buy this month.

This is due to its tier one status and high quality earnings. In addition, the broker believes recent share price weakness has created a buying opportunity for investors. Particularly given the progress it is making with its capex spend. It said:

A tier 1 upstream oil and gas operator with high-quality earnings that we see as likely to continue pursuing an opportunistic acquisition strategy. WDS’s share price has been under pressure in recent months from a combination of oil price volatility and approval issues at Scarborough, its key offshore growth project. With both of those factors now having moderated, with the pullback in oil prices moderating and work at Scarborough back underway, we see now as a good time to add to positions. Increasing our conviction in our call is the progress WDS is making through the current capex phase, while maintaining a healthy balance sheet and healthy dividend profile. WDS still has to address long-term issues in its fundamentals (such as declining production from key projects NWS/Pluto), but will still generate substantial high-quality earnings for years to come.

Morgans has an add rating and $36.00 price target on Woodside’s shares. This suggests potential upside of 27% for investors. In addition, the broker is forecasting a 5% dividend yield over the next 12 months.

The post Guess which ASX energy shares are buys and could deliver huge 12-month returns appeared first on The Motley Fool Australia.

More reading

• ASX 200 energy shares slip as cracks appear in OPEC unity
• 5 things to watch on the ASX 200 on Monday
• Here’s how the ASX 200 market sectors stacked up last week
• Here are the top 10 ASX 200 shares today
• Morgans names the best ASX dividend shares to buy in May

Motley Fool contributor James Mickleboro has positions in Woodside Energy Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.