The ‘Great Whale’ prospect has burst like a bubble, causing a sharp decline in theme stocks.
The deep-sea gas field known as ‘Great Whale,’ a promising structure in the East Sea, has been determined to be economically unviable after exploratory drilling, leading to a significant drop in related theme stocks.
On the 7th, Korea Gas Corporation saw its stock plummet by 13.82%, closing at 30,550 KRW. Other stocks such as Hwaseong Valves, a gas pipe component manufacturer, and Nexteel, a pipe manufacturer, fell by 16.26% and 11.22%, respectively. Additionally, companies like Korea ANKOR Oil (-17.57%), Korea Petroleum (-13.80%), Heung-gu Oil (-9.08%), and Dongyang Steel Pipe (-10.06%), all grouped under the ‘Great Whale theme stocks,’ also experienced a nosedive.
The exploratory drilling of the Great Whale project, considered the most promising among the East Sea deep-sea gas field development projects, concluded with a preliminary decision that it was not economically viable, severely dampening investor sentiment in related stocks.
The Ministry of Trade, Industry, and Energy stated the previous day, “The exploratory drilling results have not confirmed the economic viability of the Great Whale structure,” indicating no further exploration or drilling is needed. The drilling, which began on December 20 last year, concluded on February 4.
Korea Gas Corporation, a leading stock within the Great Whale theme, had experienced a surge since the government’s exploratory drilling announcement in June last year. On the day of President Yoon Suk-yeol’s press conference concerning the drilling, the stock hit the upper limit in a single day. Immediately after President Yoon’s statement, Industry Minister Ahn Deok-geun remarked in a briefing that the potential reserves could reach about 14 billion barrels, comparing the value of the East Sea oil and gas fields to five times the market capitalization of Samsung Electronics. Following the announcement, the stock saw a 113% rise within just 20-odd days, soaring from merely 20,000 KRW at the start of the previous year to 64,500 KRW at its peak. However, concerns grew over a potential loss of momentum in state projects due to the December 3 Martial Law incident, causing a drastic drop in stocks since the end of last year.
There are criticisms that key investment points of Korea Gas Corporation, such as potential tariff increases and dividend resumption, have been overshadowed by the Great Whale theme. Sung Jong-hwa, a researcher at LS Securities, lowered the target price for Korea Gas Corporation from 62,000 KRW to 50,000 KRW on the 5th, stating, “The main investment points for Korea Gas Corporation are the recovery of receivables through tariff increases and the resumption of dividends, but these have become difficult due to the political situation, alongside the severe stock price volatility caused by the East Sea gas field theme.”