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March 26th, 2020 | 06:29 CET

BP, Royal Dutch Shell, Saturn Oil & Gas - now positioning for the oil rally

  • Oil
Photo credits: pixabay.com

Russia and Saudi Arabia are in the middle of an oil war. This was preceded by negotiations on a joint reduction in production volumes in order to ensure price stability in connection with the Corona Crisis and the accompanying decline in demand. Russia has belonged to OPEC+ for three years in an extended circle. This has now come to an end, as no consensus decision has been reached. Saudi Arabia reacted with disgruntlement and has announced that it will increase its production volume. The oil price level now reached of less than USD 25 per barrel for WTI not only makes the US energy economy unprofitable, but also endangers the energy independence of the largest oil consumer. There is therefore enormous pressure to act.

time to read: 3 minutes | Author: Mario Hose
ISIN: GB00B03MLX29 , GB0007980591 , CA80412L1076

Table of contents:


    John Jeffrey, CEO, Saturn Oil + Gas Inc.
    "[...] The Oxbow Asset now delivers a substantial free cash flow stream to internally fund our impactful drilling and workover programs. [...]" John Jeffrey, CEO, Saturn Oil + Gas Inc.

    Full interview

     

    Setting an example in the Presidency

    In 1999, the G7 decided to establish a wider circle of countries in order to be able to react jointly to crises. The founding meeting of the G20 took place in December 1999 in Berlin. Since then, the presidency has changed every year and this year Saudi Arabia is chairing the group. This year's G20 Summit will take place on November 21 and 22 in Riyadh.

    In the meantime, the focus is not only on joint crisis management, but also on long-term issues such as energy, health and climate. Russia is also a member of the G20 and pressure is growing on Saudi Arabia to ensure that the world community works together to find solutions in difficult situations. The presidency of Saudi Arabia is at the same time an opportunity to act responsibly and to bring the price of oil back up to a sensible level.

    Massive price losses on the stock market

    The shock following Saudi Arabia's announcement to increase production was huge and sent not only the oil price plummeting, but also the stock prices of most listed companies. The value of BP shares halved within a few weeks from over EUR 5.00 to under EUR 2.50. Royal Dutch Shell's share price development in the past four weeks was similar. The value of the shares also halved from over EUR 24.00 to under EUR 12.00.

    Suncor Energy's share price developed even more dramatically in the same period, as it fell from over CAD 40.00 to under CAD 15.00. Chevron's share was also unable to escape this development and its value fell from over 112.00 USD to below 52.00 USD. As a result, the company has already announced a production cut of 125,000 barrels per day. With a price drop from CAD 4.20 to CAD 0.41, or over 90%, Torc Oil & Gas leads the field of losers.

    Sustainability and human rights

    The young Canadian oil producer Saturn Oil & Gas announced yesterday that the company has hedged half of its production volume until February 2021 at a price of over CAD 65.00. This is a forward-looking measure that will ensure attractive sales for the management for around a year. The company has recently appointed Jim Payne, CEO of dynaCERT, to the Board of Directors to be at the forefront of ESG in the future. dynaCERT has developed a hydrogen retrofit technology that will enable diesel engines to save fuel while reducing emissions of pollutants. The cooperation results in advantages for both sides. dynaCERT gains direct access to the oil industry and Saturn can not only save costs but also protect the environment.

    The environmental regulations for the oil industry in Canada are among the strictest in the world. In view of the fact that modern society will continue to need oil in the future, it is only a matter of time before value is placed on particularly sustainable production and respect for human rights. A huge opportunity for Saturn Oil & Gas and the investors.

    US government under pressure to act

    A low price for oil also makes itself felt at the petrol station and can help to ensure that households have more money left over for the consumption of other things. In the context of the Corona Crisis, however, this effect does not occur, as a large proportion of people in the countries affected are restricted in their mobility and can consume less. The US government is under enormous pressure to ensure the independence of the domestic energy supply.

    In addition to the friendly option of agreeing closer cooperation with Saudi Arabia, there is also the pressure to impose an embargo if necessary or to make foreign oil more expensive through taxes. For example, the US government could justify an embargo on the grounds that there are doubts about compliance with general human rights in various OPEC countries and Russia. Then such a measure would certainly also find broad approval among the domestic population. So in the election year not only jobs are in danger, but also votes.


    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may in the future hold shares or other financial instruments of the mentioned companies or will bet on rising or falling on rising or falling prices and therefore a conflict of interest may arise in the future. conflict of interest may arise in the future. The Relevant Persons reserve the shares or other financial instruments of the company at any time (hereinafter referred to as the company at any time (hereinafter referred to as a "Transaction"). "Transaction"). Transactions may under certain circumstances influence the respective price of the shares or other financial instruments of the of the Company.

    Furthermore, Apaton Finance GmbH reserves the right to enter into future relationships with the company or with third parties in relation to reports on the company. with regard to reports on the company, which are published within the scope of the Apaton Finance GmbH as well as in the social media, on partner sites or in e-mails, on partner sites or in e-mails. The above references to existing conflicts of interest apply apply to all types and forms of publication used by Apaton Finance GmbH uses for publications on companies.

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    Der Autor

    Mario Hose

    Born and raised in Hannover, Lower Saxony follows social and economic developments around the globe. As a passionate entrepreneur and columnist he explains and compares the most diverse business models as well as markets for interested stock traders.

    About the author



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