December 4th, 2023 | 07:40 CET
BP, Saturn Oil + Gas, Occidental Petroleum - New opportunities from OPEC+
With the decision by the oil cartel OPEC+ to further reduce production in the first quarter of next year, oil prices continued their correction that has been ongoing for weeks. Russia and OPEC+ announced their planned cuts at a total of 2.2 million barrels per day. The current decline in the oil sector offers investors an opportunity to participate in the expected long-term upward trend at more favorable prices.
time to read: 3 minutes
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Author:
Stefan Feulner
ISIN:
BP PLC DL-_25 | GB0007980591 , Saturn Oil + Gas Inc. | CA80412L8832 , OCCIDENTAL PET. DL-_20 | US6745991058
Table of contents:
"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
Author
Stefan Feulner
The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
He is passionate about analyzing a wide variety of business models and investigating new trends.
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BP - Green alternatives
Although profits from black gold are still booming, international oil giants, in particular, are looking to enter green technologies. ExxonMobil, for example, sees itself as a future supplier of electromobility and recently acquired drilling rights for a lithium deposit in the southern US state of Arkansas.
British energy giant BP, which generated a surplus of almost USD 40 billion in 2022, is also looking for new footholds and is continuing to invest in the renewable energy sector. With the remaining acquisition of 50.03% of the solar power joint venture BP Lightsource, the British company is seeking to secure complete control of one of the leading solar and battery storage system developers for around GBP 254 million. BP Lightsource specializes in the development, engineering, construction and management of large-scale solar and battery storage projects.
In recent years, the Company has grown exponentially, has developed 8.4 gigawatts of solar capacity and has a 61 GW development pipeline. The investment bank Barclays continues to assign a price target of GBP 1,000 to the BP share due to the planned overall takeover. The purchase price of around GBP 500 is well within the oil and gas group's capital framework. With this step, BP is underpinning its strategy concerning decarbonization.
Saturn Oil + Gas - Significant discrepancy to the peer group
The Canadian oil producer Saturn Oil & Gas has made several acquisitions over the past two years and is actively optimizing the acquired properties. The figures for the third quarter of the fiscal year 2023 demonstrate impressive successes. A new record was set with a free cash flow of over CAD 100 million. The curve for the current production of 26,000 oil equivalents, including gas per day, rose just as steeply.
Sales after nine months amounted to CAD 508.5 million compared to CAD 201.1 million in the same period of the previous year. Adjusted cash flow per share was CAD 1.62 due to the increase in the number of shares. After nine months of 2022, this was CAD 1.72 per share.
A further 18 drilling fields were developed in the third quarter. The goal of the management around CEO John Jeffrey in the fourth quarter is to further accelerate development activities in both Alberta and Saskatchewan. Currently, three drilling programs are running in parallel.
The currently favorable valuation of Saturn Oil & Gas compared to its peer group is striking. At a share price of CAD 2.25, the price/cash flow ratio is around 1.1, compared with a ratio of between 4 and 5 for comparable companies.
Anyone interested in learning more about the oil producer's business model will have the opportunity to listen to Vice President Kevin Smith at the 9th International Investment Forum on December 5. Click here for free registration.
Occidental Petroleum - On the verge of a major acquisition
The M&A wheel in the oil sector continues to turn. OXY, backed by Warren Buffett and Berkshire Hathaway and in which the holding company owns 26%, is also on the verge of acquiring a target. However, this is not a strategic shift towards a GreenTech company. Instead, the US company is planning to expand its core business with CrownRock, a major oil producer from Texas. According to Fitch Ratings, the Company produces around 150,000 barrels of oil equivalent per day.
CrownRock has more than 80,000 acres in the northern part of Texas's Midland Basin, which is part of the Permian Basin, the largest oil-producing region in the United States. The Company is led by renowned Texas businessman and billionaire Timothy Dunn and is backed by private equity firm Lime Rock Partners. In the Permian region, CrownRock, along with Endeavor Energy Resources, is one of the last major private companies.
The "Wall Street Journal" reported ongoing talks regarding the purchase of the Permian Basin producer. The purchase price is said to be well over USD 10 billion, including debt.
BP continues its plan to transform into a greentech company through acquisitions in renewable energy. On the other hand, OXY aims to strengthen its core business through inorganic growth. At Saturn Oil & Gas, the impact of the acquisitions is evident, resulting in record-breaking results.
Conflict of interest
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