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March 22nd, 2023 | 09:45 CET

Buffett adds to oil stocks: Shell, Saturn Oil + Gas, BYD

  • Mining
  • Oil
  • Electromobility
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Star investor Warren Buffett has long been a fan of oil stocks. So it is no surprise that he is taking advantage of the current weak oil price to add to his favourite stock (after Apple): Occidental Petroleum. Berkshire Hathaway now holds around 23% of the US oil producer. Those looking to take advantage of the low oil price opportunity should also look at Shell and Saturn Oil & Gas. Numerous analysts recommend Shell and Saturn Oil & Gas is on its way to becoming a well-known producer after several spectacular takeovers. There is also news on BYD. Also a favourite of Buffett, but it is currently in a difficult market environment. Here is what recent media reports suggest.

time to read: 3 minutes | Author: Fabian Lorenz
ISIN: Shell PLC | GB00BP6MXD84 , Saturn Oil + Gas Inc. | CA80412L8832 , BYD CO. LTD H YC 1 | CNE100000296

Table of contents:

    Analysts on Saturn: Over 100% price potential after takeover

    Saturn Oil & Gas has been shaking up the Canadian oil industry with acquisitions over the past 1.5 years. In the second half of 2023, production is expected to rise to over 31,000 barrels of oil equivalent (BOE) - up from just 700 BOE in early 2021. The latest reserve valuation of the crude oil and natural gas assets also sounds promising. According to this, the injected and suspected reserves of the two oil fields, Oxbow and Viking, are at a net asset value per share of CAD 6.92. Added to this are the reserves from the acquisition of the Ridgeback properties, which was completed a few weeks ago. Adding their total proved and probable reserves, the net asset value increases to CAD 12.88 per share. Currently, the stock is trading at around CAD 2.40.

    Therefore, it is not surprising that several analysts have renewed their buy recommendations after the publication of the reserve valuation. CG Capital Markets recommended the share of Saturn Oil & Gas with a price target of CAD 7. The analysts of Eight Capital have a price target of 7.50 CAD. The experts at also consider Saturn Oil & Gas significantly undervalued. Saturn's EV/adj EBITDA ratio is currently around 1.3. If the factor is set to the industry average of 5, then a fair value per share of around CAD 10.00 would be appropriate from today's perspective, according to - to the full update.

    Shell: Analysts give the thumbs up

    Due to weaker oil prices, Shell's share has fallen by a good 10% in recent days and is currently trading just above EUR 26. For classification: At the end of 2020, the share was quoted at EUR 10. The share price decline can therefore be considered manageable. Analysts also continue to be convinced by the share. Most recently, the Canadian RBC recommended the share of the oil group with "Outperform" and a price target of GBP 29.00. The analysts expect new impetus from the Capital Markets Day on June 14. Then more details on resource planning and development of new wells should be given. Due to the high free cash flows, the analysts at JPMorgan recommend Shell shares with an "Overweight" rating.

    The price target is GBP 30.00. Deutsche Bank is similarly optimistic. Their analysts trust Shell to achieve a share price of GBP 29.87. The share is currently quoted at GBP 23.00. Accordingly, the recommendation is "Buy". Incidentally, in Germany, Shell holds, among other things, a 37.5% stake in the refinery in Schwedt. This has been in the headlines since Russia's invasion of Ukraine, as the majority shareholder Rosneft is a Russian energy group. Shell would like to sell the stake. But as long as the federal government has taken control of Rosneft, this is proving difficult.

    Shell also invests in hydrogen refueling stations Source: James Cannon

    BYD: The situation is becoming confusing

    The situation is also difficult at BYD at the moment. Things do not seem to be going quite as smoothly at the Chinese e-car company as they have in recent years. The news agency Reuters reports that workers at the plant in Xi'an - it is BYD's largest factory - are to work only four days a week. In addition, shifts at the Shenzhen plant are said to have been reduced from three to two per day. The reason is said to be the weakening demand for e-cars in China. This again shows that 2023 will likely be rougher for the e-car industry. First, Tesla reduced prices in January. In addition, manufacturers of vehicles with combustion engines have also lowered prices and are putting pressure on e-cars. One can, therefore, certainly speak of a price war within the entire automotive industry in China. There is still no news from German manufacturers.

    However, BYD's sales figures to date are still impressive. In February 2023, 193,655 units were sold. That is about 28% more than in January and more than double the 88,283 vehicles sold in February 2022.

    The current year is expected to be a decisive one for Saturn Oil & Gas. Looking at the financials, the stock is almost ridiculously cheap. However, this has been true for months. With the upcoming production numbers, including the latest acquisition, management must succeed in attracting new investors and driving the share price. At BYD, the situation is confusing. Sales figures remain strong, and it is expanding internationally. But then why the production cuts? Shell continues to be a base investment in the oil sector.

    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") currently hold or hold shares or other financial instruments of the aforementioned companies and speculate on their price developments. In this respect, they intend to sell or acquire shares or other financial instruments of the companies (hereinafter each referred to as a "Transaction"). Transactions may thereby influence the respective price of the shares or other financial instruments of the Company.
    In this respect, there is a concrete conflict of interest in the reporting on the companies.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.
    For this reason, there is also a concrete conflict of interest.
    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Fabian Lorenz

    For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.

    About the author

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