May 14th, 2021 | 15:56 CEST
BYD, Saturn Oil + Gas, Varta - Now the lid is flying off!
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
Prepared for transformation
At the end of last year, one could read the intentions of the CEO of Saturn Oil & Gas, John Jeffrey, in several media outlets. The Company, which operates oil fields in the province of Saskatchewan in Canada, was planning to acquire larger competitors or projects that fit the Saturn Oil & Gas strategy and immediately provide noticeable scalability to sales and cash flow. It was the only way to take advantage of the unique situation.
After months of due diligence, the acquisition of assets in the Oxbow area of southeastern Saskatchewan, one of the best economic areas in North America, has now been announced. The purchase price was valued at approximately CAD 93 million and consists of a long-term loan of CAD 82 million, a brokered private placement of CAD 6 million and an unbrokered private placement of CAD 15 million. Thus, after the contribution, the number of shares will increase from currently 234.57 million shares to approximately 410 million shares, plus new warrants.
Enormous economies of scale
Saturn Oil & Gas plans to be debt-free within 24 months. The acquisition of the Oxbow assets will increase daily production to 7,500 BOE/day, a factor of more than 10. The new acquisition is expected to generate CAD 65-70 million in net operating revenues over the next 12 months - secured by oil price hedging. The low purchase price is particularly attractive, with Saturn paying only 1.4 x cash flow of the approximately 280,000 net acres, or only about CAD 14,000 per flowing BOE. In normal times, prices were even closer to CAD 100,000 per BOE.
Saturn's production will increase by more than 2,000%, with PDP reserves rising by a whopping 1,300% compared to the Company's 2020 year-end reserves. For the next three years, the Company has identified the potential to generate annual free cash flows by optimizing and recompletion of more than 500 existing wells.
With this acquisition, Saturn Oil & Gas moves up several leagues to become a major publicly traded producer of light oil in North America. The market capitalization before the announcement of the acquisition was EUR 17.6 million. Based on the numbers presented, this makes the stock a candidate for a multiple. Put simply; production will increase tenfold. The number of shares will roughly double, so the share price should move swiftly in the direction of CAD 0.50 following the lifting of the trading suspension from the most recent level of CAD 0.12, which is expected today.
Tesla rolls over
The sales figures for April were positive for the Chinese electric car manufacturer BYD. It was even able to outpace US giant Tesla in total sales of new energy vehicles. In April, BYD sold 16,114 BEVs, up 62% from April 2020, and added 8,920 plug-in hybrids, a huge jump of 288% from the same period last year, resulting in NEV sales of 25,662 electrified vehicles. That's an increase of 97.5% from April 2020 and 6% from the previous month.
Enormous imagination through spin-off
The timing couldn't be better. Due to the current global chip shortage, the "Build Your Dream" Company plans to take its proprietary chip division, BYD Semiconductor, public after the spin-off is complete. BYD Semiconductor Co. Ltd specializes in the development of chips for the electric car industry. The spin-off company will be listed on the Growth Enterprise Market of the Shenzhen Stock Exchange.
After the planned IPO, the parent Company still intends to hold around 72.3% of the shares, or 325,356,668 shares. BYD Semiconductor's most recent valuation was USD 1.44 billion. The news brought only short-term enthusiasm to the BYD share price, resulting in a share price of USD 15.11. At the USD 15 mark, broad support should hold. Otherwise, a further slide into the area around USD 12.50 threatens.
Things are looking up in the e-car market
The figures for the first quarter are out. Sales were slightly less at battery manufacturer Varta, but the business was more profitable. EBITDA rose by almost 16% to EUR 59.9 million. The Company's goal is to further increase profitability in all segments. The forecasts for the year as a whole also point to a rosy future. The Company anticipates sales of EUR 940 million. In addition, the margin is expected to increase by around 2.5%. Following the announcement around 8 weeks ago that Varta intends to enter the production of batteries for electric cars, Varta announced on Wednesday that it had found a first customer for its V4Drive lithium-ion batteries. It also said it would continue to focus on developing larger lithium-ion round cells in the future. However, the name was still kept secret by management.
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.
Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and etc. on news.financial. These contents serve information for readers and does not constitute a call to action or recommendations, neither explicitly nor implicitly. implicitly, they are to be understood as an assurance of possible price be understood. The contents do not replace individual professional investment advice and do not constitute an offer to sell the share(s) offer to sell the share(s) or other financial instrument(s) in question, nor is it an nor an invitation to buy or sell such.
The content is expressly not a financial analysis, but rather financial analysis, but rather journalistic or advertising texts. Readers or users who make investment decisions or carry out transactions on the basis decisions or transactions on the basis of the information provided here act completely at their own risk. There is no contractual relationship between between Apaton Finance GmbH and its readers or the users of its offers. users of its offers, as our information only refers to the company and not to the company, but not to the investment decision of the reader or user. or user.