Deutsche Rohstoff AG, Royal Dutch Shell, Nel ASA: Attention - here it burns!

Deutsche Rohstoff - The energy experts from Mannheim

Deutsche Rohstoff AG (DRAG) has so far fared very well through the Crisis. Thanks to the prudent management to assess both the energy prices and the commodity situation. The portfolio acquisitions in 2020 are therefore a pleasure in the current year and there are some excellent revenues on the asset management side. In 2020, the Company acquired a stake in the US Company Oasis Petroleum at a time when many industry experts only saw black, fully loaded oil tankers off the coasts of North America being used as floating oil storage facilities.

Since then, the shares in Oasis have performed very well and have been completely sold off again. The average selling price now realized represents more than a threefold increase compared with the cost price. In the first quarter of 2021, which is still ongoing, the realized portfolio gains already amount to EUR 8.2 million. Unrealized gains currently still exist in the amount of EUR 3.8 million. Good to hear that German companies can also be successful in the US.

The recent rise in the US oil price WTI to just under USD 60 provides an important basis for the expansion and resumption of oil production. It significantly increases the ability to plan the further development of the US subsidiaries. In addition, investors are naturally looking at the progress made at the tungsten and molybdenum subsidiary Almonty. Following project financing with KfW-IPEX Bank, Almonty will be able to increase its production from 2022 significantly. The Almonty share is also attracting significant interest and is trading near its highs. DRAG is in on the action here with a 12.8% stake. Also an example of a far-sighted investment policy, as tungsten is a very rare and crucial technical metal.

The DRAG share was able to climb to EUR 12.85 in 2021 and is currently consolidating at a high level. With the current outlook, the lows from 2020 should become a distant memory. We expect a revaluation of DRAG soon, as earnings should also deliver positive surprises again in 2021 through prudent oil hedging, despite currently consolidating oil prices.

Royal Dutch Shell plc - Decarbonization continues in Europe

In Europe, the signs of the times have been recognized - decarbonization is the buzzword. If you want to implement long-term climate targets politically, you can hardly avoid an alternative energy supply program, especially for the mobility sector. Gazprom and Royal Dutch Shell (RDS) have been working on expanding gas production, which is much cleaner than oil. To this end, they signed another strategic agreement for five years.

The new cooperation expands the interaction between the two companies. Particular attention will be paid to such areas as energy market research, the implementation of projects along the entire value chain, cooperation in the digitalization of technologies, and greenhouse gas emissions reduction.

The two Group CEOs, Alexey Miller (Gazprom) and Ben van Beurden (RDS) gave an overview of Gazprom and Shell's current achievements. In particular, they discussed the Sakhalin II project, Russia's first LNG plant. Last year, a record amount of liquefied natural gas, over 11.6 million tons, was produced and delivered to customers in Europe. Special mention was made of the European energy sector's decarbonization, as natural gas can play a significant role in meeting European climate targets due to its environmental friendliness.

The RDS share is currently consolidating with the oil price at a high level. Since the lows below EUR 10, the value has gained a good 70%. There is still more to come here.

Nel ASA - The rally of the century seems to be over

The management of Nel had made a good decision to increase the capital of the Norwegian hydrogen group at short notice at the end of February. 49.5 million new shares were sold in a private placement in a fast-track procedure, and a good EUR 110 million for future investments was thus flushed into the coffers overnight. Nel is demonstrating good timing and knows how to turn positive stock market cycles to its advantage.

The projects in the hydrogen refueling sector are still too thinly spread to do a flourishing business. As we expected, the figures for 2020 were disappointing across the board. The technological race against e-mobility also seems to be lost for the time being, as major international players in the automotive industry are increasingly leaving no doubt that they will be relying on intelligent battery solutions in the future. Not good news for the entire H2 sector; the share prices consequently also collapsed across the board. In the last 4 weeks alone, hydrogen shares lost around EUR 40 billion in stock market value; the biggest loser was the US Company Plug Power with a drop in share price of over USD 20 billion, while Nel lost just under EUR 1.8 billion.

As if that were not enough! The US asset manager Arrowstreet expects further losses in the Nel share price. As reported by Bloomberg, the Boston-based in-house hedge fund has built up a significant short position in Nel ASA. However, according to publicly available data, this position comprises only 7.43 million Nel shares, or 0.5% of the outstanding capital. None of this is a drama yet - but it is a sign that the historic bull market in this sector has ended. Therefore, expect further price declines.