12. December 2019 | 07:38 CET
Deutsche Rohstoff, Fuchs Petrolub, Saudi Aramco - and another successful player is emerging
With the IPO of Saudi Aramco, the topic of oil investments is once again moving into the focus of the media. People around the globe currently consume around 100 million barrels (159 liters) of crude oil per day for their usual prosperity. The crude oil is processed in a variety of ways and then used for various purposes. Apart from all environmental discussions, the production of crude oil provides a necessary foundation for a modern society. OPEC expects the daily demand for crude oil to rise to more than 110 million barrels by 2040, partly because energy demand is expected to rise by 25% over the same period.
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ISIN: DE000A0XYG76 , CA80412L1076 , DE0005790430
"[...] 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.
Will the price of crude oil rise?
Without the support of the capital market, sooner than later the supply diversity of crude oil producers will inevitably decline. The consequences would be an increasing oil price and more profits for the producers. So it's worth taking a close look at the industry and seeking for stocks with high growth rates.
Successful placement of a bond
In recent years, Deutsche Rohstoff AG has grown into an oil company. The German parent company has several subsidiaries and participations in the USA. Only recently, the company was able to place a new 5.25% bond with a maturity of 2024. The issue volume reached EUR 87.1 million, of which EUR 33.3 million was exchanged by creditors of a previous bond. With the fresh EUR 53.8 million, the company can drive forward its operational development.
Stagnation at a high level
Fuchs Petrolub SE is another German company that deals with crude oil and its products. The company had more than 5,600 employees at the end of the first nine months of 2019 and, as in the previous year, generated more than EUR 1.95 billion, leaving a net profit of EUR 176 million. What growth opportunities Saudi Aramco can offer investors is open and depends largely on the oil price. A corporation that is relevant to the financing of the state budget has its own rules.
Advertising for the Riyadh Stock Exchange
In the course of Saudi Aramco's IPO, more than USD 25 billion were flushed into the company's bank account. 1.5% of the company is now tradable on the Riyadh stock exchange. The market value of Saudi Aramco is more than USD 1.8 trillion. With the company making over USD 68 billion in profits in the first nine months of this year, it is clear that this is more of a marketing than an economic necessity.
Growth companies with potential
If you want more growth and price potential, you should take a look at the business development of Saturn Oil & Gas Inc. The company was taken over by a new management team about three years ago and has been a success story ever since. CEO John Jeffrey manages the company, which is majority owned by German investors and for this reason it is not surprising that the German research house GBC AG has started the coverage of Saturn Oil & Gas.
The analysts' 'buy' recommendation gives the company's share more than 100% price potential over the next 12 months. The shares currently trade at CAD 0.13 and the GBC experts initially see potential of up to CAD 0.31 per share. In the first nine months of this year, the company generated CAD 13.8 million in revenues, an increase of CAD 10.8 million or 352% over the same period last year. The bottom line was a net profit of CAD 2.3 million, which corresponds to a profit margin of almost 17%. Those who are in no doubt that oil will also be needed in five or ten years should consider this asset class.