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November 27th, 2023 | 07:10 CET

ExxonMobil, Prospera Energy, Deutsche Rohstoff AG - New opportunities in the supercycle

  • Mining
  • Oil
  • renewableenergies
  • Energy
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After a sharp rise of around 30% to an annual high of USD 95.50 for the US West Texas Intermediate, black gold entered a correction and has since lost about 20% in value. Even events like the Hamas attack on Israel and OPEC+ production cuts were unable to halt the current decline. From a technical chart perspective, this appears to be a normal correction. In the long term, oil is expected to reach new highs with the next upward movement. JP Morgan, for instance, issued an updated price target of USD 120 per barrel as recently as September.

time to read: 4 minutes | Author: Stefan Feulner

Table of contents:

    ExxonMobil focuses on electromobility

    Although profits from black gold continue to flow, the US oil company is looking for alternatives in green technologies. ExxonMobil sees itself as one of the suppliers of electromobility in the future. The Company is entering uncharted territory with the acquisition of drilling rights for a lithium deposit. According to Exxon, the 48.5-hectare site in the south of the US state of Arkansas is believed to contain large lithium deposits; in a press release, the management even speaks of "one of the most productive lithium resources of its kind in North America."

    Exxon's long-term plan is to become a leading producer of lithium in order to contribute to energy security and play a key role in the energy transition in the United States. The first lithium production is planned for 2027. By 2030, ExxonMobil aims to be responsible for well over 1 million battery-powered vehicles with its lithium production. According to the US company, talks are already underway with customers such as electric car manufacturers and battery producers.

    Due to the current correction in the oil market, Exxon shares lost around 15% from their high for the year to USD 104.57. A total of 26 analysts on "Refinitiv" currently see an average price target of USD 128.

    Prospera Energy - Significant momentum

    The oil producer Prospera Energy, listed on the TSX Venture, the US OTC Market and the Frankfurt Stock Exchange, is still relatively unknown and has a market capitalization of CAD 35.85 million. The focus of oil production is on properties such as Cuthbert, Luseland and Heart Hills in Saskatchewan and Red Earth and Pouce Coupe in Alberta, Canada. The potential is almost inexhaustible, with an estimated half a million barrels of oil equivalent (BOE) still in the ground.

    Production currently stands at 1,100 BOE per day but is set to increase exponentially through optimization. Samuel David, who has been CEO since the summer, has already achieved significant success with his optimization plan. Production costs per barrel have fallen from USD 38.00 to as low as USD 30.00. In addition, following the successful completion of the first phase of the restructuring plan, the net present value of the properties was increased to CAD 72 million.

    In mid-November, Prospera Energy resumed the second phase of development of the horizontal infill drilling program with the sixth horizontal well. The first 5 horizontal wells drilled were above the estimated curve, and production in the first 60 days has exceeded expectations. In addition, the conversion of the vertical wells to horizontal infill wells will continue through the winter until the onset of spring thaw weather next year. The dedicated horizontal wells will enable the Company to maintain its momentum and benefit from the continued positive oil price environment.

    In the long term, Prospera plans to implement comprehensive reservoir management in phase three of the restructured development program to optimize production and reduce production decline to ensure consistent production levels. In addition, the acquisition strategy is to be further expanded in order to expand within its core area and to diversify its products. The long-term goal is to produce 50% light oil, 40% heavy oil and 10% gas.

    Deutsche Rohstoff AG - Strong outperformance

    Despite the corrections in the oil sector, with both the North Sea Brent and the US West Texas Intermediate crude oil losing around 20% in value since the beginning of October, the Deutsche Rohstoff AG share has reached a new all-time high of EUR 35.35. Nevertheless, the Mannheim-based company is still clearly one of the more affordable stocks in a peer group comparison. After the estimates for both 2023 and the following year were raised, the price/earnings ratio is below three.

    A positive effect on further development was felt at the specially organized Capital Market Day, at which both CEO Jan-Philipp Weitz and CFO Henning Döring were available to answer questions. The focus was primarily on current business development and the potential of the sites in Wyoming. Since the beginning of 2022, the focus of operating activities has shifted from the already developed areas in Colorado to Wyoming, which is due to the acquisition of around 70,000 acres of leased land and the partnership in the joint venture with Oxy.

    In the past 14 months, 28 new wells have been brought online, 23 of which are in the Niobrara Formation and five in the Turner Formation. 21 of these wells were drilled as part of the joint venture with Oxy. These wells exceeded expectations, averaging approximately 500,000 barrels of oil per well over their lifetime.

    The positive results of these wells were also reflected in the record figures, with sales of EUR 136.6 million and EBITDA of EUR 101.6 million for the last nine months. In addition, the possibility of over 100 further potential wells provides a solid basis for future development in the coming years.

    Despite the correction in the oil markets, the Deutsche Rohstoff AG share reached a new all-time high. Meanwhile, Exxon is focusing on opening a lithium production facility. Prospera Energy is continuing its optimization measures and has made considerable progress.

    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 hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    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 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

    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.

    About the author

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