December 28th, 2023 | 07:40 CET
From record production to billion-dollar deals: Prospera Energy, Occidental Petroleum and Tesla in the spotlight
The world is undergoing an energy transition, and pioneering projects in Saudi Arabia demonstrate the significant role of renewable energy. Energy companies like Prospera Energy are experiencing record production with over 1,500 BOE/D. Value appreciation and a focus on reserves make Prospera Energy an attractive investment candidate, especially given the rising global demand for oil and gas. Warren Buffett is backing precisely these types of companies, such as Occidental Petroleum (OXY). The planned acquisition of CrownRock for USD 12 billion promises a significant increase in sales for the oil and gas company. Berkshire Hathaway is, therefore, increasing its stake in OXY by 5.2 million shares. While Tesla faces challenges with its electric vehicle (EV) doors, BYD is outperforming in the global BEV market. The Chinese car manufacturer has already overtaken Tesla in terms of market share, recording a 68% increase compared to the previous year. The future of electric mobility could lie in Chinese quality and reliability and, above all, in oil and gas companies. Where is the next profit leap?
time to read: 5 minutes
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Author:
Juliane Zielonka
ISIN:
PROSPERA ENERGY INC. | CA74360U1021 , OCCIDENTAL PET. DL-_20 | US6745991058 , TESLA INC. DL -_001 | US88160R1014
Table of contents:
"[...] Recovery rates of more than 90% rare earths are another piece of the puzzle on the way to the economic viability of our project. [...]" Craig Taylor, CEO, Defense Metals
Author
Juliane Zielonka
Born in Bielefeld, she studied German, English and psychology. The emergence of the Internet in the early '90s led her from university to training in graphic design and marketing communications. After years of agency work in corporate branding, she switched to publishing and learned her editorial craft at Hubert Burda Media.
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Prospera Energy on record course: Over 1,500 BOE/D - Focus on value enhancement and reserves
Pioneering renewable energy projects are currently emerging in Saudi Arabia. The region, rich in oil and gas reserves, has recognized one thing: The emission-reduced energy sources must be priced so attractively that industrial users remain competitive with them. By 2030, the kingdom aims to obtain 50% of its energy resources from RE technologies. Raw materials are currently very popular with investors. On the one hand, renewable energies still require fossil sources; on the other, the growing demand can be seen worldwide. For example, Prospera Energy is a listed energy company based in Western Canada (ISIN CA74360U1021). It specializes in the exploration, development and production of crude oil and natural gas, in particular, the optimization of hydrocarbon recovery from legacy fields. The Company is undergoing a three-stage restructuring process to prioritize cost-effective operations, estimate production capacity and reduce liabilities. This strategy is greatly enhancing shareholder value.
The first phase has been completed, focusing on cost efficiency, free cash flow and safe operating status in compliance with the necessary regulations. As a long-term strategy, Prospera Energy will continue its established in-house production and acquisitions business model to diversify its product mix. The aim is to achieve a share of 50% light oil, 40% heavy oil and 10% gas.
On the production front, Prospera Energy has successfully tested two oil wells, which will deliver up to 500 barrels per day (B/D) in the start-up phase and then continue to deliver around 150 B/D. Prospera Energy is also continuing the development of medium light oil. Here, too, the long-term goal is to increase production and diversify the product mix.
In heavy oil, total production is at an impressive 1,577 BOE/D, and the year-end target of 1,800 BOE/D is expected to be exceeded. These successes mean additional reserves and value enhancement. For 2024, Prospera Energy plans to increase oil recovery through EOR methods and expand core reserves through targeted acquisitions for a diversified product mix. Prospera could become a lucrative source of growth for investors.
Billion-dollar deal ahead: Occidental Petroleum plans takeover of CrownRock - Berkshire Hathaway sets sights on profit explosion
Legendary investor Warren Buffett is known for having a good hand when it comes to increasing the value of companies in the long term. His company, Berkshire Hathaway, is already invested in Occidental Petroleum (ISIN US6745991058). The US company focuses on hydrocarbon exploration in the US and the Middle East, as well as petrochemical production in the US, Canada and Chile. Buffet's strategy involves entering companies in good time that are not yet priced in at their intrinsic value on the market. Occidental shares are currently trading at EUR 55.55.
Berkshire is now increasing its shareholding by a further 5.2 million shares. The shares were acquired between December 19 and 21, 2023, for around USD 312.1 million, according to a filing with the US Securities and Exchange Commission (SEC). Berkshire's stake in Occidental now amounts to 27.7%. The Company is managed by the American businesswoman and mineral engineer Vicki Hollub. She has been President and CEO of Occidental Petroleum since April 2016, making her the first woman to head one of the most influential American oil companies. OXY plans to acquire CrownRock for USD 12 billion. Forecasts indicate that the deal could increase Occidental Petroleum's annual revenues by more than USD 1 billion. However, there are other reasons for Berkshire's interest in the company besides the acquisition. Berkshire Hathaway started buying the shares in 2022, signaling a focus on long-term, fundamental value. It is all the more important to look at and analyze Prospera Energy as a "little brother" now.
BYD vs. Tesla: The signs point to a change of power - Chinese car manufacturer dominates global BEV sales
The Tesla share (ISIN US88160R1014) complements the fundamental analysis and Warren Buffett's strategy. The Company appears to be permanently overvalued and, through its CEO Elon Musk, stands for an innovative, pioneering spirit in electromobility. However, anyone focusing on renewable energy products instead of raw materials must reckon with considerable risks. The competition never sleeps, which is why the Chinese car manufacturer BYD appears to be vastly superior to the American company in terms of quality, pricing policy and reliability.
Tesla is recalling over 120,000 vehicles because unlocked doors can increase the risk of injury in the event of an accident. Models S and X from 2021-2023 in the US are affected. Tesla discovered the problem during a crash test on December 6, 2023, but so far, there have been no known injuries or claims.
BYD has already overtaken Tesla in global market share in 2022 when plug-in hybrid sales are taken into account. Analysts had already predicted in January that BYD would dominate the sales sector in 2023 - long before the quarterly figures were published.
BYD has since introduced new BEV models that compete directly with Tesla's offerings. By the end of the third quarter of 2023, BYD had overtaken Tesla, holding a 17% share of all global BEV sales - an increase of 68% compared to the previous year, as reported by the technology research firm Counterpoint.
The global energy transition is gathering pace, and in this context, Prospera Energy is in the spotlight as a Canadian company with a record production of over 1,500 BOE/D. Like Occidental Petroleum, there is a dormant value appreciation opportunity for investors here, as Buffett has already discovered with the US player. The focus of Prospera Energy's management team on growing the Company's own value makes it an exciting investment, especially against the backdrop of rising global demand for oil and gas. While Prospera is undergoing an ambitious restructuring process, impressive achievements are emerging on the production side, including successful oil well testing, progress in medium-light oil development, and success in heavy oil production. Meanwhile, legendary investor Warren Buffett is increasing his stake in oil and gas company Occidental Petroleum as the Company plans a multi-billion dollar takeover of CrownRock. This strategic decision could lead to a jump in profits and illustrates Buffett's confidence in long-term values. Prospera also relies on acquisitions as part of its business strategy. A power shift is on the horizon in the automotive sector as Chinese carmaker BYD has overtaken Tesla in the global BEV market. BYD not only presents innovative BEV models but also demonstrates superior quality, pricing and reliability compared to Tesla. While Tesla is struggling with a recall of over 120,000 vehicles, BYD is coming to the fore as the dominant player in BEV sales. These developments highlight the changing dynamics in various areas of the energy transition and point to potential profit leaps for attentive investors.
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