21. October 2021 | 10:11 CET
Gazprom, Saturn Oil + Gas, TotalEnergies - Rising prices continue to create a party atmosphere
Europe is currently experiencing an energy crisis. Drivers are noticing it clearly at the gas pumps and users of gas heating systems in their bills. The reasons are manifold: the recovery of the economy after Corona, the curbing of coal-fired power generation for climate protection reasons, the growing hunger for energy of emerging economies and, last but not least, weather effects. In Germany, there is an additional reason: the phase-out of nuclear energy is currently causing a strong expansion of gas-fired power generation to secure the baseload. The beneficiaries of this development are the oil and gas producers - and thus their investors.
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ISIN: GAZPROM ADR SP./2 RL 5L 5 | US3682872078 , TOTALENERGIES SE | FR0000120271 , Saturn Oil + Gas Inc. | CA80412L8832
"[...] 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.
Gazprom - Record supply volumes and record prices
Gazprom, Russia's state-owned corporation and the largest Company in the Federation, is currently putting its shareholders in a celebratory mood. In the first nine months of the year, according to the Company, 13.1% more natural gas was delivered abroad than in the same period of the previous year - and this at sharply increased prices (Germany: +28.2%). As a result, experts expect additional earnings of up to 30% in the current fiscal year. In addition, the Nord Stream 2 pipeline project was completed a few weeks ago. The Company is currently waiting for the German Federal Network Agency to issue the operating permit. As soon as this is granted, a further increase in natural gas exports to Europe can be expected. In addition, the Company continues to hope for a successful lawsuit against changes to the EU gas directive, which would impose demanding requirements on the Company to unbundle gas sales and pipeline operations.
After the lawsuit was initially rejected, an opinion of the European Court of Justice (ECJ) has now declared that the Group does have legal standing. Success in the proceedings would also have a direct positive impact on the Company's earnings. In addition to the reliable dividend policy (payout ratio of more than 50%), the prospects of further gushing profits make the stock interesting for investors, even if the CO2 price and climate protection targets are likely to make business more difficult for the Russians in the long term. To counter this development at an early stage, the Company recently signed an agreement with the Russian government regarding expanding its hydrogen activities.
Saturn Oil & Gas - Share consolidation
The Canadian oil and gas producer Saturn Oil & Gas has successfully completed its share consolidation. In the process, 20 old shares were combined into one new share. Thus, the Company was able to leave the world of penny stocks and thus become interesting for institutional investors. Another important investment criterion was also recently exceeded: a valuation of more than CAD 100 million. For many institutional investors, this is the lower limit. With an outstanding share volume of around 25 million shares, the line is crossed at a price of CAD 4.
Although the share is currently trading just below this threshold, all fundamental data indicate that the Company, which has now become the largest oil producer in the Canadian state of Saskatchewan, will stabilize above this level in the near future. One indicator can be seen in the meager P/E ratio of just over 1, which speaks for an extreme undervaluation compared to the peer group. At the same time, the prospects are excellent given the current high prices for energy sources. The CEO of Saturn Oil & Gas, John Jeffrey, stated last week at the International Investment Forum (IIF) that EBITDA could rise from the current CAD 80 million to around CAD 100 million in the coming year. Canadian analyst firm Beacon Securities recently initiated coverage of the stock, rating the shares a "buy" with a price target of CAD 10.15!
TotalEnergies - Company invests heavily in alternative energies
"TotalEnergies subsidiary Adani Green Energy acquires 5 GW alternative energy generation portfolio in India", "DHL Global and TotalEnergies develop solar project in Dubai", "TotalEnergies will invest 25% of its CapEx in renewable energy". With these headlines, the former Total Group is living up to its renaming of TotalEnergies and is stepping on the gas in expanding its alternative energy portfolio in light of bubbling profits from the high oil price. But the Group is also a leader in efforts to protect the environment when it comes to fossil fuels. The French recently announced a cooperation with Company Qnergy to significantly reduce the highly climate-damaging emissions of the greenhouse gas methane during oil production at its Barnett Field in the USA.
The Company also recently completed a successful test flight from Nice to Paris in cooperation with Air France, replacing 30% of conventional jet fuel with a sustainably produced fuel. Last but not least, a partnership with AirLiquide was previously announced, whereby the world leader in technical gases will in future feed the 255 tons of hydrogen produced daily at the Normandie site into its own distribution network, thus contributing to the decarbonization of the production site. However, the stock market seems to be only partially appreciative of these efforts. While competitors' share prices such as Royal Dutch Shell, BP or Exxon Mobil have almost doubled in the last twelve months, TotalEnergies shareholders have had to be content with a price increase of only around 60%.
Oil and gas stocks are running like clockwork at the moment. Given the rally in energy prices, this should come as no surprise to anyone. Gazprom, the world's largest gas producer, is an attractive investment, not least because of its investor-friendly dividend policy, but political risks cannot be dismissed. If you want to ease your green conscience and still appreciate the security of a traditional oil producer, an investment in TotalEnergies is the right choice. However, Saturn Oil & Gas currently offers the greatest growth opportunities - with the corresponding risk. The Company is presently valued extremely low and promises strong growth given current market developments and the increasing interest of institutional investors.