Close menu

November 1st, 2022 | 12:26 CET

Halloween of energy prices: Shell, BP, Saturn Oil + Gas, Nel ASA - Is this the peak yet?

  • Mining
  • Oil
  • Gas
  • Hydrogen
Photo credits:

It sounds ambitious! To completely transform Europe in terms of energy supply, the European Union would need to invest a good EUR 300 billion in alternative energy sources, infrastructure and raw material supply contracts by 2030. By 2021, Germany alone was importing 45% of its fossil fuel energy from Russia, its valued partner until then. After the invasion of Ukraine, this business partner will likely be taken off the list. But this also means that the very favorable sources for Central Europe will no longer be accessible. So prices for electricity, heating and mobility will remain high. Which stocks can benefit from this scenario?

time to read: 5 minutes | Author: André Will-Laudien
ISIN: Shell PLC | GB00BP6MXD84 , BP PLC DL-_25 | GB0007980591 , Saturn Oil + Gas Inc. | CA80412L8832 , NEL ASA NK-_20 | NO0010081235

Table of contents:

    Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
    "[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG

    Full interview


    Shell vs BP - Is the oil rally now over?

    The word "excess profit taxation" is making the rounds. Even if the oil multinationals will not like it, the public sees the current high energy prices as a "windfall profit" for the oil companies. While they keep raking in billions in profits, private households are being pushed to the limit of their financial capacity. Gas levy or not, even the price cap for households and businesses costs the taxpayer several hundred billion. So why not skim off the excess profits of oil producers? This undertaking is not easy because it has no basis in purely legal terms. In the opposite case, a state would have to share in the special losses suffered by the oil companies during the spread of the pandemic in 2020, when the oil futures price fell below zero in April. Of course, the oil multinationals are currently shining under sanctions against Russia.

    US President Joe Biden, like the EU Commission, is criticizing the current record profits of energy companies after Shell announced its second-highest profit ever while increasing its dividend. In addition, there are to be share buybacks instead of a much-needed price cut at the pumps. Biden's remarks were, of course, immediately rejected by oil industry leaders. All Democratic proposals to impose so-called windfall profit taxes on energy companies have repeatedly failed, even when the party controlled both chambers of Congress.

    Shell most recently announced plans to buy back USD 4 billion more of its stock over the next three months, bringing its total buybacks this year to USD 18.5 billion. The Company also plans to increase its fourth-quarter dividend by 15%. Chart technically, both Shell and BP are at their highs. Since the oil price should tend to fall slightly in the medium term, the lush profits should soon be history. Analysts rate both companies predominantly positive and see, on average, still up to a 20% price potential. Today BP reports on the third quarter. The figures should look similar to Shell.

    Saturn Oil & Gas - The picture is getting better and better

    No matter which economic picture you want to put first, the long-term geopolitical picture will keep energy prices up for a while. In this scenario, however, distortions and artificial shortages can always occur. The Canadian oil producer Saturn Oil was courageous and, in an uncertain time, expanded its production neatly through acquisitions in just two years. By mid-September, daily capacity had already reached 12,000 barrels (boe/d). Meanwhile, the Company can put 50% of its cash flow into paying off the loans taken out to acquire the additional Viking fields in Saskatchewan. That brings the current debt of about CAD 200 million to zero by 2024, assuming WTI prices remain at about USD 80 or above.

    Thanks to forward transactions, Saturn can already make its plans today with a high degree of certainty. That is because it was able to sell forward part of its expected production in the second quarter at spot prices between USD 95 and 115. What was intended as a means of securing income for servicing the loans is now proving to be a special profit in subsequent quarters. Currently, the Company is benefiting from the unhedged production shares that can be sold at high spot market prices. This brings the current surpluses to unimagined heights and, at the same time, frees up funds that can be used for further development.

    The present outlook could, therefore, not be better. Stable oil prices and rising production rates go hand in hand. The target for average daily recovery in 2023 is estimated at around 13,400 barrels (boe/d), generating full-year adjusted EBITDA of around CAD 252 million. With about 59.7 million shares, the current market capitalization is only CAD 170 million. For perspective, Saturn Oil is currently valued at only about 1.7 times 2023 free cash flow. VTC Research already estimates an operating cash flow of more than CAD 100 million for the second half of 2022 and consequently calculates a DCF price target of CAD 7.19 per share for the next 4 years. The technical breakout above the CAD 2.82 mark took place yesterday. The next quarterly figures will come on November 8th. The Company will present itself at the raw materials trade fair in Munich in the next few days and then go on roadshow in Europe. There is much to suggest that investors have still not internalized the excellent story.

    Nel ASA - More and more orders, but it takes time

    In competition with fossil raw materials, the subject of hydrogen is moving forward internationally. One of the protagonists in Europe is the Norwegian Nel ASA. While the previous quarters tended to disappoint, the Norwegians presented themselves confidently in the last report. Business is still sluggish, but under the new CEO, Hakon Volldal, the Company is landing one major order after another.

    On the whole, the last quarterly figures were still somewhat disappointing. The operating EBITDA loss increased from NOK -113 million to NOK -214 million in the third quarter. At the same time, the Company's revenues deteriorated from NOK 229 million to NOK 183 million; analysts had expected revenues of NOK 296 million in advance. However, in terms of order intake in Q3, NEL posted a 456% YOY increase to NOK 775 million, which should keep its still-scarce capacity busy for several quarters. Management repeatedly emphasized that they want more public support for the H2 climate offensive.

    The Nel share price reacted calmly to the figures, falling in the first few hours, but in the last few days, it has been able to climb again by over 13% to EUR 1.23. Current broker estimates see a wide range in the price targets between NOK 9 and 28, yet the short-term targets are currently lowered in favor of an improved long-term outlook. Investors should always pay attention to the momentum in the volatile H2 stock, which is currently pointing slightly upwards again. But not a single hydrogen stock in the world is cheap, as there are no assessable profits before 2025.

    Energy markets remain tight as demand for fossil fuels remains high. Shell and BP are profiteers from the current supply situation, while Nel ASA, the hydrogen expert, still has a long way to go to profitability. Saturn Oil & Gas from Canada boasts a 2023 P/E ratio of 1.5, provided management's estimates materialize.

    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") currently hold or hold shares or other financial instruments of the aforementioned companies and speculate on their price developments. In this respect, they intend to sell or acquire shares or other financial instruments of the companies (hereinafter each referred to as a "Transaction"). Transactions may thereby influence the respective price of the shares or other financial instruments of the Company.
    In this respect, there is a concrete conflict of interest in the reporting on the companies.

    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 also 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.

    Risk notice

    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.

    The content is expressly not a financial analysis, but a journalistic or advertising text. Readers or users who make investment decisions or carry out transactions on the basis of the information provided here do so entirely at their own risk. No contractual relationship is established between Apaton Finance GmbH and its readers or the users of its offers, as our information only refers to the company and not to the investment decision of the reader or user.

    The acquisition of financial instruments involves high risks, which can lead to the total loss of the invested capital. The information published by Apaton Finance GmbH and its authors is based on careful research. Nevertheless, no liability is assumed for financial losses or a content-related guarantee for the topicality, correctness, appropriateness and completeness of the content provided here. Please also note our Terms of use.

    Der Autor

    André Will-Laudien

    Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.

    About the author

    Related comments:

    Commented by Juliane Zielonka on September 28th, 2023 | 09:20 CEST

    First Hydrogen, Siemens Energy, PayPal - Innovative growth with hydrogen and its own currency

    • Hydrogen
    • greenhydrogen
    • Energy
    • renewableenergies

    Global Market Insights forecasts that the parcel delivery vehicle market is expected to reach over USD 210 billion by 2032, driven by the uninterrupted growth of e-commerce. First Hydrogen is a company specializing in sustainable propulsion solutions for such fleet vehicles. Hydrogen-powered vehicles are also currently finding their way onto the streets of India. India is the world's fifth-largest economy and is sending a crucial signal with hydrogen technology. First Hydrogen has positioned itself in a promising market. Siemens Energy is also betting on hydrogen. After the debacle caused by the takeover of the wind energy company Siemens Gamesa, the hydrogen deal with Air Liquide is finally leading to an increase in the share price. At PayPal, the new CEO is a breath of fresh air. The Company is expanding its growth potential in the direction of its own cryptocurrency. Find out what that means for investors here.


    Commented by Nico Popp on September 28th, 2023 | 09:05 CEST

    Germany - Car Country? The exodus begins: Mercedes-Benz, Volkswagen, First Phosphate

    • Mining
    • phosphate
    • Electromobility
    • Energy

    Cars still play a significant role in Germany. Many households have two vehicles, some even more. However, sales of new cars have weakened recently - the question of whether to buy a combustion engine or an electric vehicle, along with inflation, have deterred many buyers. German brand manufacturers are now being attracted to the US. There, they are enticed by subsidies and an intact market. Find out what the latest plans of Mercedes-Benz, Volkswagen, and others entail and which relatively unknown company could benefit.


    Commented by André Will-Laudien on September 28th, 2023 | 08:05 CEST

    Attention: Extended correction - Buy the right stocks now! Bayer, Viva Gold, TUI, and BASF are on the list!

    • Mining
    • Gold
    • Pharma
    • chemicals
    • travel

    Higher inflation and rising interest rates - this connection should be clear to investors. The interest rate level in Germany has moved from negative territory to 2.77% in the 10-year range, but stocks continued to rise cheerfully. The party led to all-time highs of 16,528 points in July, but the fundamental situation of the companies deteriorated in parallel. Only after repeated warnings from the US Federal Reserve did the explosive NASDAQ also enter a correction. And it continues. Yesterday, the CEO of US investment bank JPMorgan, Dimon, warned that the world may not be prepared for 7% capital market interest rates. He and Dr. Jens Erhardt, the CEO of the asset management company DJE, warn of stronger setbacks on the stock markets. Some stocks have already undergone a strong correction. Here is a brief overview.