Kraken Energy, RWE, Plug Power - Is Germany reconsidering its nuclear phase-out?

Kraken Energy - On course for growth in the US

In the rapidly changing energy sector in the United States, Kraken Energy, under the leadership of CEO Matthew Schwab, is setting new standards in uranium exploration and development with a focus on historic properties in the US. With global demand for uranium increasing and a threatening supply shortfall that could reach between 150 to 200 million pounds annually, the US, in particular, needs uranium, requiring 35 to 65 million pounds annually but only producing a maximum of 10,000 pounds. The traditional reliance on imports from countries such as Russia, Kazakhstan and Canada is increasingly complicated by political tensions and long-term supply contracts from these countries.

Kraken Energy owns four high-grade uranium projects in Nevada and Utah. It is particularly noteworthy that three of these projects in Nevada have produced uranium in the past before being abandoned before reaching their full potential. The centerpieces of these projects are Harts Point in Utah and Apex in Nevada. At the end of December, the Company received approval for its drilling program on the Harts Point property, which consists of 324 claims covering an area of 2,622 hectares. On February 26, the Company announced the start of the Phase I drilling program, which will explore the property and drill up to 1,000 m from two drill pad locations over a strike length of 5 km.

This will test areas where high levels of radioactivity have been measured during oil drilling. Kraken's long-term vision is to develop the projects to mine maturity with a view to potentially selling them to larger mining companies. The team around CEO Matthew Schwab combines expertise from all relevant areas of uranium mining and wants to establish Kraken Energy as a central player in uranium supply in the US. To learn more, you can watch the Company presentation from the 10th International Investment Forum, which took place on February 21. After the announcement of the start of the drilling program, the share price jumped from CAD 0.105 to CAD 0.16. It will be interesting to see the drilling results.

RWE - Shares remain under pressure

RWE's share price performance resembles a tragedy. To make matters worse, the Austrian energy group Verbund disappointed with a profit forecast for 2024 that is significantly below market expectations. This is due to the sharp decline in wholesale electricity prices and challenges in the grid business. A similar picture is emerging at RWE, which has also revised its expectations downwards and is forecasting a weaker result than in the previous year. When looking at the industry as a whole, no positive signals are to be expected in the short term.

At the same time, the Federal Network Agency has presented far-reaching plans to expand the German electricity transmission grid to achieve a complete switch to renewable energies by 2045. The grid development plan presented for the years 2023 to 2045 envisages the introduction of 4800 km of new lines and 2500 km of reinforcements at an estimated total cost of around EUR 320 billion. This underlines the long-term perspective for investments in the infrastructure for climate-neutral electricity transportation. The Essen-based company is particularly well positioned in the area of renewable energy production.

At the end of February, RWE and Masdar successfully completed the transaction to develop a 3 gigawatt offshore wind farm in the UK, with Masdar holding a 49% stake in the UK's Dogger Bank South projects. RWE plans to work with Masdar to contribute significantly to the decarbonization of the UK's energy system. It did not help the share, which closed at EUR 30.66 in Xetra trading on Friday. Nevertheless, analysts see long-term positive aspects, partly due to the Company's strategic focus on renewable energies.

Plug Power - Disappointing 4th quarter

Hydrogen could help decarbonize the economy. Plug Power is a specialist in this field and is building a complete ecosystem for green hydrogen, from production and storage to delivery and energy generation. The partnership with Uline was recently expanded. An advanced hydrogen infrastructure is to be implemented at the new Uline campus in Kenosha. With an investment of USD 20 million over 8 years, 250 hydrogen-powered forklifts and refueling equipment, including an 18,000-gallon hydrogen tank and 17 dispensers, will be installed.

On March 1, Plug Power presented its financial results and milestones for Q4 and FY 2023; as expected, the numbers were worse than expected. This was foreseeable, given the news in the last quarter. The Company posted record sales of USD 891 million in 2023, which corresponds to growth of 27% compared to the previous year. In the 4th quarter, sales amounted to around USD 222 million, and the Company reported a loss of USD 1.08 per share. Depreciation and amortization amounted to USD 325 million in the last quarter.

Despite an increased loss per share of USD 2.30, primarily due to increased capital expenditures and various non-cash charges, Plug Power has strengthened its financial stability and sees no ongoing doubts about its ability to continue its operations as a company. This is arguably the most crucial message for shareholders. It may also be the reason why the share was able to rise to USD 3.89 after a gap-down to USD 3.16. With several positive developments in the first two months, the figures for the first quarter are expected to be much better, and then it will be possible to provide a clearer picture of Plug Power's future.

Nuclear energy is on the rise worldwide, including in Europe. After all, the use of this technology significantly reduces CO2 emissions. Kraken Energy has positioned itself strategically in the US and has placed its main focus on historical uranium deposits. One can look forward to the upcoming drilling results. RWE is burdened by the falling wholesale price of electricity. In principle, the Group is well positioned in the field of renewable energies. Plug Power also benefits from the expansion of renewable energies. Even if the figures for the last quarter were disappointing, there is still a chance that the Company can turn things around in time.