25. March 2021 | 08:35 CET
Linde, Royal Helium, Air Liquide - Two hydrogens, one helium. All there for an explosive mixture!
Nuclear fusion is the keyword of the future. Technically, this involves fusing two hydrogen atoms to form a helium nucleus. What is possible on a large scale on the sun without any problems (in fact, 564 million tons of hydrogen are fused into helium there every second), unfortunately, remains a dream of the future for us. This means 1. we cannot yet generate electricity from nuclear fusion, so we must continue to manage the energy transition with established sustainable technologies such as wind, solar and hydropower. Hydrogen will play a prominent role as an energy storage and transmission medium. And 2. helium will not be produced on an industrial scale in the foreseeable future in any other way than through conventional production. The following three companies should profit strongly from the energy turnaround.
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ISIN: IE00BZ12WP82 , CA78029U2056 , FR0000120073
"[...] We expect the first three wells to be drilled, cased, completed and tested by the second week of March [...]" Andrew Davidson, CEO, Royal Helium Limited
LINDE PLC - The German-American Irish are pushing the envelope when it comes to hydrogen
"Linde declares hydrogen megatrend most exciting growth area," "Hydrogen filling stations from Linde ... Daimler on board," "... Linde is building the world's largest H2 liquefaction plant ... and the world's largest hydrogen electrolyzer," and last but not least, "Linde produces wind hydrogen for green steel with Salzgitter and E.ON" - The technical gas experts have been pushing hard on the subject of hydrogen lately. At the same time, the Company is already the world's largest hydrogen producer, with annual sales of around USD 2 billion. Nevertheless, this figure is expected to at least quadruple in the next few years. Because experts expect hydrogen sales to reach USD 2.5 trillion by 2050, this is a perfectly reasonable goal.
Such prospects are naturally very tempting for other companies as well. In Germany, competitors such as ThyssenKrupp are currently lurking in wait to seize market share for themselves in this vital technology of the energy transition. And internationally, too, many energy companies, especially from the traditional oil and gas environment, such as the French groups Total and Engie, are turning their attention to the "oil of tomorrow".
So Linde is doing well to keep several irons in the fire. Investors who firmly believe in hydrogen, but would like to bet on a solid global market leader instead of risk, should not wait too long before investing in Linde. The paper, which remained in a certain lethargy a few days ago, has picked up speed again and is currently moving in the direction of the mean price target of around EUR 295 issued by analysts.
ROYAL HELIUM LTD - Pure Performance
Who is the head of state of Canada? If you now thought of the likeable Mr. Trudeau, you are unfortunately wrong. The official head of state of Canada is the Queen of England, Queen Elizabeth II. And who is the Queen of noble gases? You guessed it: helium. Why? Like the Queen, one cannot provoke it into spontaneous reactions, and this is one of the outstanding properties that make helium essential for numerous applications. As a non-conductive, non-reactive coolant, it is used in medical laboratory equipment and space rockets. And what would a birthday party be without safe helium balloons? But unfortunately, helium has a problem: despite being the second most abundant element in our universe, it is relatively rare on Earth due to its low density. While our atmosphere contains about 0.004 PPM of helium, it occurs mainly in the atmosphere's upper layers and is not commercially viable.
Fortunately, helium is formed as a byproduct of the radioactive decay of some elements such as uranium or radium in the Earth's mantle, so it could be created there over millions of years. It can now be found mainly in natural gas deposits, up to about 16% by volume, depending on geography. However, this also means that the usable resources are finite, so it is necessary to constantly find new helium deposits and examine the economic viability of extraction. In the past, Saskatchewan in Canada has turned out to be a particularly productive region. In this infrastructurally well-developed and exploration-friendly region, the listed helium explorer Royal Helium operates on its land area of almost 400,000 hectares.
The Company has just announced that it has completed its three exploration wells, Climax 1-3, to the target depth of just under 2,600m. Production tests are currently in full swing. If the results meet expectations, production can start immediately and the Company can generate cash flow. An expansion through further wells is then firmly planned for the current year. The fact that industry insiders trust Royal Helium to achieve successful production was evident from the fact that a heavily oversubscribed capital increase of CAD 6 million was completed at the end of last year. Investors who want to participate in the Company's success should hurry. The share price has already more than doubled since the end of 2020. It is questionable whether a more favorable entry will still be possible in the future given the progressing project success. Analysts even consider a further doubling of the share price to be possible.
AIR LIQUIDE SA - Towards new highs with liquid hydrogen instead of liquid air!
Until the merger of Praxair and the Linde Group, Air Liquide ("liquid air"), founded in France in 1902, was the world market leader in producing technical gases. Listed on Euronext Paris, the Company is a member of France's benchmark CAC-40 index and has been a reliable dividend payer for decades. Similar to its rival Linde, Air Liquide also has hydrogen increasingly on its radar. There are some overlaps here. Like Linde, Air Liquide is involved in the H2 Mobility initiative, promoting the nationwide development of a hydrogen infrastructure.
Air Liquide also supplies filling station equipment. Last year, the Group announced an alliance with the Port of Rotterdam to build 25 filling stations to provide hydrogen to 1,000 zero-emission, hydrogen-powered trucks by 2025. And Air Liquide has also been able to secure a project partner on the German market. It is none other than Siemens Energy. According to the Company, the cooperation agreement with Siemens Energy includes the joint development of proton exchange membrane (PEM) technology for hydrogen electrolysis and the creation of the basis for joint series production of these electrolyzers. In doing so, the Company will also draw on funding from the European Union, which has set itself the ambitious goal of completely decarbonizing its industry by 2050.
Air Liquide's cooperation with Siemens Energy is unlikely to have triggered cries of jubilation from its competitor Linde, which is involved in a joint project with Siemens on the subject of wind hydrogen. Analysts currently assess both companies' growth opportunities similarly, with a minimal advantage for the French Company. On average, estimates see a share price potential of around 11% for Air Liquide, as opposed to 10% for Linde. Ultimately, it is a matter of faith. Air Liquide also offers its investors the opportunity to participate in the hydrogen boom of the next few years with the security of a traditional company.