17. June 2021 | 12:54 CET
Nel ASA, Plug Power, Deutsche Rohstoff AG: Oil explosion or hydrogen hype?
Brent prices are going through the roof! The stock markets have to digest their COVID trauma, and China is hoarding oil and other commodities to satisfy the upcoming boom. Many consumers worldwide are waiting for the delivery of their long-ordered products. Problem: Shortages of raw materials and chips are causing massive delivery delays around the globe. Then there were events like the blockade of the Suez Canal or the restrictive stance of OPEC. One would like to keep prices high; at least the Federal Reserve recently sounded the alarm: 5% inflation in a monthly rate! Warning shot or starting trend?
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ISIN: NO0010081235 , US72919P2020 , DE000A0XYG76
"[...] 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.
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.
Nel ASA - Still not in step
Gradually, a certain uncertainty is spreading in the hydrogen technology company segment. For just as Joe Biden announced his new billion-dollar funding for climate and future technologies, oil shot through the roof and all hydrogen stocks plunged downward in unison. Accompanying the rise in energy prices, of course, was an ongoing shortage and rise in the price of commodities in general.
Nel ASA is a company founded in 1927. It installed its first electrolyzer in a Norsk Hydro factory in Notodden, Norway, in the same year. It was started with the aim of reducing dependence on fossil fuels. The Company has also included Danish hydrogen fueling station manufacturer H2 Logic since 2015 and US electrolysis specialist Proton OnSite since 2017. Together with the companies PowerCell Sweden and Hexagon Composites, Nel founded the joint venture Hyon in September 2017, aiming to establish fuel cell-powered vehicles, particularly in the maritime sector.
Nel's share price was the clear crowd favorite for alternative H2 technology between the summer of 2019 and the beginning of 2021; however, the share price plummeted from EUR 3.4 to EUR 1.6 since February 2021. With a price of EUR 1.75, the share is still not in step. Analytically the valuation is unfortunately still beyond good and bad due to low sales and a factor of over 50. However, this does not have to be a reason to sell in our bubble times.
Plug Power - Many cooperations, little share price success
In the technological application of hydrogen, every apparatus first needs a specific energy input to produce electrolytic hydrogen. This energy is obtained naturally in the latest processes, i.e. without the use of fossil fuels. Plug Power is already well advanced with its technology, some energy aggregates are already finding good application fields, and the cooperations are becoming broader.
At the beginning of 2021, Plug Power already announced significant cooperation with the French car Company, Renault. Now the establishment of the joint venture has become a reality. It is called Hyvia and will be owned equally by Plug Power and Renault. Until now, hydrogen has been seen primarily as a solution for heavy-duty transport, but Renault and Plug Power are now explicitly targeting everyday vehicles with their joint venture. They cite the hydrogen cars' long-range and short refueling time as advantages, as it only takes 5 minutes to refuel for a range of 500km.
Renault is pursuing a two-pronged strategy with electric and hydrogen cars. By 2030, the group aims to capture a 30% market share in Europe for light hydrogen commercial vehicles. In addition to the fuel cells, Plug Power will also ensure the development of hydrogen filling stations and their supply via the joint venture.
The PlugPower share has found it very difficult to regain lost ground since the balance sheet discrepancies and the 75% crash on the chart. Recently, the breakout above USD 35 also failed. Wait and see and set a stop at USD 26.50.
Deutsche Rohstoff AG - Robust oil production and tactical investments
It was a shock in March 2020 when WTI oil price subsequently plummeted to USD 12 per barrel. No one knew at the time how deep the economic hole caused by COVID-19 would actually be. However, Thomas Gutschlag, the CEO of Deutsche Rohstoff AG, showed nerves of steel. He cut production and dramatically reduced exploration costs, thus cushioning the operational super-damage. Even better, he proved to have a good investment hand and took stakes in stumbling competitors, thus achieving a handsome profit in the asset management sector. Well done!
In June, Texas light oil (WTI) climbed back above the USD 70 mark, and all seems well again. Business is now booming again as China and the USA, in particular, are dramatically turning the tide of their economies around. They are doing this with substantial monetary expansions and regional stimulus programs. As a result, this is pushing up inflation and thus commodity prices, especially oil and industrial metals. Coupled with the increased volatility in oil prices, this means DRAG's current Knight and Wyoming assets have significant option value on the timeline.
In the first quarter alone, Deutsche Rohstoff AG produced 37% of its 2021 oil forecast and at a moderate cost. However, the Mannheim-based Company is also active with tungsten and molybdenum in South Korea through its stake in Almonty Industries. The Sandong mine is one of the few tungsten production sites outside of China. Financial closing for the project is expected in June. An offtake agreement with a 15-year price guarantee has also been negotiated.
Deutsche Rohstoff AG will be able to connect additional drilling sites this year and, in all probability, will produce 6,000 barrels of oil equivalent per day, significantly more than last year. Due to the good situation, the DRAG share price is moving steadily and quietly upwards. It fell below the EUR 11 mark in the first quarter, but last week it already went beyond EUR 16. Now a market capitalization of more than EUR 80 million has been reached again; the only one who is sad is the one who had watched below EUR 10 for too long. The zone of EUR 18-20 would be our next target line for the summer.