February 22nd, 2022 | 11:54 CET
Nel ASA, Saturn Oil + Gas, BP - Uncertainty drives prices up
Table of contents:
"[...] 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
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BP - Convincing figures
Investors and analysts were extremely pleased with the figures published by BP. Higher oil prices and production volumes led to a jump in profits in the final quarter of 2021. Adjusted for special effects, Q4 profit was EUR 3.6 million, which was even above the analyst consensus. For the full year 2021, profit was thus EUR 11.29 billion. The British energy giant wants its investors to participate in the successful financial year with a dividend of USD 4.3 billion. That would correspond to a dividend yield of around 4%. A further USD 6.6 billion is to flow to shareholders via share buybacks.
There were several buy recommendations from various analyst firms following the annual figures. Deutsche Bank, Berenberg and Goldman Sachs issued a clear "buy" rating, and JP Morgan raised its price target from 590 to 600 pence after the oil company's quarterly earnings conference call. The rating was left at "overweight."
With the introduction of kerosene, which consists of 5% fat and oil, BP also focuses on sustainable business models. The energy group in Emsland now produces aviation fuel with small proportions from cooking fat residues. The organic raw materials come from canteens or catering businesses. As a spokesman explained, it is about used and leftover fats and oils, for example, from deep fryers, cooking residues and biomass waste. Now BP is announcing the start of production at the refinery in Lingen. The fats are combined with the crude oil hydrocarbons for regular kerosene in a closed process up to the permissible proportion of 5%. During subsequent combustion, the CO2 emissions of the biokerosene are similar to those in the case of pure fossil aviation fuel. The overall climate balance should be better because the fat components were already in the material cycle beforehand.
Saturn Oil & Gas - Strategic acquisition
As recently as Thursday, Saturn Oil & Gas CEO John Jeffrey reported on last year's transformative acquisition at the 2nd International Investment Forum (IIF). Then, over the weekend, three more success stories were released in a separate press release.
First, the Canadians announced that an agreement had been reached to acquire certain synergistic oil and gas assets in west-central Saskatchewan for a sum of approximately CAD 8.3 million. The synergistic assets are located in the Plato area of west-central Saskatchewan and complement the Company's existing Viking assets. The strategic acquisition includes 240 bbl/d of light oil, numerous reduced-risk light oil drilling locations and over 100 net sections of crown and freehold land rights. In addition, Saturn Oil & Gas is making good progress with debt consolidation. Approximately 45% of adjusted funds from operations are expected to be used to repay debt in the near future. Term notes totaling CAD 32.1 million are expected to be repaid with proceeds from the expanded senior term loan, which is expected to have an aggregate outstanding balance of approximately CAD 103.2 million after consolidation. The stated maturity date for repayment of the Senior Term Loan remains unchanged at June 7, 2024.
To expand capital expenditures, to fund a portion of the consideration for the strategic acquisition and for working capital and general corporate purposes, an agreement has been entered into with Echelon Capital Markets Inc. who is acting as lead underwriter on behalf of a syndicate to acquire 5,340.000 units of Saturn Oil & Gas for CAD 3.00 per unit. Each unit will consist of one common share and one common share purchase warrant of the Company. In the wake of the announcement, Saturn Oil & Gas shares fell approximately 15% to CAD 2.96. As a result, the discount of the capital increase price to the current price was offset.
Nel ASA - Bad signs
Last week, the hydrogen specialist benefited from a buy recommendation from the US investment bank Goldman Sachs. The reason given by the analyst was the Norwegians' increasing order backlog and considerable short- and long-term growth opportunities. The Company is considering the next phase of its expansion strategy, focusing on technological and geographic diversification. The buy recommendation was accompanied by a price target of 17 Norwegian kroner, equivalent to EUR 1.67.
The outgoing CEO, Jon André Løkke, who will hand over the reins to Håkon Volldal at the end of the second quarter, probably takes a controversial view. At an average price of 12.86 Norwegian kroner, the equivalent of EUR 1.27, the Company's leader sold one million Nel shares, representing half of his holdings.
In the wake of the news and also driven by the overall negative market, investors followed the outgoing CEO with further sales. With a drop of almost 7% and a price of EUR 1.18, the Norwegians are chasing a new low for the year at EUR 1.05. The indicator situation continues to show negative divergences, which means that Nel ASA could soon be traded as a penny stock.
Due to the threat from an increasing Ukraine conflict, the overall market lost strongly, while oil stocks could benefit from the uncertainty. BP is seen as a long-term buy by analysts, and Saturn continues to expand its business. In contrast, at the hydrogen specialist Nel ASA, even the Company's leaders are selling at a low level.
Conflict of interest
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