29. April 2021 | 08:47 CET
NIO, Deutsche Rohstoff, BP - Demand is exploding!
The massive inventory overhang, which still existed on the oil market last year and led to the crash due to the Corona pandemic, will be used up by the second quarter of 2021. With vaccination programs well underway and the economies of China and the United States recovering quickly, further demand is rising rapidly. Currently, it looks more like a fundamental supply deficit of black gold, with rising prices in the coming months. Experts already foresee a supercycle with oil prices just below USD 200 per barrel.
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ISIN: DE000A0XYG76 , GB0007980591 , US62914V1061
"[...] 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.
Winners on many legs
Oil producers have experienced a roller coaster of emotions since March 2020. Among the winners were those who were able to react quickly and flexibly to the circumstances. The management of Deutsche Rohstoff AG, which generates 100% of its sales from oil production in the USA, proved to have a golden hand. During the Corona Crisis, the Company cut back production as much as possible, and part of it was hedged against the drastically falling prices. Anticyclically, it was even possible to acquire new areas for oil production at knockdown prices. In addition to the oil business, the experienced management was also able to build up a bond and equity portfolio during the crisis, which alone generated profits in the low double-digit millions.
For several months now, the pumps have been running at full speed again. In addition to the projected volume growth, the extensive Knight wells are expected to generate initial revenues by the end of 2021. The Company invested USD 60 million in this project, which is likely to contribute to further increasing production volumes from 2022. The forecasts for the next two years, which were given when the consolidated financial statements were announced, sound very optimistic after a good start to the year. Consolidated sales are expected to be EUR 57 to 62 million in 2021 and between EUR 60 and 65 million the following year. In terms of EBITDA, the Mannheim-based Company is planning between EUR 42 and 47 million in 2021 and EUR 40 to 45 million in 2022.
Deutsche Rohstoff AG currently has a war chest of just under EUR 45 million. As no dividend is to be distributed to shareholders this year, the savings are likely to be used for further acquisition targets. Additional strategic investments in critical metals around electromobility, such as copper or lithium, could be booked as portfolio additions in the coming months. The Company's CEO, Dr. Thomas Gutschlag, is also likely to focus on the gold card.
Analysts see clear upside
One asset that should significantly lift the valuation of Deutsche Rohstoff AG in the long term is the 12.8% stake in Almonty Industries. The Company is building the world's largest tungsten mine in South Korea, and it is expected to go into production as early as 2022 and produce 7-10% of the world's tungsten supply in four years. Analysts at First raised the price target from EUR 9.50 to now EUR 17.00 due to the positive commodity environment and the drilling capacities that have not yet been priced in. The verdict is buy. We agree!
Better than expected
Even though the oil multinational BP already foresees the end of the oil age and is looking for alternative business models, it was able to earn decent money from its original core business in the first quarter, even more than analysts had forecast. Adjusted net income reached USD 2.63 billion in the first quarter, a threefold increase over the same period last year. The group attributed the result in part to higher oil prices and refining margins. Net debt stood at USD 33.3 billion at the end of the first quarter. Thus, the figure falls below the target of USD 35 billion much earlier than expected.
Strong dividend and share buyback
Based on the good quarter, shares are to be repurchased up to USD 500 million in the second quarter. BP is leaving its quarterly dividend at USD 5.25 per share, as it did in the previous quarter. Barclays was optimistic about the oil giant's stock and left rating at "overweight" with a price target of 475 pence. The analysts cited the Company's strong long-term prospects as the reason. As a result, they could imagine a doubling of the dividend yield.
Is the liberation blow coming
Later today, analysts are eagerly awaiting the figures from electric car maker NIO. Despite the supply bottlenecks for its chips, analysts are confident about further growth. They say NIO more than quintupled its March 2021 deliveries year-on-year to about 20,100 vehicles, well above the industry average. The Company's leading role in battery exchange stations in China should also ensure further growth. From a chart perspective, the share would have to jump above the resistance level of 45.20 to generate another buy signal.