November 9th, 2021 | 13:17 CET
Nordex, Gazprom, Saturn Oil + Gas: Rising oil and gas price drive
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"[...] 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
Saturn Oil & Gas - Oil: "Share can double or triple."
One thing the climate conference has made clear so far: There will be no way around fossil fuels in the coming years or decades. That is especially true for oil. At the same time, the supply of 'black gold' is becoming increasingly scarce, as investors and oil companies are increasingly focusing on renewable energies. The expensive exploration of new large fossil deposits is being shied away from. That makes companies that have sufficient production volumes all the more interesting.
Among them is Saturn Oil & Gas. The Canadians secured attractive areas last year - when the oil price was at rock bottom - to increase production twenty-fold to 7,000 barrels per day and become one of the leading producers. An independent appraiser has confirmed reserves of 43.3 million barrels of oil equivalent (BOE). That represents a value of CAD 435.7 million. Saturn had made a final acquisition of the assets in June 2021 for a net CAD 76.8 million. The necessary revaluation of the stock has begun but is far from complete at the current price of CAD 4. Analysts at Beacon Securities have called out a price target of CAD 10.15 in their initial report. It is only a matter of time before the "massive" valuation discounts of Saturn's stock compared to its peer group are resolved. As soon as the Company shows that its planned production targets will be realized in practice, analysts said the stock could double or triple.
Saturn is starting to deliver now: Recent drill results from the Loverna property were released last week. All three Loverna wells have started producing light oil in October 2021, and volumes are in line with internal production plans. Accordingly, Justin Kaufmann, Senior Vice-President of Saturn Oil & Gas, expressed satisfaction, "It was executed in a section not previously explored for the Viking oil formation and is delivering the largest production of the three wells executed. It is further evidence of our geological model in the area, supports the development of five contiguous land sections of Saturn, and reduces the risk for up to ten new ERH well locations." As a result, investor confidence should increase, and the valuation discount should narrow.
Gazprom: Gas price dependent on Putin and Nord Stream 2
In 2021 wholesale prices for natural gas have risen more sharply than ever before. The first small suppliers in Germany have already gone bankrupt. Relief can only come from Russia. From Gazprom, to be precise. Germany is Gazprom's biggest customer in the EU. Germany bought around 46 billion cubic meters of gas from Russia in 2020, corresponding to about one-third of total nationwide consumption. Almost two weeks ago, under pressure from rising prices and poorly filled storage facilities, Russia's President Vladimir Putin ordered the state-owned gas giant Gazprom to replenish reserves in Germany and Austria. Now, finally, action is to follow. A spokeswoman for Putin has confirmed that Gazprom will supply even more than the mandatory quantities after November 8. As a result, Gazprom's profits should continue to bubble up.
Nordex: Nervousness before the figures
Rising oil and gas prices are naturally also increasing the pressure on the expansion of renewable energies. German wind turbine manufacturer Nordex should benefit from this. The Company had also recently reported several new orders. However, Nordex was not able to inspire investors with these orders. They criticize the weak margins. In the past week, the share has also lost more than 16%. Then yesterday it went up again by 5%. That shows how great the nervousness is before the quarterly figures. Nordex will publish these on November 15. After the weak figures from competitor Vestas, investors do not want to be caught on the wrong foot. It is well known that Nordex is struggling with distortions in the commodity markets and with supply chain problems. The only question is how big the issues are and their impact on earnings, especially because of the already low margins.
So far, the climate conference has not given the energy transition any additional impetus. It will not work without oil and gas in the future. The gas giant Gazprom benefits from this just as much as Saturn Oil & Gas. They are starting to deliver, and thus the share's revaluation should continue. In the case of Nordex, only the truly courageous are likely to buy.
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