Close menu

August 10th, 2022 | 12:37 CEST

Oil will still be needed in 100 years! Fill up with these stocks: Shell, BP, Saturn Oil + Gas, BASF

  • Mining
  • Oil
  • chemicals
Photo credits:

With a view to the future energy supply, major question marks remain, especially in Europe. The dependency on Russia is historical, and the future relationship with the largest owner of raw materials in our latitudes will probably be rather frosty from a European perspective. EU Commission President Ursula von der Leyen recently presented a plan to break away from fossil fuels from Russia and, at the same time, accelerate the energy transition. But to become completely self-sufficient, the European Union would need to invest nearly EUR 300 billion in infrastructure and energy supply relationships by 2030. Meanwhile, there are secret winners in this predicament who are making a killing in the current environment.

time to read: 4 minutes | Author: André Will-Laudien
ISIN: Shell PLC | GB00BP6MXD84 , BP PLC DL-_25 | GB0007980591 , Saturn Oil + Gas Inc. | CA80412L8832 , BASF SE NA O.N. | DE000BASF111

Table of contents:

    John Jeffrey, CEO, Saturn Oil + Gas Inc.
    "[...] 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.

    Full interview


    Shell or BP - Which energy giant to invest in now?

    Europe's fatal dependence on Russian energy supplies is fueling the political debate about alternatives that can be implemented quickly. The EU wants to increase the savings target from 9 to 13%, and the share of renewable energies is to be raised from 40 to 45% by 2030. It will require huge investments. But until this is implemented in just under 10 years, oil and gas will be in great demand.

    Currently, the oil multinationals are shining under the sanctions conditions against Russia. Russian oil is undoubtedly entering the world market through the Chinese back door, but this has not yet resulted in a significant drop in price levels. At least, however, the Brent and WTI prices of around USD 120 plus are probably history; most recently, both types of oil were trading about 20% below their highs. With recessionary prospects, it should not go too high here again.

    If one regards Shell and BP as the two largest European salesmen of mineral oil products from the analytical side, then both show up straight from the strongest side. Shell trades at a P/E ratio of around 5 and a dividend yield of 4%, while British Petroleum's ratios are 4 and 5%, respectively. Analysts clearly favor the larger Shell stock in the consensus, and it has also performed slightly better in the 12-month review. However, both fit into an old-style energy portfolio.

    Saturn Oil & Gas - Produce efficiently and fill up with cash flow!

    Canada's Saturn Oil & Gas compares poorly with Shell and BP, but the oil multinationals cannot trump its recent production growth rates. That is because, in Saskatchewan, where the Company is based, things have been really taking off for the past two years. After a transformational restructuring of the Company and a multiplication of production, the target for daily yield is now over 11,500 barrels (boe/d). That generates an operating profit (adjusted EBITDA) of about CAD 155 million for the full year. However, the stock is only valued at CAD 134 million, plus the debt from the expansion financing.

    The now ample cash flow is being used to develop new fields, and much of it is going toward paying down debt, which has grown to more than CAD 220 million due to the last two acquisitions. Based on this level, debt will decrease to about CAD 185 million by the end of 2022, and by the end of 2024 it will be only about CAD 75 million. Due to forward transactions, Saturn can already determine these figures with a high degree of certainty today. Currently, the Company benefits from the unhedged production shares, which can be sold at spot market prices. This generates additional funds and increases free cash flow, which should be available for distribution to shareholders in the medium term. Based on the strong economics of recent drilling programs, Saturn's Board of Directors has set the 2022 capital expenditure budget at CAD 77.2 million. With the new guidance, Saturn again noticeably increases its output, as the increased capital expenditures further change the projected and expected cash flows. The medium-term scenario for the share is thus getting better and better.

    The current research study by Eight Capital discounts the planned cash flows to the current year and arrives at a factor of 0.7 for the enterprise value (including debt). Within the industry, however, a factor of approx. 2.5 is currently applied, other things being equal. In other words, Saturn Oil & Gas is undervalued by a factor of about 3.5 times today's price of CAD 2.25. Mathematically, this yields CAD 7.87 - the analysts, therefore, vote with a Buy rating and price target of CAD 7.50. There is currently no cheaper oil share in North America, but the capital dilution without subscription rights has probably scared off some investors. The technical breakout will succeed above CAD 2.55, but then things will likely get down to business quickly.

    BASF - Mastering dependence on oil and gas wisely

    Ludwigshafen-based chemical giant BASF has made the headlines time and again recently because of its high dependence on gas. In the meantime, however, many alternative concepts are being discussed for the Group, and initial steps are already being implemented. At least there have been no production cuts yet, which means that the current half-year profits are rising for the time being due to the price jumps and the weak euro.

    Sales climbed by almost EUR 7 billion to EUR 46.1 billion from EUR 39.1 billion, and EBIT increased by over 10% to EUR 5.14 billion. Both figures were above analyst expectations; surprisingly, there was a forecast increase despite the adverse environment. Sales are now expected to exceed EUR 86 billion in 2022, after all, and the EBIT profit target is EUR 6.8 to 7.2 billion. It seems that management does not see the warlike conflict as particularly threatening for BASF. CEO Brudermüller comments: "Despite persistently high raw material and energy prices, we again achieved strong earnings in the second quarter." Nevertheless, management stresses that risks may arise, particularly from production interruptions at the major European sites due to further restrictions on gas supplies from Russia.

    As the Group has already calculated precautionary markdowns and announced cost reductions, the share price's downward slide could already be close to an end. If there are reports of gas stops, the medium-term investor can take advantage of the expected weakness and strike boldly.

    Energy markets remain tight as demand for fossil fuels remains high. Given global distortions and long-neglected investments during the pandemic, there are currently too few commodity explorations to meet the high demand in world markets. Shell and BP are profiteers from the current supply situation, and BASF could face even bigger problems. A real bargain, however, is the up-and-coming Saturn Oil & Gas from Canada, whose figures currently stand up to any comparison.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") currently hold or hold shares or other financial instruments of the aforementioned companies and speculate on their price developments. In this respect, they intend to sell or acquire shares or other financial instruments of the companies (hereinafter each referred to as a "Transaction"). Transactions may thereby influence the respective price of the shares or other financial instruments of the Company.
    In this respect, there is a concrete conflict of interest in the reporting on the companies.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.
    For this reason, there is also a concrete conflict of interest.
    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

    Risk notice

    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.

    The content is expressly not a financial analysis, but a journalistic or advertising text. Readers or users who make investment decisions or carry out transactions on the basis of the information provided here do so entirely at their own risk. No contractual relationship is established between Apaton Finance GmbH and its readers or the users of its offers, as our information only refers to the company and not to the investment decision of the reader or user.

    The acquisition of financial instruments involves high risks, which can lead to the total loss of the invested capital. The information published by Apaton Finance GmbH and its authors is based on careful research. Nevertheless, no liability is assumed for financial losses or a content-related guarantee for the topicality, correctness, appropriateness and completeness of the content provided here. Please also note our Terms of use.

    Der Autor

    André Will-Laudien

    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.

    About the author

    Related comments:

    Commented by Armin Schulz on February 6th, 2023 | 07:46 CET

    Nel ASA, Manuka Resources, TUI - Which stocks will take off in 2023?

    • Mining
    • Commodities
    • Silver
    • Gold
    • greenhydrogen

    Shares are a popular form of investment that can hold a lot of potential. Particularly interesting are stocks that are positioned before a turnaround. This means that the Company has had difficulties in the past but is now expected to see positive changes in its business potential. These stocks can bring large profits if successful, as they often trade at lower prices and have great upside potential. However, it is important to thoroughly analyze the Company's financials and business model before investing in such stocks. We take a look at three promising titles.


    Commented by Juliane Zielonka on February 3rd, 2023 | 12:58 CET

    Booming energy supply & AI with GoviEx, AMD and Meta Materials

    • Mining
    • uranium
    • GreenTech
    • chips

    The EU Parliament has included gas and nuclear power as "transitional activities" in the list of green technologies that accelerate the transition to climate neutrality. Demand for uranium continues unabated worldwide. Explorer company GoviEx is filling the gap through its exploration activities for uranium at two renowned sites. Those interested in learning more can ask CEO Daniel Major about it on February 15. The expansion of a stable energy supply and simultaneous CO2 reduction is also a big topic for semiconductor manufacturer AMD. ChatGPT is on everyone's lips and is only the beginning of an AI boom that will require chip technology at universities and data centers, for example. Zuckerberg is also using AI to expand his metaverse. He plans to use artificial intelligence to explore green energy options further.


    Commented by Stefan Feulner on February 3rd, 2023 | 12:54 CET

    BYD, Power Nickel and Infineon - News drives share prices

    • Mining
    • Nickel
    • Electromobility

    The events are overlapping. In addition to the daily geopolitical news, the central banks are in the spotlight these days. Despite a further interest rate step, the FED sent positive signals to the capital market because the end of the strict monetary policy is approaching. In addition, the reporting season started, which could offer several surprises already at the start. After the price corrections, many companies have opportunities for a sustainable rebound.