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May 7th, 2021 | 11:25 CEST

Shell, BP, Saturn Oil + Gas, NEL: Black Gold Pearls

  • Oil
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One of the last commodities still in top shape is oil. On Tuesday, oil giant Saudi Aramco presented its figures for the recently ended quarter. Net income for the world's largest oil producer climbed 30% year-on-year in the first quarter of 2021, from USD 16.7 billion to USD 21.7 billion, thanks to rising oil prices. In terms of revenue, the oil giant reported a 20.6% increase to USD 72.6 billion. We rarely hear numbers like that, but optimism is spreading again among oil producers.

time to read: 3 minutes | Author: André Will-Laudien
ISIN: GB00B03MLX29 , GB0007980591 , CA80412L1076 , NO0010081235

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 - Together with Bosch and VW in the green

    Now that is a development in the world of fuels: Bosch, Shell and VW have developed a renewable gasoline. Blue Gasoline is the name of this futuristic fuel, which contains up to 33% renewable components. It is said to save at least 20% carbon dioxide per kilometer, so decarbonization has been sufficiently considered. Here is a calculation: If you consider 1,000 VW Golf 1.5 TSIs with an annual mileage of 10,000 kilometers, you could save a total of more than 230 tons of CO2. The new fuel is expected to be available at German service stations as early as later this year.

    The downside is that the price is still too high. Compared with the familiar E10 or Super 95, drivers will have to pay a lot more per liter for the CO2 savings because the price of the clean fuel will be in the premium region of Shell V-Power and the like - currently around 25 cents more than Super E10.

    According to Bosch, renewable, CO2-reduced fuels are not a substitute for electromobility but a supplement. Whether the price will not hinder consumers' good intentions remains to be seen. So far, green models have worked almost exclusively through government subsidies. The Shell share has made itself comfortable between EUR 16 and EUR 18, and with a dividend yield of 3.8%, it is a sit-out value. The low at below EUR 10 now really seems to be history.

    BP - Good figures and a share buyback

    Oil multinational BP tripled its quarterly profit due to exceptional gas marketing, significantly higher oil prices and refining margins. Adjusted profit at replacement cost for the first quarter was USD 2.6 billion, up sharply from USD 0.8 billion for the same period in 2020. The operational highlight of the quarter was the start of production from two new gas projects - Raven in Egypt and the Satellite Cluster in India.

    Moreover, the excellent cash flow was a surprise, reaching a total of USD 6.1 billion, while divestments and other proceeds amounted to USD 4.8 billion in the quarter. Included in this was USD 2.4 billion from the sale of a 20% stake in Oman's Block 61 and the receipt of the final tranche of USD 1.0 billion for the sale of the petrochemicals business to Ineos.

    At least 60% of the excess cash flow is to be returned to shareholders through share buybacks, subject to some deleveraging to maintain a solid investment-grade rating. At EUR 3.68, BP is not far from a chart breakout with a target of around EUR 4.25.

    Saturn Oil & Gas - Small and flexibel

    Small players stand out positively: Saturn Oil & Gas from Saskatchewan (Canada) is in good shape. The current environment favors smaller flexible suppliers that can adapt to the changing circumstances surrounding the pandemic. The company ist far away from the big political issues surrounding black gold.

    The WTI oil price has stabilized above the USD 60 mark, bringing a lot of calm to operating business. On-site pumps need their regular maintenance visits. Otherwise, contract logistics providers handle offloading, meaning oilfield management can be run with minimal input, even if pandemic-related constraints return. First quarter figures are still pending. Saturn Oil & Gas produces the converted barrel, including the gas, at around USD 12, which leaves quite a bit in the till at the current spot price of approximately USD 64.

    The location in the raw material country par excellence, the low production costs, the lean corporate structure and the expansion potential in the near future. These are best strategic factors for a forward development, which the current share price of CAD 0.12 and a stock market value of just under EUR 21 million by no means reflect.

    Nel ASA - Latent danger

    Things are not going so well at Nel ASA at the moment. We had already noted the poor technical condition of the share in the last publications. Now the breakthrough occurred. The figures presented on Tuesday for the first quarter should pull the price out of its lethargy - after all, the share previously oscillated for weeks between EU R2.40 and 2.60 - but this shot neatly backfired.

    Although the Norwegians increased sales by almost 24% year-on-year to NOK 157 million (equivalent to around EUR 15.5 million), the loss per share went up significantly. It was not expected that way. Since analysts' expectations were clearly missed, the share price has been falling sharply since then. After a 15% discount before the figures, the share price fell another 15% after the announcement. A 30% discount this week - that is hard stuff.

    So far, there is no sign of a countermovement. Nel ASA is thus trading at the same level as it was last in the fall of 2020. Investors should pay special attention to the coming trading days. The next support line is at around EUR 1.50. The correction from above now accounts for exactly 50%.

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    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 September 27th, 2023 | 09:05 CEST

    Nikola, Saturn Oil + Gas, BASF - A Buy in difficult times?

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    Commented by Stefan Feulner on September 25th, 2023 | 08:10 CEST

    Shell, Hard Value Fund, Rheinmetall - All for performance!

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    Sustainability is a significant and important topic. Due to recent developments, it is often associated with the environmental and social sustainability of financial products. However, investing purely based on these two criteria can cost investors dearly. For example, global leaders in the hydrogen sector, such as Plug Power, lost around 90% of their value within two years, while wind turbine manufacturer Nordex experienced a peak decline of around 70%. In contrast, fossil fuel producers such as Shell, BP and Exxon enjoyed a boom and were able to multiply their share prices over the same period. Whether investments should, therefore, be made exclusively in ESG-compliant stocks is more than questionable from a return point of view because many companies do not yet offer one thing: financial sustainability.


    Commented by André Will-Laudien on September 22nd, 2023 | 07:20 CEST

    Recalculation! These are the bare figures: TUI, Saturn Oil + Gas, Deutsche Bank - Buy prices non-stop!

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    Companies do not always have good figures in their baggage. Analysts listen very carefully to the words of those in charge. Often, it is only a minor sentence that changes entire valuations. TUI is slowly approaching pre-COVID figures. Saturn Oil & Gas must backtrack slightly because of substantial forest fires in Alberta, and Deutsche Bank aims to finalize the Postbank project in 2023. All three stocks offer good buying opportunities because the long-term prospects are quite convincing.