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November 29th, 2021 | 10:06 CET

Saturn Oil + Gas, BP, Gazprom - Buy when the guns are thundering?

  • Oil
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The possible impact of a new Corona variant led to significant declines in the stock markets at the end of last week. The German benchmark index lost around 1000 points within just 2 weeks. Oil and gas stocks have been hit particularly hard in recent days. The oil price lost last on a single day 11-12%. The development thus prices in, among other things, travel restrictions, lockdowns and a cooling of the economy. The tapping of strategic oil reserves, which US President Biden recently announced, plays a psychological role in the big picture in supply and demand. Much more exciting is what OPEC will soon say about its production plans. Where are the opportunities now?

time to read: 2 minutes | Author: Carsten Mainitz
ISIN: Saturn Oil + Gas Inc. | CA80412L8832 , BP PLC DL-_25 | GB0007980591 , GAZPROM ADR SP./2 RL 5L 5 | US3682872078

Table of contents:

    Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
    "[...] 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

    Full interview


    Saturn Oil + Gas - Record results
    The shares of the Canadian oil and gas producer Saturn Oil & Gas could not escape the wave of panic on the stock markets. Weaker prices are a good opportunity to build up or expand positions. After all, the business of the Canadians is first-class. Recently, the Company was able to report record results.

    In the first full quarter after the acquisition of the Oxbow assets, the producer was able to increase the operating cash flow in Q3 by more than a factor of 13 compared to the same period of the previous year and posted CAD 13.9 million, which equates to a cash flow of CAD 0.55 per share. Of the free cash flow of CAD 9.5 million, almost half was invested in three successful wells. In addition, the Company continued to reduce debt. The debt position as of the balance sheet date was CAD 71.8 million. The share is currently quoted at CAD 3.11, bringing the market value to CAD 78 million.

    In addition, the Company's CEO, John Jeffrey, announced that the Company will continue to systematically reduce its debt and aims to reduce debt by approximately 50% by the end of 2022. Other portions of the free cash flow will be invested in new drilling. Saturn averaged production of 6,970 BOE/d in the third quarter. A year earlier, the figure was just 499 BOE/d. According to the Company, the output is currently around 7,050 BOE/d. Given the solid operating data, we believe the share is currently undervalued.

    BP - Further share buybacks decided
    BP's share prices declined less sharply than crude oil prices in recent days. The rising demand for oil and higher prices led to very decent figures in the third quarter, excluding a one-off effect worth billions. Adjusted for special effects such as valuation changes of oil inventories, BP posted a profit of USD 3.32 billion from July to September, up from just USD 86 million a year earlier. The quarterly dividend remained at the same level of 5.46 US cents per share. The Group announced that it would spend a further USD 1.25 billion on share buybacks.

    The stock is favorably valued from a fundamental perspective. The 2022 P/E ratio is a moderate 6, and the dividend yield is a good 5%. Analysts believe the stock has an average upside potential of 26%. BP's market capitalization is currently the equivalent of USD 84 billion.

    Gazprom - P/E ratio of 3!
    In addition to the falling oil price, the difficulties surrounding the Nord Stream 2 Baltic Sea pipeline continue to weigh on the stock. Political resistance from countries such as the USA, Poland and Ukraine has been unmistakable in recent years. The German Federal Network Agency has interrupted its certification process and demands that the operating Company be organized under German corporate law. Now the Russian state-owned Company wants to set up a company in Germany, and the management board and supervisory board are also to be expanded. Then the certification process can be restarted. But there are still a few hurdles to be cleared at EU level. The Company's valuation is extremely low, with the shares being valued at only a 2022 P/E ratio of 3. Shareholders can look forward to a dividend yield of a whopping 16%! Analysts believe the share has an average upside potential of 35%. This figure already includes a significant discount for country risk.

    All presented oil and gas shares are favorably evaluated. Further setbacks offer favorable entry opportunities. In addition to blue chips such as BP and Gazprom, this applies in particular to Saturn Oil & Gas. In our view, the Canadians have the greatest upside potential.

    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") may in the future hold shares or other financial instruments of the mentioned companies or will bet on rising or falling on rising or falling prices and therefore a conflict of interest may arise in the future. conflict of interest may arise in the future. The Relevant Persons reserve the shares or other financial instruments of the company at any time (hereinafter referred to as the company at any time (hereinafter referred to as a "Transaction"). "Transaction"). Transactions may under certain circumstances influence the respective price of the shares or other financial instruments of the of the Company.

    Furthermore, Apaton Finance GmbH reserves the right to enter into future relationships with the company or with third parties in relation to reports on the company. with regard to reports on the company, which are published within the scope of the Apaton Finance GmbH as well as in the social media, on partner sites or in e-mails, on partner sites or in e-mails. The above references to existing conflicts of interest apply apply to all types and forms of publication used by Apaton Finance GmbH uses for publications on companies.

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    Der Autor

    Carsten Mainitz

    The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.

    About the author

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