February 24th, 2021 | 08:29 CET
Saturn Oil & Gas, Royal Dutch Shell, BP, Plug Power - The oil specialists!
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"[...] 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.
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.
Saturn Oil & Gas - The specialist from Canada
Just over a week before the next OPEC meeting, there is still no uniform line for future oil production policy. According to a Bloomberg news agency report, the oil giant Saudi Arabia wants to keep production constant, while the second oil giant Russia intends to expand production. Currently, Saudi Arabia, in particular, is helping to support prices with reduced production.
Saturn Oil & Gas Inc. can watch this hustle and bustle calmly because it produces oil at about USD 12 in Saskatchewan. Saturn currently produces about 700 barrels per day, no matter what the decisions in Vienna. Meetings are usually held twice a year, but the board is very conflicted. Particularly explosive this time is the agreement on a medium-term oil production rate until 2025 because global mobility trends are moving away from oil as a raw material.
In such times, the hour of the specialists strikes. Saturn Oil & Gas can adjust its production rate to demand because the wells' pressure naturally decreases over time, i.e., the initial production rate of a fresh well (approx. 70-120 barrels) gradually goes down over time. Thus, if oil demand increases dramatically, new wells are tapped to increase production. If demand falls, costs go down simultaneously because no new money is invested in exploration. Operational management thus leads to cash flow maximization.
Saturn Oil & Gas is considering expansion through acquisitions. Due to the rising demand, especially in North America, Saturn is monitoring its environment very closely and is also in a position to acquire new properties. Jean-Pierre Colin, the new strategy advisor, is responsible for this, and we would be surprised if several deals have not already been in the pipeline since his appointment. The Saturn Oil & Gas share has recently become quieter, trading stably between CAD 0.12-0.15. But those who get in now are buying a lot of potential. According to the 2019 strategic plan, production is to be increased by over 200%.
Royal Dutch Shell PLC - Sale of properties in Alberta
Alberta is Saskatchewan's neighboring state, and this is where significant portfolio sales by Royal Dutch Shell PLC are taking place. The oil multinational announced that it has sold its Duvernay shale light oil position in Alberta to Crescent Point Energy Corp. for a total amount of about USD 700 million. The transaction is subject to regulatory approvals and is expected to close in April this year.
Shell said the transaction includes the transfer of approximately 450,000 net acres in the Fox Creek and Rocky Mountain House areas, currently producing approximately 30,000 barrels of oil equivalent per day. The properties consist of about 270 wells, and associated infrastructure is part of the deal. A Shell statement said of the sale that it is optimizing its upstream portfolio to generate cash. Shell is apparently in a divestment phase, which could also interest neighboring Saturn Oil & Gas.
Shell plans to focus more on the Permian Basin in the future, and the portfolio should be more resilient and less risky.
Royal Dutch shares are stable in the market at EUR 16.8, up 70% since October 2020.
British Petroleum PLC - Commitment to geothermal energy
BP is breaking new ground in its energy mix and focusing on sustainability. With other investors, BP is committed to Eavor Technologies, which describes itself as a leader in scalable geothermal technology. The current round of funding is worth over USD 40 million and is attracting huge interest.
Investors in the round included BP Ventures, Chevron Technology Ventures, Temasek, BDC Capital, Eversource and Vickers Venture Partners. Eavor emphasized that the investments and associated partnerships are critical to the commercialization of its technology. Eavor's technology, known as the "Eavor Loop," uses the earth's natural heat like a giant rechargeable battery, according to the Company's website. What sets this technology apart from other forms of geothermal energy is a scalable "go anywhere" solution. In other words, applications can be used around the globe regardless of location.
BP is taking another step into the green energy economy with this investment. Since the "Deep Horizon" disaster, BP has invested over USD 50 billion in environmentally friendly projects. A promising sign of making amends for a disaster. At EUR 3.27, BP shares are about 30% above the sell-off lows of October 2020.
Plug Power - corrective movement gains momentum
In many posts, we had pointed out the overvaluation of the stock Plug Power. The entire hydrogen sector is correcting almost daily in 5-10% discounts. For Plug Power, this means a loss of around 30% from the beginning of the month high of EUR 60. Since the price-to-sales ratio is still out of this world at 30, the correction is likely to continue for a few more weeks. The stock market community had probably overinvested in hydrogen in recent months and the valuations are reminiscent of the year 2000. Those who have been invested here for a long time are still sitting on historic gains that are unparalleled even in the best stock market decades. The level is still high enough to exit, but the chart technique indicates further downside potential.
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