October 6th, 2023 | 07:00 CEST
Saturn Oil + Gas, Siemens Energy, Allianz: Perennial favorites in the energy sector and insurance - Which stocks are in for big price jumps?
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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
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Booming energy sector: Saturn Oil & Gas shares - price target EUR 3.90?
Energy suppliers are highly valued by prominent investors. A few weeks ago, Warren Buffett and his investment firm Berkshire Hathaway increased their shareholding in the US company Occidental Petroleum (OXY) from 23% to 25.1%, making it the largest shareholder in the business. The logic behind this is understandable: strong industries need strong energy suppliers. In order to achieve the global energy revolution, traditional forms of energy such as oil and gas are needed to enable industries to produce successfully worldwide. China, for example still relies on the construction of coal-fired power plants.
In the future, German industry will rely on LNG from the US. No wonder, then, that oil and gas companies represent a valuable investment opportunity for investors. In this context, special attention is being paid to the Canadian company Saturn Oil & Gas. Founded in 2001, the energy company focuses on the development of oil and gas deposits in the Canadian regions of Alberta and Saskatchewan. What originally started as an exploration company has grown over the past decades into a solid company with 280 employees.
According to Reuters, Canaccord analyst Mike Mueller estimates that the stock, currently at EUR 1.88, has the potential to rise to EUR 3.90. There are currently 139,312.898 million shares outstanding. The Saturn Oil & Gas team is transparent in its approach to communicating with its shareholders. There was a damper last week, as the Company had to slightly lower its 2023 oil production forecast from around 27,170 barrels of oil equivalent per day (boe/d) to an estimated 24,100 boe/d. Reasons for the adjusted forecast are wildfires in the Alberta drilling area and other things they openly state in their announcement. The good news is that production is expected to pick up this December, averaging 27,000 boe/d. So, those who see Warren Buffett's strategy of investing in energy as a model should take a closer look at Saturn Oil & Gas' financial statements. Additionally, investors can ask MBA VP of Corporate Development, Kevin Smith questions live next week during the 8th International Investment Forum taking place on October 10, 2023. Click here for free registration.
Also, on the positive side, the Company has reached an agreement with one of its lenders to defer debt repayments for September and December 2023. This means Saturn Oil & Gas will have more money available to fund new drilling programs this fiscal year. The new drilling programs may soon significantly improve the production rate in 2024 for the benefit of participating shareholders.
Breach of investor trust at Siemens Energy: First class action lawsuits filed
German energy company Siemens Energy is learning the hard way just how valuable it is to deal transparently with its shareholders. The outsourced energy division of Joe Kaeser quickly turned out to be a toothless tiger in the renewable energy sector due to bad management decisions when it took a cuckoo into its nest with the purchase of Spanish wind energy company Gamesa.
In addition to class action lawsuits filed by small investors in the US, justice is also starting to be served against the Company in Germany. According to Handelsblatt, the aim is to understand whether Siemens Energy "and some of its managers or supervisory board members engaged in investor fraud or other illegal business practices."
Siemens Gamesa, the subsidiary integrated through the M&A, will have to shell out about EUR 1.6 billion to repair damage to rotor blades and bearings on its onshore 4.X and 5.X platforms. In Q3/23, Siemens Energy recorded charges of EUR 2.2 billion at Siemens Gamesa, mainly due to the abovementioned damage, higher product costs and difficulties in ramping up its offshore business. Overall, the Munich-based company expects a loss of EUR 4.5 billion for fiscal 2022/23, according to Renewables Now.
Despite the damage, the turbines are in operation, and most of the repairs are expected to be carried out in 2024 and 2025. These significant issues with renewable energy highlight the importance of having a reliable oil and gas business.
Last week, a Siemens Energy AG spokesman said the Company would focus on fixing quality problems with certain onshore platforms at its Siemens Gamesa subsidiary rather than building new business. CEO Christian Bruch must deliver a promising business strategy in November, or shareholder confidence will be further tested. JP Morgan corrects its price target for Siemens Energy shares from EUR 18 to EUR 16.7. Currently, the stock stands at EUR 11.69.
New tough CFO on Board, Allianz Group thus increases female quota to 44%
Researchers at the Universities of Glasgow and Leicester find that British companies run by a high proportion of women perform better than companies in this country run purely by men. Word seems to have spread to the Allianz Group, as the new CFO will be a woman from January 1, 2024. Claire-Marie Coste-Lepoutre, Chief Actuary and Head of Planning and Control at Allianz SE and previously CFO and Deputy CEO of Allianz Global Corporate & Specialty SE, will then start as a new member of the Board of Management. Coste-Lepoutre is known for her tough restructuring approach. Together with AGCS CEO Joachim Müller, she has helped to bring the long loss-making industrial insurer AGCS back into the black. In the first half of this year, AGCS, previously the biggest loss-maker, increased its business volume by more than 7%, up from a year earlier. AGCS' operating profit grew by about 65% in Q2/2023, mainly due to its well-performing real estate business and through mid-sized companies.
Together with Sirma Boshnakova, Barbara Karuth-Zelle and Renate Wagner, Claire-Marie Coste-Lepoutre will be the fourth female member of Allianz's nine-member Board of Management. With a female quota of 44%, the Allianz Group thus plays a pioneering role in the DAX. According to an EY survey, the average proportion of women in the other 39 listed companies is only 23%.
And where is the ex-CFO Giulio Terzariol heading? Her Italian predecessor answers the call back home and joins moves to Generali in a new role, where he will coordinate international insurance operations and report to the CEO. His future role includes coordinating the activities of the managing directors of all operating units in various regions, including Italy, the DACH region, France, Global Business Activities (including Europe Assistance and Global Business Lines) and International (including CEE, Mediterranean & Latin America and Asia).
Saturn Oil & Gas specializes in oil and gas development in Canada. Although the Company had to slightly lower its 2023 oil production forecast due to wildfires and other factors, it plans to increase production by the end of the year. Analyst Mueller sees a price potential of EUR 3.90 per share for Saturn Oil & Gas, compared to the current value of EUR 1.88. The Company offers a promising investment opportunity, especially for investors who back energy like Warren Buffett. A pause in debt repayment means the Company has enough capital to finance new drilling projects. Siemens Energy, on the other hand, is struggling with record losses of EUR 4.5 billion for 2022/23, blamed on damage to rotor blades at Siemens Gamesa's offshore turbines. Despite the problems, operations continue. Repairs are scheduled to take place in 2024 and 2025. Transparent dealings with shareholders and a clear business strategy are now crucial to regaining investor confidence, as the first class-action lawsuits from small investors are piling up.
Claire-Marie Coste-Lepoutre will join the Allianz Board of Management as the new CFO from January 2024. The Allianz Group thus achieves a 44% share of women on the Board of Management and sets an important benchmark in the DAX list. Whether the results of the study by researchers from the Universities of Glasgow and Leicester will also prove true for the Allianz Group on an international level remains to be seen. Coste-Lepoutre is known for her tough and successful restructuring efforts. She has already demonstrated her skills by restoring profitability to industrial insurer AGCS, which she led back to profitability together with AGCS CEO Joachim Müller.
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