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April 29th, 2024 | 06:45 CEST

Shell, Saturn Oil + Gas, BP - Oil price soon at USD 100? Oil defies US inflation

  • Mining
  • Oil
  • Gas
  • Energy
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Last Friday, the oil price rose despite the negative impact of the latest inflation data from the US. These figures have dampened hopes of swift interest rate cuts by the FED, usually a catalyst for increasing oil demand. Tensions in the Middle East continue to contribute to uncertainty. Some analysts, including those at JP Morgan, are even speculating on a potential rise in the Brent oil price up to USD 100, driven in part by Russia's surprise announcement of further production cuts. If the oil price rises to USD 100, oil companies' profits would soar. We are therefore taking a look at three companies today.

time to read: 4 minutes | Author: Armin Schulz
ISIN: Saturn Oil + Gas Inc. | CA80412L8832 , Shell PLC | GB00BP6MXD84 , BP PLC DZ/1 DL-_25 | DE0008618737

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


    Shell - Revised filling station network

    Over the next two years, Shell plans to initiate a significant transformation of its operational network. This includes the reduction of several hundred filling stations worldwide while at the same time expanding the range of charging stations for electric vehicles. The move indicates an adaptation to changing market needs and customer preferences. By the end of the decade, Shell aims to expand its network to 200,000 charging points, a significant increase from the current 54,000 charging points. This decision is in line with Shell's "Energy Transition Strategy".

    Shell is demonstrating its commitment to the energy transition through new partnerships and innovative projects. Key milestones include the agreement with Hapag-Lloyd for the supply of LNG, participation in a CCS project in Singapore and cooperation with Bloom Energy in the field of hydrogen technology. These measures underline the Company's efforts to invest in promising green technologies. Despite a slight adjustment to its emissions targets, Shell remains committed to its long-term mission of achieving net zero emissions by 2050.

    The recent strategic realignment, including a focus on more profitable projects and an increase in natural gas production, demonstrates that the Company is taking a balanced approach to meeting both environmental and economic challenges. For investors, Shell's transition to a greener energy future signals potential growth opportunities as the Company strives to maintain its leadership position in a rapidly changing sector. The shares have gained significantly since the beginning of March and are currently trading at EUR 34.03.

    Saturn Oil & Gas - Streamlines product portfolio

    In 2023, Saturn Oil & Gas, an up-and-coming Canadian energy company, has made remarkable progress. The Company doubled its production base compared to the previous year. In Q4, the Company achieved an average production of 26,891 barrels per day, an increase of 115% from a year earlier. This growth was also reflected in the financial performance, with Adjusted EBITDA increasing by 61% to CAD 100.1 million and Adjusted Cash Flow increasing by 58% to CAD 80.2 million. Despite a 17% decline in average WTI oil prices, Saturn continued to achieve high profitability through efficiency improvements and cost reductions.

    A key to Saturn's 2023 success story was the acquisition of Ridgeback Resources Inc. This acquisition allowed Saturn to strengthen its presence in strategically important areas such as Saskatchewan and Alberta while improving its cost structure. Average operating costs decreased by 18%, and average royalties paid also decreased, helping to optimize profitability. On April 1, the Company sold the Deer Mountain block, which was acquired with the Ridgeback acquisition, for CAD 27 million. Thus, Saturn streamlined its portfolio and intends to use the proceeds to reduce its debt further.

    Overall, it was a good deal for the Company. Deer Mountain was purchased for 1.7 times the forecast net operating income. Saturn demonstrated its commitment to financial stability and shareholder value with a significant repayment of the senior loan and a consistent focus on debt reduction. CAD 180 million is to be repaid this year. At the end of the year, only 280 million in debt will remain. Debt will then be below the annual EBITDA. The Company will announce how the first quarter went around mid-May. Saturn currently has a market capitalization of around CAD 387 million at a current share price of CAD 2.78.

    BP - Realignment and challenges

    BP is taking decisive steps to drive forward the transformation in the mobility sector. With the recent acquisition of Ashford International Truckstop in Kent, one of the largest truck stops in Europe, the Company is significantly strengthening its position in the field of electromobility. This move enables BP to effectively address the growing demand for charging infrastructure for electric truck fleets in the UK and Europe. It underlines the Company's commitment to playing a leading role in the transition to cleaner forms of energy.

    In parallel with its expansion into new business areas, BP is facing internal and external challenges. The move away from traditional energy sources is leading to significant restructuring within the Company, evidenced by the departure of key personnel and the streamlining of the management team. This realignment goes hand in hand with critical voices from investors questioning BP's strategy. In addition, there are operational challenges, such as the extended delivery times due to the rerouting of ships around the Cape of Good Hope, which, on the other hand, are contributing to a rise in oil prices.

    Despite these challenges, BP remains true to its strategy and continues to focus on future-oriented projects. The commissioning of the new Azeri Central East platform in the Caspian Sea and the ambitious goal of installing 100,000 charging points for electric vehicles by 2030 demonstrate a strong commitment to reshaping the future of energy. Nevertheless, oil and gas production is set to remain at a constant level until at least 2025, thereby strengthening shareholder returns. The share is currently trading at EUR 5.98.

    The high oil price is boosting the profits of oil producers. While BP and Shell are no longer investing in the expansion of oil production but are focusing more on renewable energies, the situation is different at Saturn Oil & Gas. The Canadians have significantly expanded their production in recent years and are paying attention to compliance with ESG factors. If the debt reduction progresses as planned, the share will be significantly higher at the end of the year. The prerequisite is that the oil price does not fall below USD 75. However, this cannot be assumed at present.

    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 hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    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 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.

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    Der Autor

    Armin Schulz

    Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.

    About the author

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