SHOCK at Nel ASA! RELIEF at TUI! OPPORTUNITY for Zefiro Methane!

Zefiro Methane: Good Reasons to Buy the Stock

It can really only be a matter of time before Zefiro Methane's stock rebounds. There are several strong reasons to consider adding shares to a portfolio. The company monitors and plugs abandoned oil and gas wells, operating in a highly attractive niche. It is currently focused on the United States—the most attractive market globally. There are more than 2 million abandoned wells in the US alone. The estimated costs of monitoring and plugging these wells range between USD 400 and 600 billion. The market is highly fragmented, offering Zefiro excellent growth opportunities. For the current fiscal year (ending June 30), the company aims to generate more than USD 40 million in revenue and achieve a clearly positive EBITDA. In the coming years, both revenue and earnings are expected to increase substantially.

The news flow has been consistently positive. Last week, the company announced four new major clients from the energy sector. Three of them are publicly traded and have a combined market capitalization of more than USD 140 billion. The new contracts cover the decommissioning of various types of wells, including oil and gas production wells, gas storage wells, injection wells, and salt wells. The work will initially focus on Ohio, where Zefiro is already active through its subsidiary, P&G. Work is also scheduled in Indiana.

At the same time, work is beginning in Ohio on a three-year Construction Manager-at-Risk contract administered by the Ohio Department of Natural Resources, which the company says is expected to generate approximately USD 19.6 million in revenue through May 2029. To serve these new clients, 20 new employees have already been hired, with at least 20 more to follow. CEO Catherine Flax highlights the team's strong execution capabilities and views the core business as a positive, scalable value driver.

The next announcement came on Wednesday. According to the report, the company was awarded three new projects in Ohio to backfill abandoned wells. In total, this involves 12 wells and one additional water well. For Zefiro, the new contracts are expected to generate approximately USD 2.4 million in revenue, to be recognized in the first quarter of fiscal year 2027. The client is the Ohio Department of Natural Resources. The projects are being funded through the US Infrastructure Investment and Jobs Act (IIJA), which has allocated USD 4.7 billion nationwide for the remediation of abandoned wells.

If Zefiro continues at this pace, revenue and earnings are likely to rise significantly in the fiscal year starting in July. The company is currently valued at a modest CAD 61.6 million on the stock market.

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TUI: A Winner from Peace?

Will the Middle East actually find peace? That is the great hope for this week. TUI would be a winner if peace were to be achieved in the Iran conflict and the Strait of Hormuz were to reopen. The oil price has already fallen below USD 80. In March, it stood at over USD 110. This would ease the burden of fuel costs on the travel industry. At the same time, a stabilization of the situation would boost many consumers' desire to travel. For TUI, this would be a doubly positive development: lower costs on the one hand, and stronger demand for package tours, cruises, and hotels on the other.

In April, TUI had to significantly scale back its annual targets due to the impact of the war in Iran. Instead of adjusted EBIT growth of 7 to 10% compared to the prior-year figure of around EUR 1.4 billion, the group now expects only EUR 1.1 to 1.4 billion for fiscal year 2026. The revenue forecast of 2-4% was withdrawn without replacement. At the time, the company cited higher fuel costs, as well as booking reluctance and a shift in demand away from destinations in the eastern Mediterranean.

Following the profit warning, Jefferies reduced its price target from EUR 8.20 to 7.00. Maybe things will pick up again soon. TUI shares are currently trading at around EUR 7.21.

Nel: CEO Steps Down

While the mood is positive at Zefiro and TUI, the sense of optimism at Nel ASA is finally over. The long-time CEO is stepping down, and the former hydrogen high-flyer is facing a change at the top. Håkon Volldal has decided to step down from his position as President and CEO to take on a new professional role outside the hydrogen industry. He has a six-month notice period and will remain in office while a successor is sought. The board of directors has already begun the recruitment process.

Arvid Moss, Chairman of the Supervisory Board, praised Volldal's contributions since he took office in July 2022. During this time, he helped shape Nel's strategy, revamped the product portfolio, strengthened the organization, and established key partnerships. At the same time, the company emphasized that its strategic direction and priorities remain unchanged. Volldal himself stated that he remains a supporter of clean hydrogen and wants to ensure a smooth transition.

Incidentally, in July 2022, Nel's stock was trading at EUR 1.30. Today, it stands at just EUR 0.22. In early 2021, the share price had temporarily risen above EUR 3. Then the steep decline began. The hope that hydrogen would become the backbone of the energy transition has not materialized. Even Samsung Group's entry into the market has long since fizzled out. While Plug Power is able to benefit somewhat from the AI hype, the situation at Nel ASA currently seems almost hopeless.

The Bottom Line

Zefiro Methane is unlikely to remain a hidden gem for long. The company appears to be establishing itself as the market leader in a fragmented, billion-dollar niche. The stock seems anything but expensive. TUI is not expensive, but its business model is vulnerable to a wide range of external influences. It may be interesting for trading, but less so for long-term investing. Nel is a major disappointment. The hydrogen sector remains interesting, but there now seem to be other favourites in that space.