In today’s briefing:
- Oil and Gas Weather Black Monday Storm Relatively Unscathed
- Rio Tinto: Open to Major Copper M&A; Entree Resources Logical Target
- Oil & Gas Giants Hit by Recession-Driven Sell-Off but Outperform the S&P 500
- ECVT: Another Pushout in Story, PT to $12
- [Earnings Review] Shell Surpasses Earnings Forecasts with Strong Upstream and Retail Gains
- Champion Iron Q1 2025: Inline, High-Grade Iron Ore on Critical Minerals List in Canada
- LVG: Mining License Renewal – Long Runway Ahead
- Sakai Chemical Industry Co (4078 JP): Q1 FY03/25 flash update
- BP p.l.c.: Enhanced Focus on Natural Gas and Renewable Energy Paying Off? – Major Drivers
Oil and Gas Weather Black Monday Storm Relatively Unscathed
- Crude oil prices ended Monday lower but fell less than other commodities and equities. WTI dropped 0.79% and Brent fell 0.66%, while the S&P 500 declined 3%.
- Crude oil prices were supported by rising Middle East tensions, the shutdown of Libya’s largest oil field, and a sharp decline in the DXY.
- Henry Hub futures fell 1.27% due to surplus stockpiles, cooler US weather forecasts, and the impact of Hurricane Debby.
Rio Tinto: Open to Major Copper M&A; Entree Resources Logical Target
- The acquisition of Filo (FIL CN) by Lundin Mining (LUN CN) and BHP Group Ltd (BHP LN) could be the start of a much larger M&A wave.
- Many juniors trade at 0.1x to 0.2x NAV while transactions typically happen at 0.8x-1x NAV. Filo was acquired at 0.81x NAV so right within this range.
- We continue to like a basket of junior copper mines to get exposure to M&A copper dynamics
Oil & Gas Giants Hit by Recession-Driven Sell-Off but Outperform the S&P 500
- The milder drop in crude oil prices was reflected in energy stocks on Monday, with most major oil and gas companies, outperforming the S&P 500.
- Most of the oil companies’ volume PCR was elevated on Monday and Friday, with Haliburton’s volume PCR exceptionally high at 3.66 on Monday (5/Aug).
- On 5/Aug, all major energy companies saw a rise in implied volatility due to recession fears, except Shell, whose IV dropped slightly to 20.01% from 20.28% on Friday.
ECVT: Another Pushout in Story, PT to $12
- ECVT continues to experience setbacks to its operations this year. The latest from its joint venture, Zeolyst, having renewable fuel customers delay catalyst orders.
- The headwinds ECVT has dealt with in the past year creates pressure on investor sentiment and the Company now having to reassure investors it can sustain generating free cash flow.
- The investor story that shifted out to 2025 remains unchanged. We believe ECVT’s stock price currently reflects investor unrest as to the possibility of ECVT’ 2025 prospects.
[Earnings Review] Shell Surpasses Earnings Forecasts with Strong Upstream and Retail Gains
- Shell’s Q2 revenue dipped 0.2% YoY, but net profit increased by 12.2%. Both revenue and EPS surpassed analyst expectations by 7.4% and 5.1%, respectively.
- Shell cut total debt by 10.5% YoY to USD 74.5 billion, with net debt down 5% YoY to USD 38.3 billion.
- Shell recorded a USD 708 million impairment from selling its Singapore refinery and another USD 783 million from pausing construction on a European biofuel plant.
Champion Iron Q1 2025: Inline, High-Grade Iron Ore on Critical Minerals List in Canada
- Champion Iron (CIA AU) reported an inline Q1 FY25, with revenue/earnings up 57%/308% YoY owing to a 34% YoY volume increase and better pricing.
- The company reiterated its guidance for 15 million tons of production and equivalent sales. It is working on improving logistics after forest fires and other port/rail issues.
- The stock trades at 8.5x PE and a 6% dividend yield for FY25e ( assuming iron ore prices of USD 108/ton with a 15 USD/ton premium on 65% Fe).
LVG: Mining License Renewal – Long Runway Ahead
- LVG announced the Imwelo Mining License has conditionally been approved for a 10-year renewal, providing runway for LVG to execute.
- On July 18th, the Company announced the receipt of the Tax Clearance Certificate, the final requirement for transferring the Imwelo Mining Licence to LVG.
- Once the Mining License is officially transferred, it will trigger the second tranche of investment from the TAIFA group.
Sakai Chemical Industry Co (4078 JP): Q1 FY03/25 flash update
- Revenue increased 3.7% YoY to JPY21.9bn, with operating profit up 71.2% YoY to JPY1.6bn.
- Chemicals segment, accounting for 90.3% of revenue, saw significant growth in electronic materials (+44.7% YoY).
- Operating profit from electronic materials recovered to JPY340mn, approximately 6.3x YoY, aiding overall profit rise.
BP p.l.c.: Enhanced Focus on Natural Gas and Renewable Energy Paying Off? – Major Drivers
- BP’s recently disclosed quarterly financial results reflect a robust operational performance characterized by high plant reliability and refining availability.
- During the quarter, upstream plant reliability was reported at 96%, and refining availability matched this figure, fostering a conducive environment for strong production and operational efficiency.
- This operational reliability underpinned the company’s financial performance, with BP generating substantial operating cash flow of $8.1 billion.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
