Daily Brief Energy/Materials: Gold, Entree Resources, Packaging Corporation of America, Valeura Energy Inc, Pulsar Helium, Ring Energy Inc, Sealed Air Corp, Kolibri Global Energy , Fmc Corp, Forum Energy Technologies and more

• WA gold explorers and developers are struggling in the market compared to producers
• Value gap between explorers/developers and producers has widened, with little progress in projects
• Cash balances are dwindling for many companies, raising questions for investors about the incentive to fund them

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• Entree Resources (ETG CN) has been in an arbitration proceeding against Rio Tinto PLC (RIO LN) since April 2024.
• After initial hearings earlier in 1H24 we expect final arguments next week. The arbitration committee verdict should come by late 3Q24.
• At stake is the relationship and ownership arrangement between ETG and RIO’s in Oyu Tolgoi, one of the world’s largest copper mines. Just concluded Mongolian elections clear the last hurdle.

• Packaging Corporation of America reported its first quarter 2024 results, including a net income of $155 million, or $1.72 per share, and a total net sales of $2 billion.
• While these figures show a decrease from first quarter 2023 results of $198 million net income, or $2.20 per share, and the same $2 billion net sales, they still mark a significant achievement for the company.
• To tackle inflation, Packaging Corporation of America has been focusing on cost management and improving process efficiencies across its manufacturing and converting facilities.

• 2Q24 production was 21.1 mbbl/d, which was very close to our expectations (21.3 mbbl/d).
•  Production is expected to increase in 3Q24 with the start-up of production at Nong Yao C.
• Half of the planned drilling targets have already been drilled.

• The initial 1.1 km 2D seismic sweep survey shows a seismic reflector at the same depth where gas was intersected at the Jetstream #1 well.
• This is important as it supports the contingent resources estimated in the Competent Persons Report published at the time of the IPO.
• These resources had been estimated with limited reservoir and seismic data.

• On July 8, 2024, Ring increased its 2Q24 production guidance to 13.5-13.7 MB/d of oil (19.5-19.7 MBOE/d) from 13.0-13.4 MB/d of oil (18.5-19.1 MBOE/d) reflecting the continuation of outperformance exhibited in 1Q24 (Figure 1).
• Production volumes are benefiting from outperformance in Ring’s development program and increased operational efficiencies in the company’s base production.
• The midpoint reflects gains of ~2% Q/Q and 15% Y/Y. The Y/Y gain partially reflects the addition of assets acquired in the Central Basin Platform from August 2023.

• Sealed Air Corporation has disclosed its financial outcomes for the first quarter of 2024, presenting mixed results amid shifting market conditions and ongoing strategic adjustments.
• Revenue for the quarter reached $1.33 billion with an adjusted EBITDA of $278 million, indicating robust performance despite the challenging dynamics, particularly in the Protective segment.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

Kolibri Global Energy (KEI) has provided an update on operations and revised guidance. It now guides to FY24 revenue of US$57–62m and EBITDA of US$43–48m on average production of 3,200–3,700boepd. KEI plans to start drilling its next three wells in the first half of August. These wells will have longer lateral lengths, which should result in better well economics. We have revised our estimates to reflect the latest guidance and operational update. Our valuation of KEI falls slightly to US$6.8/share. The announced intention to initiate a share buyback, as well as the recent inclusion in the Russell Microcap Index, should provide additional support to the shares.

• FMC Corporation delivered mixed first-quarter results for 2024, characterized by solid EBITDA that met the higher end of the company’s guidance and significant improvement in cash flow, yet facing a notable decline in revenue and volume.
• During this period, revenue decreased by 32% compared to the previous year, with a 27% drop in volume primarily attributable to ongoing channel destocking and delayed purchasing behavior by growers, aligning with the trend observed over the past year.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• We are updating our estimates to reflect higher expected interest expense in 2Q24.
• On the May 3, 2024, earnings call to discuss 1Q24 results, management indicated that 2Q24 interest expense would be ~$8 million.
• Our previously published 2Q24 interest expense estimate was $7.1 million.