Daily Brief Energy/Materials: Northam Platinum Holdings , Canacol Energy, Vedanta Resources, Medco Energi, Riley Exploration Permian and more

• The annual WisdomTree rebalance takes place next week Wednesday in the closing auction. Turnover on the JSE at the rebalance last year (20 Oct) was R30.6bn, 1.5 times the 5-day average.

• There are several SA stocks being added to and deleted from the range of WisdomTree EM funds.

• Our buy flow estimate for SA additions is R1.3bn, our sell flow estimate for SA deletions is R1.8bn. This excludes up and down weightings.

• Pulsar Helium (PLSR CN)C; target price of C$0.90 per share: Additional acreage should increase the size of the prize – Pulsar has signed a lease with a private mineral rights holder to expand the area of the company’s Topaz helium project.
• The additional mineral rights are within a 6.2 mile radius of the Topaz discovery and cover a total of 2,840 gross acres (1,049 net acres).
• OMV (OMV AG): 3Q23 update – 3Q23 production was 364 mboe/d.

• Market concern on company’s redemption of Bonds of $ 3 bn in 2024 
• Liquidity gap for company is much larger estimated at nearly $11 bn
• Company needs to raise long term funds and/or divest assets to raise the required amount

Medco Energi’s tender offers are positive for existing bondholders in our view, as the early tender considerations are 2-3 pts above the last traded prices before the announcement. Conversely, we doubt the repurchases will provide significant interest savings for the company. Still, we view the proposed new notes issuance as credit positive for Medco, as it will lengthen the debt maturity profile and enable the company to finance a Middle East acquisition using long-term funding.

We recommend that holders of the MEDCIJ 6.75 25 tender before the early tender deadline, but are neutral on the tender offer for the remaining notes. We see fair value for the proposed 2029 notes at 9.2-9.7%. 

On 10 October, Canacol Energy provided an update on gas sales and drilling results. Gas sales in Q3 were 178mmcf/day, which was down approximately 4% from the level seen in Q2 due to previously flagged problems at its Jobo gas processing plant. This is being resolved and management is confident about achieving its average 2023 production targets.