Daily Brief Energy/Materials: Tesla , Copper, Crude Oil, Serica Energy, Lake Victoria Gold , Valeura Energy Inc, Pan American Silver, Zephyr Energy and more

• Tesla Tops Storage: Tesla dominates North American battery storage (25% market share) as renewables rise, deploying a record 4,053 MWh in Q1 2024.
• Explosive Industry Growth: U.S. battery storage market projected for a staggering 30.5% CAGR until 2030, driven by clean energy transition.
• Forefront of Innovation: CATL revealed TENER, a mass-producible energy storage system with zero degradation for five years achieving 430Wh/L density. Innovation to continue fueling growth.

• Top miners like BHP Group Ltd (BHP AU) and Teck Resources (TECK US) are signaling their long-term bullish copper intent through their recent corporate actions. 
• Copper may experience short periods of oversupply, but its long-term outlook makes it one of the best commodities we cover in terms of return potential. 
• Our best plays in the copper space are Southern Copper (SCCO US), Teck Resources (TECK US) and Freeport Mcmoran (FCX US)

• An unexpected increase in US crude oil and gasoline inventories pushed oil prices down but the ongoing conflicts capped the downside.
• Growing natural gas output dampens Henry Hub’s uptrend. Europe will ban transshipments of Russian LNG in its ports from March 2025.
• Chevron’s Wheatstone LNG facility in Australia resumed full production. Wells Fargo lowered its target price on Shell but raised it on Occidental.

• Serica Energy is a ~US800 mm market cap company with >40 mboe/d production and 140 mmboe of 2P reserves in the UK North Sea.
• The investment case is about value and generous shareholder distributions.
• The strategy is to maximize the value of two key producing hubs, depending on the UK’s tax policy, to develop a third one at Buchan Horst and to grow via M&A.

• 2023 production to date was 43,781 boe/d. very close to our expectations of 44.3 mboe/d. 
• Production in June at the Bruce Hub of 25,771 boe/d was particularly strong following the recent Light Well Intervention Vessel campaign.
• This partially offsets the low production in May at the Triton Hub following a trip of a compressor that shut down production for three weeks (the production at Triton has been restored since then).

• LVG has received the tax assessment from the Tanzanian Revenue Authority, one of the final steps from the acquisition of the Imwelo Mining License.
• Once the Mining License is officially transferred, it will trigger the second tranche of investment from the TAIFA group.
• Barrick Gold continues to explore the area surrounding the Tembo licenses, exciting us as LVG will share in Barrick’s success.

• Production at Wassana has been suspended following the discovery of a crack within one of the MOPU’s steel jack-up legs that could pose a risk to the structural integrity of the MOPU.
• The company is conducting further inspections and analysis to plan next steps.
• Further visibility is expected in the coming weeks.

Pan American Silver (PAAS) recently held an investor day focusing on strategy, key projects, exploration, ESG and capital allocation. In this note we summarise key takeaways from the event. Our valuation and financial estimates remain unchanged ahead of the Q224 results in August.

• The FY23 operating cashflow after interests of ~US$9 mm was above our forecasts (US$7 mm) due to change of working capital.
• We expected a negative change of working capital given (1) Zephyr had to make advance payments for the remedial of the State 36-2R well ahead of being reimbursed by the insurance and (2) the fact that the proceeds of the production for the Slawson wells were not received until part way through 1H24.
• Zephyr’s revolving credit facility (RCF) has been redetermined with an unchanged borrowing base (compared to December 2023) of US$15.15 mm.