In this briefing:
- New J Hutton – Exploration Report (Weeks Ending 22/03/22)
- Corporate Governance in Global Emerging Markets: 70 Energy Companies – Korean Co Gets Lowest Score
- Kazakhstan: Nazarbayev Surrendering Title, Not Power
- Weekly Oil Views: Another Crude Rally Fails to Stick as Technicals Signal a Pivot Point
- Kosmos Energy: The Standout Internationally-Focused E&P Company
1. New J Hutton – Exploration Report (Weeks Ending 22/03/22)
- Uranium Price has fallen 7% over the past two months
- Actively looking for uranium short positions
- Provide summarised watch list
- Wisdom from Samuel Longhorne Clemens
- Yellow Cake PLC (YCA LN), Berkeley Energy (BKY AU), Cameco Corp (CCO CN), Kazatomprom Natsionalnaya At (KZAP KZ), Jangada Mines PLC (JAN LN), Europa Metals Ltd (EUZ LN), Buxton Resources (BUX AU), Musgrave Minerals (MGV AU), Myanmar Metals (MYL AU), Archer Exploration (AXE AU), Canyon Resources (CAY AU), Catalyst Metals (CYL AU), Core Exploration (CXO AU), Exore Resources (ASX: ERX), Stavely Minerals (SVY AU), Tietto Minerals Ltd (TIE AU), Horizonte Minerals PLC (HZM LN), Bellevue Gold (ASX: BGL), Allegiance Coal (AHQ AU), First Au (ASX: FAU), Base Resources (BSE AU), Breaker Resources Nl (BRB AU)
2. Corporate Governance in Global Emerging Markets: 70 Energy Companies – Korean Co Gets Lowest Score
- Our proprietary corporate governance scoring system now covers over 1,800 stocks including 70 Electricity, Alternative Energy, Distribution, Water and Utilities companies in Emerging Markets.
- This report includes the Energy and Utilities names currently under coverage.
The lowest score in this group is Korea Gas (44/100). - We have found that scores below 50/100 indicate poor corporate governance and higher risk of fraud.
- Korean companies often have lower scores as a result of a lack of board independence and convoluted corporate structure.
- Of the groupings presented here Alternative Energy has the highest average score at 64/100.
We welcome requests from clients of names they want to see added to the universe.
3. Kazakhstan: Nazarbayev Surrendering Title, Not Power
By transferring his presidential powers to the Senate Speaker, President Nursultan Nazarbayev has not retired from politics. He has remained an official “Leader of the Nation” and retained a tight grip of Kazakhstan’s foreign and domestic policy. His recent announcements have signalled a tilt towards increased social spending. The reshuffle at the helm of the NBK signals that the regulator is far from achieving full independence. Furthermore, there are signs of increasing pressure on the central bank to provide long-term funding to the economy, which we find worrying.
4. Weekly Oil Views: Another Crude Rally Fails to Stick as Technicals Signal a Pivot Point
Oil remains in a tug-of-war between fundamentals and a fickle sentiment in the global financial markets.
Brent and WTI futures settled at fresh four-month-highs of $68.50/barrel and $59.98/barrel mid-week, but had erased all the gains — and some more — by Friday’s close. However, technicals point to a pivot point in crude futures, with the 50-day moving average crossing over the 100 DMA last week. That’s typically a buy signal, but a sustained rally from the current levels is hard to see in the near-term.
Meanwhile, there were some interesting and unexpected outcomes from a high-profile OPEC/non-OPEC monitoring committee meeting in Baku on March 18. Among them were signs of a divergence in the views of Saudi Arabia and Russia, de facto leaders of the 24-producer alliance curbing supply to rebalance the market.
What explains Saudi Energy Minister Khalid al-Falih’s new hawkish stance and is the OPEC and non-OPEC partnership under some strain? Our short answer: No. We lay out our perspective of the evolving dynamics in the producers’ alliance, which is important to understanding the likely path of their collaboration.
5. Kosmos Energy: The Standout Internationally-Focused E&P Company
We think that Kosmos Energy (KOS US) offers everything that is required from an internationally focused E&P company. It has a highly rated management team, strong balance sheet and free cash flow generation from its existing producing assets, low risk / high value near field exploration potential, selective high risk / reward frontier exploration in which it has a proven track record, it has done recent value accretive acquisitions with room for more, it has demonstrated the ability to farm-down its assets on multiple occasions and is currently in the process of a major asset sell down, which could surprise the market to the upside. Despite this the stock trades on a significant discount to risked NAV, making it a potential acquisition target and has plenty of catalysts coming up this year to close the valuation gap.
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