In this briefing:
- Yellow Cake (YCA) – Great Idea, Wrong Time!
- Oil Majors Results: The Main Take-Aways. We Are Positive on Hess, Valero and Chevron
1. Yellow Cake (YCA) – Great Idea, Wrong Time!
- Yellow Cake PLC (YCA LN) is a pure play on the uranium price
- Spot Price $28.90/lb U3O8 & L.T. Price remains $32/lb U3O8
- Share price trading at ~2% discount to NPV
- Despite recent production cuts, primary & secondary supplies cover world demand
- Est. surplus ~500ktU, representing six years of global primary production
- Global nuclear generation peaked in 2006
- Forecast world uranium demand to decline between 25% and 40% by 2050
- 1-year Target Price £1.98-2.02 ps NPV4% assuming $24/lb U3O8
- 3-year Target Price £1.57-1.77 ps NPV4% assuming $21/lb U3O
2. Oil Majors Results: The Main Take-Aways. We Are Positive on Hess, Valero and Chevron
A number of the largest oil companies in the U.S. and Europe reported results last week including Exxon Mobil (XOM US) , Chevron Corp (CVX US) and Royal Dutch Shell (RDSA LN), all showing strong share price performance on the back of their results and outlook statements.
We look at the main topics of interest that came out of the results so far and what this means for the oil and gas sector. The areas in focus were the strong cash flow generation and capex plans, reserve replacement, new LNG projects, IMO impact for the refining sector and digitalisation. The upstream areas that got the most focus were the US onshore (specifically the Permian), US Gulf of Mexico, Guyana, Brazil and Venezuela. This follows on from our note 2019 Energy Market Themes & Stocks with Exposure: Focus on Oil, Refining, LNG, M&A & Renewables.
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