Category: Energy

Energy Industry Report – Oil prices on a tear – the case for why prices will stay high

Posted on by cpatches

Monday, October 2, 2023

Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the bottom of the report for important disclosures

Oil price rose 30% in the third quarter helping propel the XLE Energy Index up 11.4%. Natural gas prices also rose after twelve months of decline. Higher oil prices reflect declining inventories due to rising demand that is not being met by rising supply.

Domestic oil demand is rising. Oil demand largely tracks the economy. And, while monetary tightening has slowed growth, demand is still growing. Recently, domestic demand has increased due to warm summer weather and increased propane exports to Europe.

Oil supply is not keeping pace. OPEC+ extended its production cuts. In previous decades, domestic producers would respond to production cuts by accelerating drilling. In recent years, producers have not increased drilling as noted by a sharp decline in domestic oil rig activity. Oil drilling rigs even declined this quarter despite the rise in oil prices. Limited drilling, combined with sharper well decline curves, has meant supply is not keeping up with demand. 

Small cap producers are uniquely positioned to take advantage of higher prices. The production gains that came from horizontal drilling and fracking in the Permian Basin appear to be waning. That means well profitability has declined as producers move on to secondary and tertiary targets. This is especially an issue for larger production companies that need a large number of wells drilled to provide growth. In addition, large companies face regulatory and investor pressures regarding fossil fuel production that the smaller companies may avoid.

Energy Stocks

Energy stocks, as measured by the XLE Energy Index, rose 11.4% in the 2023 third quarter as compared to a 3.6% decline in the S&P 500 Index.  The outperformance was largely due to rising oil prices. The November 2023 futures contract rose 30% during the quarter. Natural gas prices rose 4.9% during the quarter largely reflecting normal seasonal trends.

Oil Prices

The rise in oil prices corresponds to a drop in inventories. After a covid-induced spike in  early 2020, domestic inventories have fallen steadily. During this period of monetary tightening, demand growth has slowed but remained positive. Supply, on the other hand, has stagnated. OPEC+ has extended cutbacks and domestic drilling activity has declined.

Figure #1

Source: EIA

The decline in drilling activity can best be seen by looking at domestic oil rig activity. Where once there were more than 1600 active wells, now there are one-third that number. What’s more, oil drilling activity has continued to decline in the third quarter even as oil prices have risen.

Figure #2

Source: Baker Hughes

Weather has also played a part as warm temperatures have meant increased use of oil for electric generations. Although oil represents a small portion of the generation load, it is an important component in the summer months when generation demand is greatest. Temperatures in the United States have been warmer than average each month this summer and 17 of the 24 months over the last four years.

Figure #3


Finally, it is worth noting that petroleum exports have been growing. Exports jumped after the Ukraine invasion as the United States rushed to ship petroleum to Europe to offset Russian supply disruptions. Note the large jump in propane exports since 2021 in the chart below. Propane, a component of the crude oil barrel, is one of the easier fuels to export until additional liquified natural gas export terminals are completed.

Figure #4

The combination of limited drilling, growing demand for electric generation and exports, and OPEC production cuts bodes well for oil prices.

Natural Gas Prices

The story for natural gas is less positive but improving. Sharp declines last winter bottomed out in April and have slowly begun to creep back upward. Natural gas production profitability is not great at prices near $3.00 per thousand cubic feet (mcf) but still profitable.  

Figure #5

Source: Nymex, EIA

Outlook

We believe the outlook for energy companies remains favorable. Oil prices are high and do not show signs of falling due to OPEC cuts, reduced domestic drilling and rising demand for power generation and exports. We believe the case for smaller cap energy stocks is especially strong because they are less liquid and slower to react to rising energy prices. Smaller energy companies also face less political and investor pressure to shift away from carbon-based production.

GENERAL DISCLAIMERS

All statements or opinions contained herein that include the words “we”, “us”, or “our” are solely the responsibility of Noble Capital Markets, Inc.(“Noble”) and do not necessarily reflect statements or opinions expressed by any person or party affiliated with the company mentioned in this report. Any opinions expressed herein are subject to change without notice. All information provided herein is based on public and non-public information believed to be accurate and reliable, but is not necessarily complete and cannot be guaranteed. No judgment is hereby expressed or should be implied as to the suitability of any security described herein for any specific investor or any specific investment portfolio. The decision to undertake any investment regarding the security mentioned herein should be made by each reader of this publication based on its own appraisal of the implications and risks of such decision.

This publication is intended for information purposes only and shall not constitute an offer to buy/sell or the solicitation of an offer to buy/sell any security mentioned in this report, nor shall there be any sale of the security herein in any state or domicile in which said offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or domicile. This publication and all information, comments, statements or opinions contained or expressed herein are applicable only as of the date of this publication and subject to change without prior notice. Past performance is not indicative of future results. Noble accepts no liability for loss arising from the use of the material in this report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to Noble. This report is not to be relied upon as a substitute for the exercising of independent judgement. Noble may have published, and may in the future publish, other research reports that are inconsistent with, and reach different conclusions from, the information provided in this report. Noble is under no obligation to bring to the attention of any recipient of this report, any past or future reports. Investors should only consider this report as single factor in making an investment decision.

IMPORTANT DISCLOSURES

This publication is confidential for the information of the addressee only and may not be reproduced in whole or in part, copies circulated, or discussed to another party, without the written consent of Noble Capital Markets, Inc. (“Noble”). Noble seeks to update its research as appropriate, but may be unable to do so based upon various regulatory constraints. Research reports are not published at regular intervals; publication times and dates are based upon the analyst’s judgement. Noble professionals including traders, salespeople and investment bankers may provide written or oral market commentary, or discuss trading strategies to Noble clients and the Noble proprietary trading desk that reflect opinions that are contrary to the opinions expressed in this research report.
The majority of companies that Noble follows are emerging growth companies. Securities in these companies involve a higher degree of risk and more volatility than the securities of more established companies. The securities discussed in Noble research reports may not be suitable for some investors and as such, investors must take extra care and make their own determination of the appropriateness of an investment based upon risk tolerance, investment objectives and financial status.

Company Specific Disclosures

The following disclosures relate to relationships between Noble and the company (the “Company”) covered by the Noble Research Division and referred to in this research report.
Noble is not a market maker in any of the companies mentioned in this report. Noble intends to seek compensation for investment banking services and non-investment banking services (securities and non-securities related) with any or all of the companies mentioned in this report within the next 3 months

ANALYST CREDENTIALS, PROFESSIONAL DESIGNATIONS, AND EXPERIENCE

Senior Equity Analyst focusing on Basic Materials & Mining. 20 years of experience in equity research. BA in Business Administration from Westminster College. MBA with a Finance concentration from the University of Missouri. MA in International Affairs from Washington University in St. Louis.
Named WSJ ‘Best on the Street’ Analyst and Forbes/StarMine’s “Best Brokerage Analyst.”
FINRA licenses 7, 24, 63, 87

WARNING

This report is intended to provide general securities advice, and does not purport to make any recommendation that any securities transaction is appropriate for any recipient particular investment objectives, financial situation or particular needs. Prior to making any investment decision, recipients should assess, or seek advice from their advisors, on whether any relevant part of this report is appropriate to their individual circumstances. If a recipient was referred to Noble Capital Markets, Inc. by an investment advisor, that advisor may receive a benefit in respect of
transactions effected on the recipients behalf, details of which will be available on request in regard to a transaction that involves a personalized securities recommendation. Additional risks associated with the security mentioned in this report that might impede achievement of the target can be found in its initial report issued by Noble Capital Markets, Inc.. This report may not be reproduced, distributed or published for any purpose unless authorized by Noble Capital Markets, Inc..

RESEARCH ANALYST CERTIFICATION

Independence Of View
All views expressed in this report accurately reflect my personal views about the subject securities or issuers.

Receipt of Compensation
No part of my compensation was, is, or will be directly or indirectly related to any specific recommendations or views expressed in the public
appearance and/or research report.

Ownership and Material Conflicts of Interest
Neither I nor anybody in my household has a financial interest in the securities of the subject company or any other company mentioned in this report.

Hemisphere Energy Corporation (HMENF) – Production jump coming. A special dividend!

Posted on by cpereira@noblefcm.com


Friday, September 29, 2023

Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

2023 summer drilling program completed. Hemisphere drilled eight wells (6 for production) during the summer, as planned. Four had been completed by August 24th, as reported during second quarter results, so the completions were expected and in line with our model’s assumptions. Management indicated that capital expenditures for the rest of the year should be minimal and we do not expect additional wells to be drilled. 

Production is rising. Management reports that production has reached 3,200 boe/d, up from August production of 3,000 boe/d. Recall that production for the second quarter was slightly below our expectations, but we expected rates to rise as wells came on line.  With production finishing the quarter strong, we believe third quarter production should meet our projections for 3,050 boe/d and fourth quarter production of 3,200 boe/d which assumes some improvement from well optimization.


Get the Full Report

Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

Chesapeake Utilities to Acquire Florida City Gas in $923 Million Deal

Posted on by slightbourne@noblecapitalmarkets.com

Chesapeake Utilities Corporation announced Monday that it has entered into an agreement to acquire Florida City Gas (FCG) from NextEra Energy for $923 million in cash. The acquisition will significantly expand Chesapeake’s presence in the growing Florida energy market.

FCG is the eighth largest natural gas local distribution company in Florida, serving around 120,000 residential and commercial customers across eight counties. Its infrastructure includes approximately 3,800 miles of distribution pipelines and 80 miles of transmission pipelines.

According to Jeff Householder, President and CEO of Chesapeake Utilities, natural gas demand in Florida continues to rise as consumers and businesses seek reliable, domestic, and affordable energy. With this acquisition, Chesapeake aims to capitalize on the robust growth opportunities across the state.

“This acquisition will more than double our natural gas business in Florida, one of the fastest growing states in the nation,” said Householder. “We see significant potential to continue pursuing long-term earnings growth.”

The deal is expected to close by the end of the fourth quarter of 2023, subject to regulatory approvals. Once completed, FCG will become a wholly owned subsidiary of Chesapeake Utilities.

Chesapeake has a strong track record of successfully integrating acquisitions to drive growth, as seen in its purchase of Florida Public Utilities in 2009. The company believes it can optimize FCG’s operations and execute on additional investments in gas distribution, transmission, and other energy platforms.

To finance the deal, Chesapeake plans to utilize a mix of equity and long-term debt to maintain balance sheet strength. The company has also obtained committed financing from Barclays.

Chesapeake has extended its earnings guidance through 2028 based on the increased scale and opportunities from FCG. It expects earnings per share growth of approximately 8% through 2028. The company also increased its 5-year capital expenditure guidance to $1.5-$1.8 billion.

The FCG acquisition demonstrates Chesapeake’s strategy of consolidating natural gas assets and positioning itself for growth in key geographies. As energy markets evolve, strategic deals allow companies like Chesapeake to enhance their competitive position.

Uranium Prices Hit 12-Year High on Rising Demand

Posted on by slightbourne@noblecapitalmarkets.com

Uranium prices have hit their highest level in 12 years, reaching around $70 per pound in recent trading. This marks a major rally for the nuclear fuel, as prices were languishing below $30 per pound just a couple years ago. The uranium market has seen renewed interest from investors and utilities lately, driving the huge spike in prices.

Image Credit: Trading Economics

Uranium is a key material used in nuclear power generation. It is the fuel inside nuclear reactors that undergoes fission to release massive amounts of energy. Uranium is mined from the ground, then processed and enriched before being fabricated into fuel rods for insertion into reactors. Nuclear power plants require a steady supply of uranium fuel to continue operating.

There are several factors behind the big jump in uranium prices recently. A major one is increased demand, as more nuclear reactors are being built around the world. China in particular has been rapidly expanding its nuclear energy capabilities. More reactors coming online globally means more demand for uranium fuel. Supply has also been constrained lately, with pandemic-related disruptions slowing some uranium mining operations. This demand/supply imbalance has helped drive uranium prices markedly higher.

The surge in uranium prices is great news for uranium mining companies and producers. Major players in the global uranium market like Cameco, Kazatomprom, and Energy Fuels stand to benefit greatly from elevated prices. Their profitability increases significantly when uranium prices rise. These companies have seen their stock prices jump this year in tandem with the uranium price rally. Many uranium stocks are up 50% or more year-to-date.

According to Noble Capital Markets Senior Research Analyst Michael Heim, “There has been an imbalance between domestic uranium supply and demand over the last 15 years as consumers (electric utilities) purchased cheap uranium from foreign nations such as Kazakhstan under short-term contracts. Domestic producers curtailed production with spot prices below production costs. With prices now near $70 per pound and electric utilities increasingly willing to sign longer-term contracts, domestic uranium companies like Energy Fuels are able to restart operations.”

Take a moment to take a look at Energy Fuels Inc., a leading U.S.-based uranium mining company, supplying major nuclear utilites.

The hot uranium market also has implications for the broader stock market. The S&P 500 energy sector has been one of the top performing segments this year. Rising uranium prices provide an added catalyst, as nuclear energy becomes relatively more cost competitive. Utility companies running nuclear power plants also benefit from lower relative fuel costs. This can enhance their profitability and lead to upside in the utilities sector.

Overall, the big rebound in uranium prices reflects growing global demand for nuclear power. New reactor projects and increased focus on energy security are driving uranium back to multi-year highs. This should provide a boost to uranium producers and related stocks going forward. Nuclear power appears poised for increased utilization in the years ahead, which points to a strong fundamental outlook for uranium prices. As long as demand keeps rising faster than supply, uranium seems likely to maintain its bull run.

Greenfire Shares Drop After SPAC Merger Completes

Posted on by slightbourne@noblecapitalmarkets.com

Greenfire Resources, a Calgary-based oil sands company, began public trading on the New York Stock Exchange on Thursday through a merger with a special purpose acquisition company (SPAC). However, shares of Greenfire fell sharply on its debut, dropping around 11% in morning trading.

Greenfire combined with M3-Brigade Acquisition III Corp, a SPAC sponsored by New York-based private investment firm Brigade Capital Management. The deal, first announced in December 2022, valued Greenfire at $950 million.

The new company, Greenfire Resources Ltd, is now listed on the NYSE under the ticker “GFR”. But investors reacted negatively to the stock early on. After opening at $9.80 per share, GFR declined over 37% to around $6.10 by Friday morning.

SPAC deals have faced increased skepticism from investors amid high market volatility this year. Many companies that went public via SPACs have seen their share prices sink below initial trading levels. This broader SPAC downturn could be contributing to the weak debut for Greenfire.

Greenfire operates steam-assisted gravity drainage (SAGD) facilities in Alberta’s prolific oil sands region. It has a 75% stake in the Hangingstone expansion project, which came online in 2017, and 100% ownership of the adjacent Hangingstone demonstration facility. Both produce bitumen using steam injection to mobilize viscous oil sands deposits.

The company raised approximately $42 million through a private placement that closed concurrently with the SPAC merger on September 20. It also put in place $300 million in new senior secured notes and a $50 million senior secured credit facility to boost liquidity.

According to Greenfire’s management, the company will prioritize debt reduction in the near-term to strengthen its financial position. It also plans to increase production at its existing facilities through techniques like infill drilling and debottlenecking.

For example, Greenfire is currently drilling extended reach “refill” wells at the Hangingstone expansion site. These wells are intended to produce incremental volumes from between existing well pairs. No new drilling has occurred at the project since its commissioning in 2017.

In the long-term, Greenfire aims to generate free cash flow thanks to controlled capex spending and its high quality oil sands reservoirs. The company believes it has a structural cost advantage compared to some other SAGD operators in the Athabasca region.

Greenfire says its assets have long-life reserves and relatively low decline rates versus conventional oil and gas resources. For instance, the Hangingstone demonstration project has maintained steady production for nearly 20 years without new wells. This could support continued output for decades.

The company intends to initiate a shareholder returns policy over time once it has made sufficient progress on debt reduction. It also plans to evaluate potential acquisition opportunities to drive further growth down the line.

But in the short-term, investors seem cautious on the newly public company as oil prices waver. Energy stocks have seen significant volatility in 2022. Greenfire traded down double-digits in its NYSE debut as traders reacted hesitantly.

Its success at boosting production from existing assets through relatively low-cost techniques like infill drilling may dictate whether shares can rebound over the coming months. For now, the market is taking a wait-and-see approach with the SPAC-backed oil sands operator.

Explore other SPAC Mergers via SPACtrac reports from Noble Capital markets

FG Merger Corp. (FGMC) – Asymmetric Return Profile Acquisition To Unlock iCoreConnect Saas Potential

Heritage Distilling Co.: Liquor With A Kicker

Russian Export Ban May Push Crude Oil Higher

Posted on by slightbourne@noblecapitalmarkets.com

Oil prices climbed over 1% Friday after Russia banned diesel and gasoil exports. The move aims to increase Russia’s domestic supply but reduces the global oil market.

West Texas Intermediate crude climbed back above $90 per barrel following the news. Brent futures also gained, topping $94. Energy analysts say the Russian ban will likely sustain upward pressure on oil prices near-term.

Russia is a leading diesel producer globally. How much the export halt affects US fuel prices depends on how long it remains in place, says Angie Gildea, KPMG’s head of energy. But any drop in total global oil supply without lower demand will lift prices.

The ban comes as US gas prices retreat from 2022 highs, now averaging $3.86 nationally. Diesel is around $4.58 per gallon. Diesel powers key transport like trucks and ships. The loss of Russian exports could spur further diesel spikes.

However, gas prices may keep easing for most of the US, says Tom Kloza of OPIS. Western states could see increases.

Kloza believes crude may rise $2 to $3 per barrel in the near-term. But gasoline margins are poised to shrink even if oil nears $100 again. The US transition to cheaper winter fuel could also limit price hikes.

Oil has increased steadily since summer as OPEC+ cuts output. Saudi Arabia and Russia also reduced production. More Wall Street analysts now predict $100 oil in 2023.

Goldman Sachs sees Brent potentially hitting $100 per barrel in the next 12 months. Sharper inventory declines are likely as OPEC supply falls but demand rises, says Goldman’s head of oil research.

The White House has criticized OPEC+ for the production cuts. US gasoline demand recently hit a seasonal record high over 9.5 million barrels per day. Jet fuel use is also rebounding towards pre-pandemic levels.

Strong demand, paired with reduced Russian oil exports, leaves the market more exposed to supply disruptions. Hurricane Ian showed how quickly price spikes can occur.

Take a moment to take a look at other energy companies covered by Noble Capital Markets Senior Research Analyst Michael Heim.

The Biden Administration plans to keep tapping the Strategic Petroleum Reserve into 2023 to restrain cost increases. But further export bans or output reductions could overwhelm these efforts.

While tighter global fuel supplies might not directly translate to the US, Russia’s latest move signals volatility will persist. Energy prices remain sensitive to supply and demand shifts.

More export cuts could accelerate oil’s return to triple-digits. But for US drivers, the road ahead on gas costs seems mixed. Falling margins and seasonal shifts could limit prices, but risks linger.

High Gas Prices Return, Complicating Inflation Fight

Posted on by slightbourne@noblecapitalmarkets.com

Pain at the pump has made an unwelcome return, with gas prices rapidly rising across the United States. The national average recently climbed to $3.88 per gallon, while some states now face prices approaching or exceeding $6 per gallon.

In California, gas prices have spiked to $5.79 on average, up 31 cents in just the past week. It’s even worse in metro Los Angeles where prices hit $6.07, a 49 cent weekly jump. Besides California, drivers in 11 states now face average gas prices of $4 or more.

This resurgence complicates the Federal Reserve’s fight against high inflation. Oil prices are the key driver of retail gas costs. With oil climbing back to $90 per barrel, pushed up by supply cuts abroad, gas prices have followed.

West Texas Intermediate crude rose to $93.74 on Tuesday, its highest level in 10 months, before retreating below $91 on Wednesday. The international benchmark Brent crude hit highs above $96 per barrel. Goldman Sachs warned Brent could reach $107 if OPEC+ nations don’t unwind production cuts.

For consumers, higher gas prices add costs and sap purchasing power, especially for lower-income families. Drivers once again face pain filling up their tanks. Households paid an average of $445 a month on gas during the June peak when prices topped $5 a gallon. That figure dropped to $400 in September but is rising again.

Politically, high gas also causes headaches for the Biden administration. Midterm voters tend to blame whoever occupies the White House for pain at the pump, whether justified or not. President Biden has few tools to immediately lower prices set by global markets.

Take a look at other energy companies by taking a look at Noble Capital Markets Research Analyst Michael Heim’s coverage list.

However, economists say oil and gas prices must rise significantly further to seriously jeopardize the U.S. economy. Past recessions only followed massive oil price spikes of at least 100% within a year. Oil would need to double from current levels, to around $140 per barrel, to inevitably tip the economy into recession, according to analysis.

Nonetheless, the energy resurgence does present challenges for the Fed’s inflation fight. While core inflation has cooled lately, headline inflation has rebounded in part due to pricier gas. Consumer prices rose 0.1% in August, defying expectations of a drop, largely because of rising shelter and energy costs.

This complicates the Fed’s mission to cool inflation through interest rate hikes. Some economists believe the energy volatility will lead the Fed to pencil in an additional quarter-point rate hike this year to around 4.5%. However, a dramatic policy response is unlikely with oil still below $100 per barrel.

In fact, some argue the energy spike may even inadvertently help the Fed. By sapping consumer spending power, high gas prices could dampen demand and ease price pressures. If energy costs siphon purchases away from discretionary goods and services, it may allow inflation to fall without more aggressive Fed action.

Morgan Stanley analysis found past energy price shocks had a “small” impact on core inflation but took a “sizable bite out of” consumer spending. While bad for growth, this demand destruction could give the Fed space to cool inflation without triggering serious economic damage.

For now, energy volatility muddies the inflation outlook and complicates the Fed’s delicate task of engineering a soft landing. Gas prices swinging upward once again present both economic and political challenges. But unless oil spikes drastically higher, the energy complex likely won’t force the Fed’s hand. The central bank will keep rates elevated as long as underlying inflation remains stubbornly high.

The Hidden Value in Offshore Drilling Stocks

Posted on by slightbourne@noblecapitalmarkets.com

Oil markets and energy stocks often get painted with a broad brush. But within the sector, offshore drilling stocks offer upside that many investors are overlooking. Despite cries of peak oil demand, fundamentals for rig owners point to gains ahead.

The oil services sector has rocketed over 50% higher in the last year, soundly beating the S&P 500. Yet offshore drilling stocks remain unloved. This creates an opportunity for investors willing to take a contrarian bet.

The bull case lies in constrained supply and rapidly rising prices. ESG considerations have limited capital investment in new oil production. But robust demand has returned as pandemic impacts recede. This supply/demand imbalance has sent oil above $80 per barrel.

Day rates for offshore rigs are soaring as utilization rates stick near 90%. However, shipyards are focused on liquefied natural gas, not building fresh drilling ships. That means supply can’t catch up to growing demand in a hurry.

This grants pricing power to rig owners. Valaris, Noble, and Weatherford have emerged from bankruptcy with pristine balance sheets. Meanwhile Transocean boasts the most high-specification rigs, positioning it to profit from climbing day rates.

Yet valuations look disconnected from fundamentals. Offshore drillers trade at up to an 80% discount to replacement value, signaling the market doubts their potential. But conditions point to further gains.

Why Energy Could Shine for Investors

Beyond compelling fundamentals, two key reasons make energy stocks stand out right now:

  1. Inflation hedge – Energy equities have historically held up well during inflationary periods. With prices still running hot, oil stocks may offer protection if high inflation persists.
  2. Contrarian bet – Energy is the most hated sector this year, with heavy net outflows from funds. That sets up a chance to buy low while others are selling.

To be clear, the long-term peak oil argument holds merits. The global energy transition will likely constrain fossil fuel demand over time. But that shift will take decades to play out.

In the meantime, diminished investment and stiff demand creates room for shares like offshore drillers to run higher. For investors willing to make a contrarian bet, the neglected energy space offers rare value.

ESG Sours Sentiment But Oil Remains Key

What about the ESG push away from fossil fuels? Shift is clearly underway. But hydrocarbons still supply 80% of global energy needs. Realistically, oil and gas will remain vital to powering the world for years to come.

Market sentiment has soured on all things oil. But investors should remember that supply/demand, not narrative, ultimately drives commodity prices. Offshore drillers look primed to benefit from that dynamic.

While oil markets face uncertainty beyond the next decade, conditions now point to upside in left-behind niches like offshore drilling stocks. For investors who see value where others only see headwinds, forgotten energy corners may hold diamonds in the rough.

Take a moment to look at Noble Capital Market’s Energy Industry Report by Senior Research Analyst Michael Heim.

Release – Alvopetro Announces Q3 2023 Dividend of US$0.14 Per Share

Posted on by aweinsoff@channelchek.com

Research News and Market Data on ALOVF

Sep 14, 2023

CALGARY, AB, Sept. 14, 2023 /CNW/ – Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) announces that our Board of Directors has declared a quarterly dividend of US$0.14 per common share, payable in cash on October 13, 2023, to shareholders of record at the close of business on September 29, 2023. This dividend is designated as an “eligible dividend” for Canadian income tax purposes. 

Dividend payments to non-residents of Canada will be subject to withholding taxes at the Canadian statutory rate of 25%.  Shareholders may be entitled to a reduced withholding tax rate under a tax treaty between their country of residence and Canada.  For further information, see Alvopetro’s website at  https://alvopetro.com/Dividends-Non-resident-Shareholders.

Corporate Presentation

Alvopetro’s updated corporate presentation is available on our website at:http://www.alvopetro.com/corporate-presentation. 

Social Media

Follow Alvopetro on our social media channels at the following links:

Twitter – https://twitter.com/AlvopetroEnergyInstagram – https://www.instagram.com/alvopetro/LinkedIn – https://www.linkedin.com/company/alvopetro-energy-ltd

Alvopetro Energy Ltd.’s vision is to become a leading independent upstream and midstream operator in Brazil. Our strategy is to unlock the on-shore natural gas potential in the state of Bahia in Brazil, building off the development of our Caburé and Murucututu natural gas fields and our strategic midstream infrastructure.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

All amounts contained in this new release are in United States dollars, unless otherwise stated and all tabular amounts are in thousands of United States dollars, except as otherwise noted.

Forward-Looking Statements and Cautionary Language. This news release contains “forward-looking information” within the meaning of applicable securities laws. The use of any of the words “will”, “expect”, “intend” and other similar words or expressions are intended to identify forward-looking information. Forward‐looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the expectations discussed in the forward-looking statements. These forward-looking statements reflect current assumptions and expectations regarding future events. Accordingly, when relying on forward-looking statements to make decisions, Alvopetro cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties. More particularly and without limitation, this news release contains forward-looking information concerning the Company’s dividends, plans for dividends in the future, the timing and amount of such dividends and the expected tax treatment thereof. The forward‐looking statements are based on certain key expectations and assumptions made by Alvopetro, including but not limited to equipment availability, the timing of regulatory licenses and approvals, the success of future drilling, completion, testing, recompletion and development activities, the outlook for commodity markets and ability to access capital markets, the impact of global pandemics and other significant worldwide events, the performance of producing wells and reservoirs, well development and operating performance, foreign exchange rates, general economic and business conditions, weather and access to drilling locations, the availability and cost of labour and services, environmental regulation, including regulation relating to hydraulic fracturing and stimulation, the ability to monetize hydrocarbons discovered, expectations regarding Alvopetro’s working interest in properties and the outcome of any redeterminations, the regulatory and legal environment and other risks associated with oil and gas operations. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Actual results achieved during the forecast period will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. In addition, the declaration, timing, amount and payment of future dividends remain at the discretion of the Board of Directors. Although Alvopetro believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because Alvopetro can give no assurance that it will prove to be correct. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on factors that could affect the operations or financial results of Alvopetro are included in our annual information form which may be accessed on Alvopetro’s SEDAR+ profile at www.sedar.com. The forward-looking information contained in this news release is made as of the date hereof and Alvopetro undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

SOURCE Alvopetro Energy Ltd.

Carbon Credit Firm DevvStream To Go Public In $212M SPAC Merger

Posted on by slightbourne@noblecapitalmarkets.com

DevvStream Holdings, a leading developer of carbon offset projects and associated credit streams, has signed a definitive agreement to go public through a merger with special purpose acquisition company (SPAC) Focus Impact Acquisition Corp.

The combined company will be named DevvStream Corp. and is expected to list on the Nasdaq under ticker “DEVS”. The deal values DevvStream at an implied $212.8 million enterprise value.

Founded in 2021, Vancouver-based DevvStream partners with corporations and governments on sustainability initiatives. It brings projects generating carbon credits to market by co-investing or providing technical services in exchange for a share of long-term credit streams.

This capital-light model requires little upfront investment for participation in the fast-growing carbon markets. DevvStream estimates its current portfolio will generate $13 million in net revenue in 2024 and $55 million in 2025 as projects are expanded.

DevvStream participates in both regulated compliance markets and the rapidly expanding voluntary carbon credit market. The voluntary market hit $2 billion in 2022 but could reach up to $250 billion by 2030 according to estimates.

The merger will provide further expansion capital to DevvStream as it scales its portfolio of emissions-reducing projects. Focus Impact raised $172.5 million in its May 2021 IPO into a trust that will go to the combined company after redemptions.

According to DevvStream CEO Sunny Trinh, “Entering into a definitive agreement to merge with Focus Impact is a significant step towards accelerating the growth of our differentiated technology-based approach to carbon markets.”

He added that enhancing transparency and reliability in voluntary markets in particular can help drive participation and meaningful emissions reductions.

Focus Impact CEO Carl Stanton said the proposed merger “presents a significant opportunity to create substantial value for our shareholders.” He cited DevvStream’s systematic approach to carbon project development and blockchain-enabled tracking.

The transaction is expected to close in the first half of 2023, subject to shareholder approvals and other customary closing conditions. Upon completion, DevvStream will be listed on the Nasdaq under ticker “DEVS”.

With global momentum building around carbon markets and climate action, the merger comes at an opportune time. DevvStream is now poised to capitalize on surging demand as both corporations and governments seek to curb emissions.

Uranium Bull Run Continues with Prices Hitting New Highs

Posted on by slightbourne@noblecapitalmarkets.com

Uranium prices have entered a new bull market in 2023, surging 20% so far this year. The nuclear fuel recently hit $60 per pound for the first time in over a decade. This milestone comes on the back of rosier demand forecasts from the World Nuclear Association (WNA) and vastly outperforms other metals markets.

The WNA recently released its biennial report at the World Nuclear Symposium in London. The report provides insights into future uranium demand, underscoring the role nuclear power will play in the global energy transition. It predicts world reactor requirements for uranium will reach almost 130,000 tonnes by 2040, up from 65,650 tonnes in 2023.

Even the WNA’s most conservative projection of 87,000 tonnes in 2040 represents robust demand growth. This is driven by an expected expansion of nuclear capacity from 391 gigawatts currently to 686 gigawatts by 2040 under its base case scenario. The bulk of new reactors will be located in China, which is aggressively decarbonizing by replacing coal plants with nuclear.

China has 23 reactors under construction, 23 more planned, and 168 proposed to add to its existing fleet of 53 reactors. The WNA report increased its overall uranium demand growth projections to 4.1% annually through 2040, up from 3.1% in its 2021 forecast.

This surging demand presents a huge opportunity for growth in the uranium mining sector. As the market transitions from oversupply to undersupply, uranium companies are poised to benefit tremendously. Their revenues, earnings, and valuations could rapidly improve as prices rise. Many junior miners could become acquisition targets for larger producers looking to add resources.

Take a moment to take a look at more uranium and vanadium and mining companies by viewing Michael Heim’s coverage list.

A key driver of demand is the accelerated adoption of small modular reactors (SMRs). These compact, modular designs allow nuclear plants to be constructed faster and cheaper. The WNA sees SMRs reaching 31 gigawatts of installed capacity by 2040, significantly boosting uranium demand. However, forecasts remain relatively conservative given SMRs’ potential applications in shipping, data centers, and other sectors.

According to BMO Capital Markets, SMRs could play a pivotal role in powering remote mines looking to replace diesel generators with cleaner energy solutions. With ample space and ideal climates, mines are adding solar and wind power. But in colder regions like Canada, SMRs may be the only viable zero-carbon option.

In much the same way platinum miners are testing hydrogen trucks onsite, uranium producers could pioneer SMR installations at operations. This would create new demand from uranium miners themselves. BMO estimates SMR capacity could reach 58 gigawatts by 2030, or around 10% of total nuclear generation.

While secondary supplies like reprocessed fuel and stockpiles have bridged the supply-demand gap for decades, the WNA report acknowledges these inventories are diminishing. With roughly 3.7 years of reactor requirements in current stockpiles, the WNA projects secondary supplies will fall from 11-14% of demand now to just 4-11% by 2050.

This decline underscores the need for new mine supply to meet growing reactor demand in the long run. With secondary sources drying up, uranium prices must rise to incentivize investment in expansion and new projects. The uranium bull run still appears to be in its early innings, as rosier demand forecasts confront constrained mine supply. Nuclear energy’s role in global decarbonization efforts continues to expand, brightening the outlook for uranium markets and uranium mining companies.

Apple Goes Green: Tech Giant Unveils First Carbon Neutral Lineup

Posted on by slightbourne@noblecapitalmarkets.com

Apple just recently announced its first carbon neutral products – the new Apple Watch lineup. This achievement comes from innovations across Apple’s global supply chain over years to dramatically reduce emissions. It’s a major milestone toward Apple’s 2030 goal to make all products carbon neutral.

To become carbon neutral, Apple steeply cut watch emissions first via clean energy, recycled materials, and low-emission transportation. Any remaining emissions are addressed with high-quality carbon credits from nature-based projects like forests.

This shift demonstrates how companies can decarbonize operations and products through renewable electricity, material innovation, and carbon removal. If adopted widely, these strategies can significantly benefit the environment.

Apple’s progress was enabled by large investments in wind and solar energy. Their actions helped create over 15 gigawatts of new clean power. Scaling renewable energy is crucial for the transition away from fossil fuels.

Take a moment to look at more natural resources and mining companies by viewing Mark Reichman’s coverage list.

The company also pioneered using recycled metals and fibers in devices. This reduces the need for carbon-intensive mining and materials manufacturing. Broad adoption would lessen impacts on natural resources.

Additionally, Apple funded carbon removal through forest restoration. This supports nature-based solutions to sequester CO2. The climate impact could grow exponentially if more firms financed conservation projects.

In summary, Apple’s carbon neutral product milestone highlights the environmental promise of renewable energy, the circular economy, and carbon removal. It demonstrates the potential for these strategies to transform manufacturing, conserve natural resources, and fight climate change.

Mining Company Auxico Acquires Majority Stake in Bolivian Mine Rich in Key Minerals

Posted on by slightbourne@noblecapitalmarkets.com

Auxico Resources, a Canadian mining company, recently signed a Memorandum of Understanding (MOU) to acquire an 85% equity interest in the past-producing El Benton niobium and tantalum mine located in Bolivia. This strategic acquisition provides Auxico with a rich source of critical minerals essential for emerging technologies.

Under the MOU, Auxico will make initial payments totaling $140,000 to the current owner of El Benton. Auxico will then hold majority 85% control of the mine as part of a joint venture arrangement.

The El Benton mine and adjacent Monte Verde concessions cover over 700 hectares in a proven mineral-rich region of Bolivia. Historic samples show valuable concentrations of niobium, tantalum, lithium, and rare earth elements.

By securing rights to El Benton, Auxico aims to restart production of niobium and tantalum concentrates. The company also plans to define the lithium potential and recover other critical minerals using advanced ultrasound extraction methods.

Gaining access to El Benton’s strategic mineral deposits boosts Auxico’s role as a major supplier of scarce metals needed for electric vehicle batteries, renewable energy infrastructure, electronics, and defense applications.

Owning the majority interest allows Auxico to implement efficient, sustainable extraction techniques at El Benton. This includes removing radioactive elements from concentrates using the Company’s proprietary ultrasound technology.

In summary, the deal gives Auxico substantial equity control of a mine rich in critical and rare earth minerals. Restarting efficient production can provide crucial supply to high-tech industries while generating profits.

Take a moment to look at more natural resources and mining companies by viewing Mark Reichman’s coverage list.