Oil Prices Tumble Over 5% as Israel Unlikely to Target Iran’s Oil Industry

Key Points:
– Oil futures dropped over 5% as fears of Israeli attacks on Iran’s oil facilities eased.
– Weak demand in China and OPEC’s downward revision of oil forecasts are adding pressure on crude prices.
– The International Energy Agency (IEA) signals a surplus in global oil supply, further dampening the market.

Oil prices fell sharply on Tuesday, dropping more than 5%, as geopolitical concerns surrounding Israel and Iran’s oil industry began to ease. Initially, fears of potential supply disruptions spiked oil prices after Iran launched a missile attack on Israel earlier this month, but the market has now calmed as Israel is not expected to strike Iran’s oil infrastructure.

At the same time, the International Energy Agency (IEA) has weighed in, signaling that its member nations are prepared to take action if any supply disruption occurs in the Middle East. For now, however, global oil supply remains steady, and with the absence of major disruptions, the market faces a likely surplus in the new year.

As of Tuesday morning, energy prices were reacting to both the geopolitical environment and broader market dynamics:

  • West Texas Intermediate (WTI) November futures fell by $3.74, or 5.07%, to $70.08 per barrel. Year to date, U.S. crude oil has seen a 2% decline.
  • Brent crude, the global benchmark, fell by $3.67, or 4.7%, to $73.79 per barrel, continuing its year-to-date drop of about 4%.
  • Gasoline prices also dipped, with the November contract down 4.47% to $2.014 per gallon, bringing year-to-date losses to nearly 4%.
  • Natural gas was the exception, seeing a slight rise of 1.36% to $2.528 per thousand cubic feet.

The significant drop in crude prices reflects more than just geopolitics. The oil market has been facing weakening demand, particularly from China, and ongoing concerns about a global economic slowdown. OPEC’s recent decision to cut its 2024 oil demand forecast for the third consecutive month has further contributed to the pressure on oil prices.

China’s oil consumption has been particularly weak in recent months, with the IEA reporting that Chinese demand dropped by 500,000 barrels per day (bpd) in August. This marked the fourth consecutive monthly decline, adding to the overall bearish sentiment surrounding global oil demand.

The broader outlook for 2024 and 2025 also suggests slower demand growth compared to the post-pandemic recovery. The IEA projects global oil demand to increase by just under 900,000 bpd in 2024 and 1 million bpd in 2025, which is a noticeable drop from the 2 million bpd growth seen in the previous years.

At the same time, crude production in the Americas, particularly the U.S., is on track to grow. According to the IEA, American-led production will increase by 1.5 million bpd this year and next, further contributing to the global supply glut.

For the third consecutive month, OPEC has revised its oil demand forecast downward, reflecting concerns about slower economic growth and subdued consumption in major markets like China. The cuts come as the cartel faces pressure to balance supply with softer global demand.

As a result of these factors, analysts now expect the oil market to shift its focus away from geopolitical fears and towards demand weakness, which could define the market’s trajectory in the months ahead. While geopolitical events may continue to inject short-term volatility, the more significant concern remains the fundamental imbalance between supply and demand.

Oil Surges as US Warns of Potential Iran Attack on Israel, Stoking Fears of Supply Disruption

Key Points:
– Oil prices jump 4% as Iran reportedly prepares to strike Israel within hours.
– Middle East tensions raise concerns about global oil supply, pushing prices higher.
– Investors brace for volatility amid potential disruptions in one of the world’s largest oil-producing regions.

Oil prices surged on Tuesday following warnings from the US that Iran is preparing to launch an attack on Israel within the next 12 hours. This development has significantly heightened concerns over possible disruptions to oil supplies in the Middle East, a region that produces a third of the world’s crude oil.

West Texas Intermediate (WTI) crude saw an immediate increase of nearly 4%, reaching close to $71 a barrel, while Brent crude, the global benchmark, climbed above $74. The potential conflict in this geopolitically critical area may lead to further price hikes if tensions escalate and oil output is impacted. Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC), was the ninth-largest oil producer in 2023, pumping over 3.3 million barrels a day as recently as August.

“The key factor for crude will be whether Israeli defense systems are able to shield against the attack and what subsequent actions Israel might take,” said Rebecca Babin, senior energy trader at CIBC Private Wealth. “In the near term, we could see a few more dollars of short covering in crude.”

This possible disruption marks the most significant threat to oil markets since Russia’s invasion of Ukraine, an event that sent global markets into turmoil last year. Surging oil prices are likely to become a significant concern for consumers and governments, especially in countries like the US where gasoline prices are a political flashpoint. Both major presidential candidates are expected to focus on preventing a further spike in gas prices, with the cost of oil playing a central role in domestic economic debates.

The geopolitical threat comes at a time when oil traders had been betting heavily on bearish market trends, largely driven by concerns of weakening demand growth. The elevated short positions have left the market vulnerable to sharp upward movements if these bearish bets need to be unwound quickly in response to rising tensions in the Middle East.

Concerns about the Middle East have been escalating following the death of Hezbollah leader Hassan Nasrallah last week. In retaliation, Israel has launched airstrikes on Beirut and initiated “targeted ground raids.” As the region braces for further conflict, investors are anticipating potential volatility in the oil market, with Brent crude volatility indices reaching their highest levels since January.

Previously, oil prices had dropped in recent months amid expectations that OPEC+ would increase production just as non-OPEC nations, including the US, ramped up their output. Additionally, China’s weakening demand, as the world’s largest crude importer, has added downward pressure on prices. However, this latest geopolitical flare-up could reverse these trends, injecting fresh instability into global energy markets.

As investors brace for further developments, the oil market remains on edge, with any direct involvement from Iran likely to further disrupt global supplies and drive prices higher.

New High-Pressure Drilling Technology Opens Opportunities in Gulf of Mexico Oil Exploration

The oil industry is abuzz with excitement as groundbreaking high-pressure drilling technology promises to unlock billions of barrels of previously inaccessible crude in the Gulf of Mexico. This development could spell significant opportunities for investors, particularly those interested in small cap companies involved in offshore drilling and related technologies.

Chevron recently announced the successful first oil production from its Anchor project, a deepwater development utilizing innovative high-pressure technology. This $5.7 billion project represents a major technological milestone, as it’s capable of safely operating at pressures up to 20,000 pounds per square inch (psi) – a third higher than any previous well. The implications of this breakthrough are substantial. Analysts estimate that this technology could put up to 5 billion barrels of previously unreachable oil into production globally, with about 2 billion barrels in the U.S. Gulf of Mexico alone. This volume equates to approximately 50 days of current global oil production, highlighting the significance of the advancement.

For small cap investors, this development opens up several potential avenues. Equipment manufacturers like NOV and Dril-Quip, which provided specially designed equipment for the Anchor project, could see increased demand for their high-pressure capable products. Offshore drilling contractors operating advanced drillships, such as Transocean, may benefit from increased activity in ultra-high pressure fields. Smaller exploration and production companies with Gulf of Mexico assets could potentially reassess their portfolios for high-pressure opportunities previously considered uneconomical. Additionally, companies offering specialized services for high-pressure, high-temperature (HPHT) environments may see growing demand.

The new technology is expected to be a significant driver of production growth in the Gulf of Mexico. Wood Mackenzie, a research firm, projects a nearly 30% increase in deepwater output from 2023-2026, potentially reaching 2.7 million barrels of oil equivalent per day. This growth could help return the region to its peak output levels, last seen in 2019. Moreover, the applications of this technology extend beyond the Gulf of Mexico. Similar high-pressure, high-temperature oil fields that could benefit from this technology are found off the coasts of Brazil, Angola, and Nigeria. Brazil, in particular, with its complex offshore environments, is seen as a prime candidate for future application of this technology.

However, investors should be aware of potential risks and challenges. The regulatory environment, including the pace of offshore lease auctions and environmental regulations, can significantly impact future development. Operating in such high-pressure environments carries inherent risks and technical difficulties that companies must navigate. The economic viability of these projects remains dependent on global oil prices, adding an element of market risk. Furthermore, increased offshore drilling activity may face opposition from environmental groups, particularly in light of past disasters like the Deepwater Horizon spill.

Despite these challenges, the advent of this new high-pressure drilling technology represents a significant opportunity for the oil industry and investors alike. While major oil companies will likely lead the charge, savvy small cap investors may find promising opportunities in the ecosystem of companies supporting this technological revolution in offshore drilling. These could include specialized equipment manufacturers, innovative service providers, and smaller E&P companies with strategic Gulf of Mexico assets.

In conclusion, the high-pressure drilling breakthrough in the Gulf of Mexico marks a new chapter in offshore oil exploration. It offers the potential to tap into vast previously unreachable reserves, driving production growth and technological innovation. For small cap investors willing to navigate the complexities and risks of the offshore oil sector, this development could uncover valuable investment opportunities. As always, thorough due diligence is essential when considering investments in this dynamic and complex sector, but for those who choose wisely, the rewards could be substantial.

Crude Oil Prices Surge Amid Middle East Tensions and Global Market Dynamics

Key Points:
– U.S. crude oil prices rally above $80 per barrel due to escalating Middle East tensions.
– Pentagon deploys additional forces to the region, anticipating potential Iranian attack on Israel.
– OPEC revises global demand forecast downward, citing economic uncertainties in China.

In a dramatic turn of events, the global oil market witnessed a significant uptick as U.S. crude oil prices surged past the $80 per barrel mark on Monday. This rally, largely fueled by growing geopolitical tensions in the Middle East, has sent ripples through the energy sector and financial markets alike.

The catalyst for this price surge appears to be the Pentagon’s decision to dispatch additional military forces to the Middle East. Defense Secretary Lloyd Austin ordered an accelerated deployment of a carrier strike group, including advanced F-35 warplanes, along with a guided-missile submarine to the region. This move comes in response to intelligence suggesting a potential Iranian attack on Israel, heightening the already tense situation in the area.

Israel has reportedly placed its military on high alert, according to sources familiar with the matter. The nation has been bracing for potential strikes from Iran and the Hezbollah militia for nearly two weeks, following the assassination of a Hamas leader in Tehran. Israeli intelligence assessments indicate that Iran might respond directly to the killing within days, adding fuel to the geopolitical fire.

The West Texas Intermediate (WTI) September contract closed at $80.06 per barrel, marking a substantial increase of $3.22 or 4.19%. This push has contributed to an impressive year-to-date gain of 11.7% for U.S. crude oil. Similarly, the global benchmark, Brent October contract, settled at $82.30 per barrel, up by $2.64 or 3.31%, bringing its year-to-date increase to 6.8%.

Interestingly, this bullish trend in oil prices persists despite OPEC’s recent downward revision of its global demand growth forecast. The organization reduced its projection by 135,000 barrels per day, citing softening consumption in China as a primary factor. This juxtaposition of rising prices amid lowered demand forecasts underscores the complex interplay of geopolitical risks and market fundamentals in the oil industry.

Market analysts, including those at UBS, are advising clients to consider allocations to oil and gold as potential safeguards against further escalation of geopolitical tensions. Phil Flynn, a senior market analyst at the Price Futures Group, noted the strong market reaction to increased geopolitical risks, even as OPEC expresses concerns about demand growth.

The current market dynamics also reflect a broader economic context. Last week, U.S. crude oil prices snapped a four-week decline, finishing more than 4% higher. This reversal coincided with a recovery in the stock market following a brief sell-off triggered by recession fears and the Bank of Japan’s slight interest rate adjustment.

As the situation continues to evolve, market participants remain vigilant, closely monitoring both geopolitical developments and economic indicators. The interplay between supply concerns, demand uncertainties, and geopolitical risks continues to shape the landscape of global oil markets, promising continued volatility and opportunities for strategic positioning in the energy sector.

Take a moment to take a look at more emerging growth energy companies by looking at Noble Capital Markets Research Analyst Mark Reichman’s coverage list.

Oil Prices Bounce Back Amid Geopolitical Risks and Economic Resilience

Key Points:
– Oil prices rise amid concerns over Middle East instability and positive US economic data
– Tight global supply and potential weather disruptions add further upside risk
– Investors should monitor geopolitical developments and economic indicators closely

As investors closely track the volatile oil markets, the latest developments have painted a complex picture, with geopolitical tensions and economic resilience emerging as the key drivers behind the recent price rebound. The oil benchmarks, Brent and WTI, have staged a recovery after hitting an eight-month low earlier this week, signaling the industry’s sensitivity to both supply-side and demand-side factors.

The catalyst for the price increase was a combination of heightened tensions in the Middle East and positive economic data from the United States. The killing of senior members of militant groups Hamas and Hezbollah last week has raised the specter of potential retaliatory strikes by Iran against Israel, stoking concerns over oil supply from the world’s largest producing region. “It will spike the price of crude oil if there is an Iranian retaliation on a large scale and I think that is what everyone is most worried about,” said Tim Snyder, chief economist at Matador Economics.

Compounding these geopolitical risks, the latest US job market data provided a positive surprise, easing fears of a wider economic slowdown and its potential impact on oil demand. The number of Americans filing new applications for unemployment benefits fell more than expected last week, suggesting the labor market remains robust despite recessionary headwinds. “The latest US data on jobless claims indicates still a growing U.S. economy, reducing some of the oil demand concerns,” said UBS analyst Giovanni Staunovo.

Furthermore, the Energy Information Administration reported a significant 3.7 million barrel drop in US crude inventories last week, marking the sixth consecutive weekly decline to six-month lows. This tightening of global supply, coupled with the potential for weather-related disruptions during the hurricane season, has added to the upside pressure on oil prices.

Looking ahead, analysts at Citi believe there is a possibility of oil prices bouncing to the low to mid-$80s per barrel for Brent, citing “still-tight balances through August, heightened geopolitical risks across North Africa and the Middle East, the possibility of weather-related disruptions through hurricane season and light managed money positioning.”

For investors, navigating the oil market landscape requires a careful balance of monitoring both geopolitical developments and economic indicators. The escalating tensions in the Middle East, coupled with the resilience of the US economy, have underscored the complex interplay between supply-side and demand-side factors that ultimately shape the trajectory of oil prices.

As the industry continues to grapple with these dynamics, investors should remain vigilant in assessing the potential risks and opportunities that may arise. Close attention to factors such as inventory levels, weather patterns, and global economic trends will be crucial in making informed investment decisions in the volatile oil market.

InPlay Oil (IPOOF) – Operating and financial results in line with expectations


Thursday, March 14, 2024

InPlay Oil is a junior oil and gas exploration and production company with operations in Alberta focused on light oil production. The company operates long-lived, low-decline properties with drilling development and enhanced oil recovery potential as well as undeveloped lands with exploration possibilities. The common shares of InPlay trade on the Toronto Stock Exchange under the symbol IPO and the OTCQX Exchange under the symbol IPOOF.

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.

Quarterly production in line with recently reduced guidance. InPlay reported 2023 production volume of 9,025 boe/day consistent with guidance of 9,000-9,100 boe/day. We had expressed concern that the previous decline in guidance reflected a sharper production decline curve than previously expected. Management assures that the decline curve has not changed and the decline reflects a shift towards drilling oil wells which have a lower initial production rate than gas wells. 

InPlay released a reserve report for the 2023 year end. The reserve report shows a modest reduction in reserves and reserve value implying a reserve replacement rate slightly below 1.0 times. The calculation is somewhat complicated by changing assumptions regarding assumed energy pricing and recoverability. The report indicated a finding, development and acquisition cost of $23.36/boe which is attractive compared to current prices.


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*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. 

Drivers Brace for Higher Gas Prices as Oil Costs Spike

Motorists across the nation are once again feeling the pinch at the gas pump as oil prices have climbed sharply in recent months. After a brief reprieve earlier this year, the national average price for a gallon of regular gasoline has risen over 18 cents in just the last month to around $3.40 according to AAA data. Experts warn that prices could jump another 10-15 cents over the next couple of weeks alone.

The primary culprit behind the surge is the rising cost of crude oil. Both the U.S. benchmark West Texas Intermediate and the global Brent crude have seen prices spike, with WTI crude now hovering around $79 per barrel and Brent north of $83 per barrel. Just a few months ago, WTI started 2024 just over $70 a barrel.

As crude gets more expensive for refiners to purchase, the costs get passed along to consumers in the form of higher gasoline prices. Tighter supplies and seasonal factors are also contributing to price increases at the pump.

“This week, Gulf Coast refiners began transitioning to more expensive summer blend gasoline, which accounts for nearly 50% of the nation’s refining capacity,” said Andy Lipow of Lipow Oil Associates. “That switch means higher prices are ahead.”

California drivers are being hit particularly hard, with the statewide average price per gallon already at a lofty $4.88 as of Wednesday. Refinery maintenance, lower inventory levels, and the changeover to summer blends have caused California gas prices to jump around 25 cents in recent weeks according to Lipow.

The overall lower supply situation is being exacerbated by disruptions at some key refineries. For example, BP’s massive Whiting refinery in Indiana, the largest in the Midwest, is still recovering from a recent power outage caused by cold weather that impacted production.

Historically, spring represents the start of the annual rise in gas prices as refiners transition to summer blends and demand picks up with more drivers hitting the road after the winter months. Consumer demand typically peaks during summer’s peak driving season.

While higher energy costs were one of the main factors driving an unexpected increase in inflation in February, rising gas prices take an oversized toll on household budgets. The latest Consumer Price Index data showed the gasoline index spiked 3.8% last month alone after declining in January.

Analysts caution there is likely more pain at the pump on the horizon with the summer driving season still ahead. Unless crude oil prices reverse course or refining capacity increases, American drivers can expect gasoline to remain unusually expensive compared to this time last year.

“With the industry having less refining capacity and the economy remaining relatively strong, I expect retail gasoline prices to set new records across the nation in the coming months,” Lipow stated.

Whether taking a road trip for spring break or commuting to and from work and activities, consumers have little choice but to absorb the impact of elevated gas prices cutting into other spending. Budgets will be further squeezed if crude oil costs remain stubbornly high and gasoline supply remains tight.

Alvopetro Energy (ALVOF) – Production Volumes Rebounding Nicely


Thursday, December 07, 2023

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 natural gas field and our strategic midstream infrastructure.

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.

Alvopetro released November production volumes that accelerated its recent upward trend. Alvopetro reported November gas production of 12.9 mmcfe/day (up from 10.6 mmcfe/day in October), oil production of 15 boe/day (vs. 8 boe/day), and NGL production of 105 boe/day (up from 67 boe/day). Production was depressed over the summer due to allocation issues with a joint venture partner and demand issues from Bahia Gas, Alvopetro’s primary natural gas customer. Total production was 2,264 boe/day in November.

Total production remains below peak levels but is approaching that level quickly. Production peaked at 2,771 MBOE/day in the quarter ended March 31, 2023. However, with production rising 425 MBOE/day in the most recent month, it is quickly returning to past production levels. Importantly, oil and natural gas production is the fastest growing component of Alvopetro energy portfolio providing additional diversification and lessening its reliance on Bahia Gas.


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*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. 

Alvopetro Energy (ALVOF) – Results near expectations with volumes preannounced and pricing set


Thursday, November 09, 2023

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 natural gas field and our strategic midstream infrastructure.

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.

Alvopetro reported 2023-3Q net income of $5.8 million or $0.15 per diluted share. Results were slightly below our projections for net income of $6.3 million, or $0.17 per share. Sales were $12.3 million versus our $11.8 million estimate. With sales volume preannounced on a monthly basis and natural gas prices (95% of sales) preset by Alvopetro’s Gas Sales Agreement, there is little variance to expectations.

Production costs per unit rose explaining the slightly lower-than-expected results. Production expenses per barrel of oil equivalent (BOE) produced were $6.52 versus $3.34 last year and $5.77 last quarter. We attribute the rise to lower production volume and do not view it as an area of concern. Operating netbacks (realized prices less royalties and production costs) were $70.34 per BOE up from $59.83 last year and $67.46 last quarter. Higher netbacks reflect a natural gas price reset in February and August that increased pricing as well as a decrease in royalty costs.


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*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. 

Alvopetro Energy (ALVOF) – Production takes a turn upward


Tuesday, November 07, 2023

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 natural gas field and our strategic midstream infrastructure.

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.

Production in the month of October was 1,839 boe/d, up from 1,203 boe/d in September. Production has been anemic in recent months due to partner nomination issues in the Cabure field and demand issues by Bahia Gas. The production increase, and the fact that it largely came from the Cabure field, is a positive indication that Alvopetro’s growth plans are getting back on track. Management has set a near-term goal of reaching 3,000 boe/d and a long-term goal of 5,833 boe/d.

Speaking of growth, results from a new oil well look positive. Alvopetro completed the BL-6 well in the Bom Lugar field. The well is averaging 13 boe/d, more that all other existing oil production. The Bom Lugar field could be an important field for the company as it seeks to expand operations and reduce dependency upon natural gas sales to Bahia Gas. We believe the success of the BL-6 well will lead to management putting additional resources into the Bom Lugar field.


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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. 

Alvopetro Energy (ALVOF) – Gas sales in September take a big drop


Wednesday, October 11, 2023

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 natural gas field and our strategic midstream infrastructure.

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.

Gas sales declined due to a temporary reduction in demand. Gas sales to Bahiagas in September averaged 6.8 MMcf/d down 35% from August sales and well below peak sales of 15.8 MMcf/d in the March quarter. Gas sales were below take or pay agreements by 1.2 MMcf/d, which will be treated as deferred revenue. Gas sales had been declining in recent months because Alvopetro’s joint venture partner in its primary field had increased its nominations for gas sales following the start-up of its plant. The decline in September is related to lower demand and comes in addition to nomination issues.

Management views the decline as temporary and is working to increase production in 100% owned fields. As we have indicated before, increased partner nominations will result in lower partner nominations in the latter years of  well lives. In addition, Alvopetro is making progress drilling new wells that do not have nomination issues. Regarding the drop in demand, we would remind investors that the city of Bahia is a vibrant growing city that has limited gas supply options beyond Alvopetro. We are not concerned with a one-month decline in demand but recommend investors monitor demand issues going forward.


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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. 

Alliance Resource Partners (ARLP) – Embarking on a New Era of Growth


Wednesday, February 01, 2023

ARLP is a diversified natural resource company that generates operating and royalty income from coal produced by its mining complexes and royalty income from mineral interests it owns in strategic oil & gas producing regions in the United States, primarily the Permian, Anadarko and Williston basins. ARLP currently produces coal from seven mining complexes its subsidiaries operate in Illinois, Indiana, Kentucky, Maryland and West Virginia. ARLP also operates a coal loading terminal on the Ohio River at Mount Vernon, Indiana. ARLP markets its coal production to major domestic and international utilities and industrial users and is currently the second largest coal producer in the eastern United States. In addition, ARLP is positioning itself as an energy provider for the future by leveraging its core technology and operating competencies to make strategic investments in the fast growing energy and infrastructure transition.

Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.

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

Another stellar quarter. Alliance reported fourth quarter EBITDA and earnings per unit (EPU) of $293.9 million and $1.63, respectively, compared to $130.2 million and $0.40 during the prior year period. We had forecast net income and EPU of $272.8 million and $1.42. The partnership’s coal and oil & gas royalties segments performed stronger than expected due to higher volumes and commodity prices.  

Updating estimates. We have increased our 2023 EBITDA and earnings per unit estimates to $1.18 billion and $5.90, respectively, from $1.12 billion and $5.85. Based on contracted coal sales volumes in 2023 and 2024, the outlook for cash flow growth appears favorable. Within the oil and gas royalty segment, volumes are expected to benefit from recent acquisitions, including the purchase of 2,682 net oil and gas royalty acres in the Permian Basin which is expected to close shortly with an effective date of January 1, 2023. 


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*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. 

Permex Petroleum (OILCD) – Permex held a call updating investors


Tuesday, January 24, 2023

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

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

Production from first drilled well is coming. The Eoff PPC #3 well in the Breedlove Field was completed in October and is going through a Flowback Recovery Period (removal of liquids). It was shut down due to freezing temperatures. Management expects full production by the end of February and will disclose flow rates then. The company hinted that it will probably go forward with converting the well to a horizontal well at an additional $1.1 million cost.

Cash is tight. Permex’s cash position is down to $2.5 million, not enough to drill another well. The company is opposed to taking on debt (which we agree with) because debt is the Achilles heel of start-up energy companies should energy prices decline. The company discussed selling acreage but indicated that it neither has a large contiguous field to sell (outside of its Breedlove Field position) nor does it have small, producing property that might be of interest to energy companies. Management would like to issue stock but not at the current stock price of 4% of net asset value.


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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.