Oklahoma Oil & Gas Firm's 'Near-Term Selloff Creates Long-term Opportunity'

Source: Streetwise Reports 05/23/2019 The likely reasons for this energy company’s recent stock activity and underperformance are discussed in a Stifel report. In a May 17 research note, Stifel analyst Derrick Whitfield reported that a recent selloff and roughly 30% relative underperformance of Roan Resources Inc.’s (ROAN:NYSE) stock translate into a buying opportunity for investors. “We are not concerned with Roan’s liquidity as we project the company to be free cash flow neutral by year-end with growing production,” he added. Yet, Stifel lowered its target price on the energy firm to $11 per share from $13, which compares to its current stock price of $2.83 per share. The selloff occurred after the company management’s conference call on May 14 and Q1/19 investor presentation the next day, during which it “disclosed several impactful developments,” relayed Whitfield. For one, Roan’s executive chairman of the board Joseph Mills expressed during the call the board’s unhappiness with Roan’s performance in 2018 and “outlined a couple of material strategic missteps by management,” Whitfield indicated. For example, the decision to expand to eight rigs was far too aggressive for a company of Roan’s scale and maturity, according to Mills. About 10 drilled but uncompleted wells were spaced too tightly and therefore underperforming. Consequently, for this year’s drilling and completion operations, Mills indicated that Roan will space the wells at “5–8 WPS and target completions for a two-mile lateral with 30–45 stages per well, 1,500–2,500 pounds per foot and 8–16 cluster per stage.” While correcting for 2018’s … Continue reading

First Cobalt Corp. and Glencore Sign MOU on Cobalt Refinery

Source: Peter Epstein for Streetwise Reports 05/23/2019 If the agreement to get the North American cobalt refinery up and running is finalized, sector expert Peter Epstein believes it could be transformative for the Canadian company and its investors. This is big, really big. I can’t say it’s a surprise that Glencore AG might want to partner with First Cobalt Corp. (FCC:TSX.V; FTSSF:OTCQX; FCC:ASX), but it would be by far the best possible outcome for management’s strategic review of its 100%-owned refinery in Ontario. Shareholders and prospective investors were understandably growing nervous about First Cobalt’s ability to deliver the restart funding with little or no additional equity issuance. Not because of management, because the battery metals sector is a complete disaster. Everyone knows that the cobalt price is down a lot, did you know that vanadium is down 73.5% in six months? This news alone, if this agreement is consummated, it could mark a turning point for select cobalt juniors. [See full press release.] Glencore adds tremendous credibility to First Cobalt’s refinery In addition to the potential for significant revenue (CA$100 million+ at US$20/pound cobalt) and good, very good or great EBITDA (earnings before interest, taxes, depreciation and amortization) margins (depending on the cobalt price), this would open a lotof doors for the company. It would instantly become the premier pure-play, North American cobalt junior, not that there are many left to choose from. First Cobalt could solidify its leading position by acquiring other companies end assets. Might eCobalt Solutions Inc. … Continue reading

Oil & Gas Firm Attracts Acquisition Interest in Its Orogrande Assets

Source: Streetwise Reports 05/21/2019 The energy company noted that the response so far is encouraging. Torchlight Energy Resources Inc. (TRCH:NASDAQ) announced in a news release its efforts to date to attract acquisition interest in its Orogrande Basin assets. Since starting the process in April, management made seven individual presentations to major publicly traded industry corporations that have an enterprise value between $400 million and $100 billion and private equity-backed firms, the names of which remain confidential. “A key focus has been the opportunities of the play as both an oil and gas project in the Wolfcamp/Penn zones and additionally the Barnett/Woodford zones,” Torchlight’s CEO John Brda said in the release. Interest has come from some majors with and others without a significant presence in the Permian Basin. Some of the potential suitors like the project’s conventional opportunities. “We believe that next-round discussions will help identify the best partners for a transaction, accelerate the process and move us to another round of final geoscientific review and capital discussion,” Brda added. Read what other experts are saying about: Torchlight Energy Resources Inc. Sign up for our FREE newsletter at: www.streetwisereports.com/get-news Disclosure: 1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None. 2) The following companies mentioned in this … Continue reading

Oil & Gas Explorer with Texas Assets Rated Outperform

Source: Streetwise Reports 05/19/2019 The energy company’s expectations for the year are addressed in a Raymond James report. In a May 16 research note, analyst John Freeman reported that Raymond James reiterated its Outperform rating on SM Energy Co. (SM:NYSE) after updating its model on the company to incorporate its latest update and management’s comments. Freeman highlighted that SM Energy anticipates and remains committed to generating free cash flow in Q2/19. “Overall, our model puts SM in slightly positive free cash flow territory in the back half of 2019, but 2020 should be the real turning point for the company,” he added. “Likewise, the balance sheet remains at about 3x leverage through 2019 before meaningfully improving in 2020.” About 14 of SM’s wells in the Eagle Ford are slated to come online in Q2/19 versus two that started production in Q1/10. As such, Freeman noted, Raymond James estimated SM Energy will attain an approximate 13% growth in 2019 over that of last year with a capex of $1.07 billion, weighted to H1/19. Similarly, SM’s budget guidance for the year remains at $1–1.07 billion. As for pricing in Q2/19, SM Energy expects it to be weaker in Q2/19 and Q3/19 for crude oil and natural gas due to constrained pipeline capacity for both causing Permian price differentials to expand, Freeman pointed out. However, “hedges on 60–65% of oil and 70–75% of Permian gas should alleviate some of the regional pricing burden.” Raymond James has a $26 per share target price on … Continue reading

Energy Transportation Firm 'Looks to Carry Positive Momentum' Through 2019

Source: Streetwise Reports 05/17/2019 This company’s solid Q1/19 and growth potential were discussed in an iA Securities report. In a May 13 research note, iA Securities analyst Jeremy Rosenfield reported that Enbridge Inc. (ENB:NYSE; ENB:TSX) had a good start to 2019, with its Q1/19 results coming in above expectations. “Solid performance across all business segments” drove Enbridge’s Q1/19, highlighted Rosenfield. The company reported adjusted EBITDA of $3,769 million, higher than iA’s CA$3,353 million projection and consensus’ CA$3,447 million forecast. Adjusted earnings per share was CA$0.81, above iA’s CA$0.79 projection and the Street’s CA$0.73. Discounted cash flow was CA$1.37 per share, also higher than iA’s CA$1.25 estimate and consensus’ CA$1.21. Enbridge’s near-term growth and longer-term potential upside “remain on track,” Rosenfield noted. The company intends to put about CA$16 billion into secured growth projects through 2023 and increase discounted cash flow (DCF) per share at an annual rate of about 5–7%. “We continue to see longer-term potential upside from additional growth initiatives, which could support an extension of the existing DCF/share growth rate, without the need for external equity,” the analyst added. Enbridge reiterated its financial guidance for 2019. Rosenfield concluded that Enbridge offers investors stable earnings and cash flows; visible, low-risk organic growth; attractive income characteristics; and upside. IA Securities has a Buy rating and a CA$60 per share price target on Enbridge Inc. The company’s stock is currently trading at about CA$49.41 per share. Sign up for our FREE newsletter at: www.streetwisereports.com/get-news Disclosure: 1) Doresa Banning compiled this article … Continue reading

Restructuring Plan 'Best Course of Action' for Oil & Gas Company but Bleak for Equity Holders

Source: Streetwise Reports 05/16/2019 The details and effects of the plan, which is in negotiation as part of a Chapter 11 bankruptcy, were explored in a Raymond James report. In a May 12 research note, Raymond James analyst Praveen Narra reported that as part of its Chapter 11 bankruptcy, Weatherford International Ltd. (WFT:NYSE) entered negotiations to restructure its outstanding notes, which will mean “equity holders [will] get minimal recovery of new common stock.” The analyst added that “while it is a challenging decision, we continue to see the prepackaged restructuring as the best course of action.” In the proposed restructuring plan, existing notes would be canceled and exchanged for 99% of the common stock of the reorganized company, or new common stock, along with $1.25 billion of new tranche B senior unsecured notes with a seven-year maturity, to be issued by the reorganized company. This would reduce outstanding debt by $5.85 billion. It also would cancel the existing equity in exchange for 1% ownership of newly issued shares and three-year warrants to purchase 10% of the new common stock. “While the restructuring agreement has yet to be finalized, we would expect the plan to go through in the coming weeks, and see Weatherford shares as holding little value given the low exchange ratio,” Narra commented. In other news, Weatherford reported its Q1/19 adjusted EBITDA was $120 million, below Raymond James’ $209 million estimate and consensus’ $206 million forecast. Earnings per share was $0.18, higher than the $0.12 estimate of Raymond … Continue reading

One of the Remaining Active High-Grade Uranium Exploration Companies in Canada Could Benefit from a Rising Uranium Tide

Source: Streetwise Reports 05/16/2019 The uranium market has been in a long dormant period, but one Canadian company has used the opportunity to pick up assets. From his office in Vancouver, British Columbia, Jordan Trimble oversees the operation of Skyharbour Resources Ltd.’s (SYH:TSX.V; SYHBF:OTCQB) uranium assets in Saskatchewan’s Athabasca Basin—the world’s most reliable source of high-grade yellow metal. The uranium market has lain largely fallow in the aftermath of Fukushima as reactors shut down and uranium prices tumbled from $70/lb to a nadir of $17.75/lb. Scores of juniors bankrupted; majors closed highly productive mines to await more propitious days, meaning the ability to mine uranium profitably. In commodity markets, patience is a virtue since what goes down must come up as economic forces equilibrate supply and demand. Spot market prices for uranium are nudging toward $30, but experts agree that cost-effective mining of the heavy metal globally awaits a price of more than $50/lb. In an interview with Streetwise Reports, Trimble listed several reasons why Skyharbour Resources chose to take advantage of the downturn in uranium prices by acquiring high-quality Athabasca Basin projects at bargain basement values. “During the next decade, global electricity consumption is predicted to rise by 76%. If we are serious about limiting greenhouse gases, then generating carbon-free electricity with nuclear reactors is a must,” Trimble said. “What’s the point of driving a Tesla if you are fueling it with electricity generated from burning coal?” Trimble explained that the low cost of production in uranium-rich regions such … Continue reading

Chevron 'Makes a Wise Decision' in Withdrawing from Bidding War

Source: Streetwise Reports 05/10/2019 Thoughts on the latest development and answers to some related lingering questions are provided in a Raymond James report. In a May 9 research note, Raymond James analyst Pavel Molchanov reported that Chevron Corp. (CVX:NYSE) bowed out of the acquisition battle for Anadarko precipitated by Occidental in early April. “With today’s decision that Chevron will not attempt to outbid Occidental’s $76 per share buyout proposal, Chevron shareholders can breathe a sigh of relief,” Molchanov commented. “This decision by Chevron management is entirely correct,” and by the increase in the company’s stock price, the market seems to agree. Now, he added, shareholders can focus on the company’s strong fundamentals. Molchanov answered the question of whether Chevron will pursue acquiring a different company or asset. First, he highlighted the company does not need to expand its portfolio via large-scale mergers and acquisitions. It has plenty of growth opportunities within its current asset base, including in the Permian, Tengiz, deepwater Gulf of Mexico, Argentina and Kitimat LNG. However, he noted Chevron likely will at some point “buy something,” but “it ought to be bolt-on deals rather than megamergers.” The analyst clarified another uncertain point in indicating Chevron will maintain the annual share buyback increase to $5 billion it announced in early April. “The $1 billion break-up fee to be received from Anadarko (that is to say, Occidental) is helping in this regard,” Molchanov noted, but regardless, free cash flow estimates for the company cover it. Molchanov reiterated Raymond James’ … Continue reading

Energy Company 'Knocking It Out of the Park in Thailand'

Source: Streetwise Reports 05/10/2019 This oil and gas firm’s latest news and future catalysts were covered in a Mackie Research Capital Corp. report. In a May 8 research note, Mackie Research analyst Bill Newman reported that Pan Orient Energy Corp.’s (POE:TSX.V) four wells in the L53-DD field began stable production on April 27, 2019. He highlighted that this latest development increased the company’s net production in Thailand to about 1,400 barrels of oil per day (1,400 bbl/d), more than quadruple the 2018 rate of 250 bbl/d. The analyst provided further production test results from three of those producing wells. L53-DD3 tested 570 bbl/d (285 bbl/d net) of 23.5 degree API oil from the DD/EE sands. “The well has been shut in to allow Pan Orient to test the BB sands in the well,” Newman noted, adding that the testing will begin soon. L53-DD4 tested 729 bbl/d (365 bbl/d net) of 23.8 degree API oil from the BB/CC sands. L53-DD1 tested 514 bbl/d (257 bbl/d net) of 23.5 degree API oil from a new zone, the top of the AA sand. As for the fourth well, L53-DD2, the company restarted production from the BB/CC sands at about 883 bbl/d, or 442 net bbl/d. Newman described what to expect from Pan Orient further out. In late July/early August 2019 in Thailand, the company plans to launch a four- or five-well exploration program, followed in late 2019/early 2020 by the start of another multiple well exploration program targeting the L53-DD field. In Indonesia, … Continue reading

First Cobalt Starts Study to Enhance Refinery Economics and Invests in eCobalt Solutions

Source: Peter Epstein for Streetwise Reports 05/08/2019 Peter Epstein of Epstein Research explains why he believes this cobalt company could thrive despite the currently low cobalt price. The cobalt price continues to languish below US$20/lb. This is an unexpected development given that last year the price was at or >$40/lb for much of March, April and May. In speaking with experts and reading industry analysis, the consensus is that the cobalt price could settle in the $20–$25/lb range later this year. I agree, that seems to be a sweet spot where end users are comfortable and the better quality cobalt juniors can get financed. That price range is not aggressive, but if it’s as high as prices are headed, it will knock out many cobalt juniors that require $30+/lb pricing. Of course, $20-$25/lb might not seem that conservative when the price is at roughly $16/lb (according to infomine.com). Of the 100+ names, surprisingly few can get financed in a sub-$20/lb environment. After an upcoming industry shakeout (cobalt management teams are likely looking at cannabis deals by now), the survivors will thrive, perhaps enjoying a price of $30+/lb in the early 2020s. First Cobalt’s Refinery Could Be in Production Within 24 Months Few cobalt juniors will survive this pricing cycle, most face a slow death through equity dilution, waiting in vain for the cobalt price to double or triple. However, First Cobalt Corp. (FCC:TSX.V; FTSSF:OTCQX; FCC:ASX) appears to be a survivor and could thrive next decade. Notice that news from peers … Continue reading