Why Three Analysts Believe This Natural Gas Small Cap Is Undervalued

Source: Streetwise Reports 05/26/2020 The firm’s project in Brazil has a contract price that is twice the natural gas price in the U.S. Alvopetro Energy Ltd.’s (ALV:TSX.V; ALVOF:OTCQX) Caburé natural gas discovery in Brazil is ready to come online and the firm just amended its long-term sales agreement with Bahiagás, the distributor for the state of Bahia, to double its Firm deliveries. Bahiagás, which is extending the pipeline 15 kilometers and constructing a new City Gate—gas receiving station—has agreed to increase its natural gas deliveries from Alvopetro to 300,000 cubic meters per day (10.6 million cubic feet per day), reduce any potential supply failure penalties through 2020, and prepay Alvopetro for 120,000 cubic meters a day for the months of May and June, a figure roughly equivalent to US$1.1 million. Alvopetro agreed to provide a 15% discount on the prepaid natural gas in May and June. “Once the Caburé field is on production we expect ALV to generate significant free cash flow to fund an extensive drilling program in 2021.” – Bill Newman, Mackie Research Based on a floor price of US$5.20/million BTU (mmbtu), Alvopetro expects gross revenues in 2020 to total US$11.3 million, and expects EBITDA of approximately US$7.5 million for the second half of the year. These actions were favorably viewed by analysts covering the company. Analyst Bill Newman of Mackie Research wrote on May 15, “We view these amendments as positive and we maintain our SPECULATIVE BUY recommendation and our $1.65 target price.” Alvopetro shares are currently … Continue reading

Crude Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life

Source: McAlinden Research for Streetwise Reports 05/21/2020 Though gasoline demand remains historically weak, commuters are beginning to head back to their offices, opting for the isolation of their personal vehicles and abandoning public transit, reports McAlinden Research. Saudi Arabia enhanced their commitment to OPEC+ supply cuts as the Kingdom said they’d shut production of additional 1 million barrels of crude oil per day next month. Most of the OPEC+ countries have already come close to compliance with the deal that took effect this month and cuts from non-member states like Norway, Brazil, Canada, and the US are compounding the already steep curbs on production. Though gasoline demand remains historically weak, commuters are beginning to head back to their offices, opting for the isolation of their personal vehicles and abandoning public transit. Crude Cuts Continue to Deepen As part of its latest efforts to reign in the global glut of crude oil, Saudi Arabia’s energy ministry ordered the Kingdom’s oil giant Aramco to reduce its crude oil production in June “by an extra voluntary amount of one million barrels per day (bpd), in addition to the reduction committed by the Kingdom in the latest OPEC+ agreement,” the official Saudi Press Agency reported. The 23-country OPEC/non-OPEC coalition known as OPEC+ agreed to cut output by 9.7 million bpd for two months from an agreed baseline level starting May 1. These countries will also cut 7.7 million bpd between July and December and 5.8 million bpd from January 2021 to April 2022. Under … Continue reading

Cypress Development's Clayton Valley Lithium Project vs. Chinese LCE/EV Battery Supply

Source: Rick Mills for Streetwise Reports 05/21/2020 Rick Mills of Ahead of the Herd asks if it’s possible to rescue the economy while also making big cuts to greenhouse gas emissions and improving overall health, and discusses one company with a large lithium deposit that could go a long way to providing U.S.-sourced material for batteries. The pause in industrial activity brought about by the Covid-19 crisis has led us to a fork in the road with respect to the direction we as a society take in fulfilling the twin mandates of suppressing global warming and growing the economy in challenging times. To some extent these goals are incompatible. In a world that continues to run on fossil fuels, how do policymakers wean countries off oil and gas without wrecking their economies? And from an environmental point of view, how can we continue to drive gas-powered vehicles and heat our homes with natural gas and coal, when we know emissions from these fuels add to greenhouse gases that, left unchecked, will eventually render much of the earth uninhabitable? Unexpectedly, the coronavirus has provided a window into a future with fewer carbon emissions. While nobody hoping for a cleaner environment would wish to pair ecological progress with the worst economic slowdown since the Great Depression, the pandemic does show what happens when industrial activity abruptly stops. As we now know, clearer skies owing to Covid-19 lockdowns have become the silver lining of the global economy coming to a screeching halt in … Continue reading

Oil & Gas Company Reports 'Solid Q1/20' and 'Progress on Cost Reductions'

Source: Streetwise Reports 05/14/2020 Devon Energy’s first quarter operational and financial numbers are reviewed and a 2020 cash flow forecast are provided in a Raymond James report. In a May 8 research note, analyst John Freeman reported that Raymond James increased its target price on Devon Energy Corp. (DVN:NYSE) after updating its estimates on the company. “Devon delivered a solid Q1/20, reporting modest beats on oil volumes, capex and pricing” and is making “solid progress on cost reductions,” Freeman highlighted. The new target price is $15 per share, up from $11. In comparison, Devon Energy’s current share price is about $11.53. Freeman discussed the Oklahoma-based company’s results and cost improvements of Q1/20. Regarding performance, Freeman noted that Devon’s Delaware Basin asset, which accounts for 75% of its production, continues to deliver. During Q1/20, it averaged IP30 of 2,500 barrels of oil equivalent per day at an average well cost of $705 per foot. Devon expects total 2020 oil production to be 145–150 million barrels of oil per day (145–150 MMbbl/d), roughly in line with Raymond James’ forecast of 151.9 MMbbl/d and consensus’ projection of 150.5 MMbbl/d. Devon’s oil volumes guidance for Q2/20 is 145–155 MMbbl/d. This compares to previous projections by Raymond James and the Street of 156 MMbbl/d and 154 MMbbl/d, respectively. The pace of completions will remain slower throughout Q2/20 and Q3/20 and then ramp up in Q4/10. As for costs, “Devon’s off to a good start” with Q1/20 cash costs coming in 6% below Raymond James’ prediction, … Continue reading

Oil & Gas Company Reports 'Solid Q1/20' and 'Progress on Cost Reductions'

Source: Streetwise Reports 05/14/2020 Devon Energy’s first quarter operational and financial numbers are reviewed and a 2020 cash flow forecast are provided in a Raymond James report. In a May 8 research note, analyst John Freeman reported that Raymond James increased its target price on Devon Energy Corp. (DVN:NYSE) after updating its estimates on the company. “Devon delivered a solid Q1/20, reporting modest beats on oil volumes, capex and pricing” and is making “solid progress on cost reductions,” Freeman highlighted. The new target price is $15 per share, up from $11. In comparison, Devon Energy’s current share price is about $11.53. Freeman discussed the Oklahoma-based company’s results and cost improvements of Q1/20. Regarding performance, Freeman noted that Devon’s Delaware Basin asset, which accounts for 75% of its production, continues to deliver. During Q1/20, it averaged IP30 of 2,500 barrels of oil equivalent per day at an average well cost of $705 per foot. Devon expects total 2020 oil production to be 145–150 million barrels of oil per day (145–150 MMbbl/d), roughly in line with Raymond James’ forecast of 151.9 MMbbl/d and consensus’ projection of 150.5 MMbbl/d. Devon’s oil volumes guidance for Q2/20 is 145–155 MMbbl/d. This compares to previous projections by Raymond James and the Street of 156 MMbbl/d and 154 MMbbl/d, respectively. The pace of completions will remain slower throughout Q2/20 and Q3/20 and then ramp up in Q4/10. As for costs, “Devon’s off to a good start” with Q1/20 cash costs coming in 6% below Raymond James’ prediction, … Continue reading

Energy Firm Posts Solid Q2, Positions Itself for Price Uncertainty

Source: Streetwise Reports 05/14/2020 A Haywood report explains why TORC Oil & Gas is “well positioned to ride out the current tumultuous oil price environment.” In a May 6 research note, Haywood analyst Christopher Jones reported that TORC Oil & Gas Ltd. (TOG:TSX) had a “sound” Q2 FY20 and made strategic moves in response to oil price uncertainty. The company is “well positioned to ride out the current tumultuous oil price environment,” he added. Jones reviewed the energy company’s results in Q2 FY20, noting that production and cash flow were in line with estimates. Production totaled 28,515 barrels of oil equivalent per day (28,525 boe/d), compared to Haywood and the Street’s forecasts of 28,500 boe/d and 28,400 boe/d, respectively. Capex also was as expected, at $65 million. Cash flow per share amounted to $0.21, which was one cent above projections. The company’s hedge book on March 31, 2020, had an unrealized gain of $7.1 million at current strip. During the quarter, TORC was hit with a total impairment charge of $853 million, as were many of its peers. Broken down, $704 million was for its Saskatchewan business, $132 for its Cardium business and $17 for its Monarch business. At the end of Q2 FY20, TORC’s net debt was $382.7 million with $190.7 million available on the $500 million line. In his report, Jones presented the changes TORC made to support liquidity in an ongoing uncertain market and commented, “These actions are logical in today’s environment and should not shock investors.” … Continue reading

Energy Firm Posts Solid Q2, Positions Itself for Price Uncertainty

Source: Streetwise Reports 05/14/2020 A Haywood report explains why TORC Oil & Gas is “well positioned to ride out the current tumultuous oil price environment.” In a May 6 research note, Haywood analyst Christopher Jones reported that TORC Oil & Gas Ltd. (TOG:TSX) had a “sound” Q2 FY20 and made strategic moves in response to oil price uncertainty. The company is “well positioned to ride out the current tumultuous oil price environment,” he added. Jones reviewed the energy company’s results in Q2 FY20, noting that production and cash flow were in line with estimates. Production totaled 28,515 barrels of oil equivalent per day (28,525 boe/d), compared to Haywood and the Street’s forecasts of 28,500 boe/d and 28,400 boe/d, respectively. Capex also was as expected, at $65 million. Cash flow per share amounted to $0.21, which was one cent above projections. The company’s hedge book on March 31, 2020, had an unrealized gain of $7.1 million at current strip. During the quarter, TORC was hit with a total impairment charge of $853 million, as were many of its peers. Broken down, $704 million was for its Saskatchewan business, $132 for its Cardium business and $17 for its Monarch business. At the end of Q2 FY20, TORC’s net debt was $382.7 million with $190.7 million available on the $500 million line. In his report, Jones presented the changes TORC made to support liquidity in an ongoing uncertain market and commented, “These actions are logical in today’s environment and should not shock investors.” … Continue reading

Natural Gas Stocks Ride Upcoming Wave of Oil Well Closures

Source: McAlinden Research for Streetwise Reports 05/14/2020 McAlinden Research Partners reports that hedge funds that had been shorting natural gas have suddenly developed a strong appetite for natural gas stocks and bonds on the expectation that U.S. oil wells that generate gas as a by-product will close fast enough to make up for the collapse in global natural gas demand. 2019 was such a rough year for natural gas that by the time February 2020 rolled by, hedge funds had built up the largest net short position on record for the sector. Those investors have suddenly developed a strong appetite for natural gas stocks and bonds on the expectation that U.S. oil wells that generate gas as a by-product will close fast enough to make up for the collapse in global natural gas demand. Some Appalachian gas producers are especially well-positioned to benefit from such a prospect. Global consumption of natural gas is on track to drop by 5% in 2020, according to the International Energy Agency (IEA). While that number sounds harmless, it represents a huge shock to the gas industry which has enjoyed ten years of uninterrupted demand growth, until the COVID-19 lockdowns brought that streak to an end. Early evidence of the impact has already cropped up in the first quarter data, even though the lockdowns in Europe and the United States were still relatively new. While global demand fell more than 3% in 1Q 2020, demand in the United States dropped 4.5% from a year earlier, … Continue reading

Natural Gas Stocks Ride Upcoming Wave of Oil Well Closures

Source: McAlinden Research for Streetwise Reports 05/14/2020 McAlinden Research Partners reports that hedge funds that had been shorting natural gas have suddenly developed a strong appetite for natural gas stocks and bonds on the expectation that U.S. oil wells that generate gas as a by-product will close fast enough to make up for the collapse in global natural gas demand. 2019 was such a rough year for natural gas that by the time February 2020 rolled by, hedge funds had built up the largest net short position on record for the sector. Those investors have suddenly developed a strong appetite for natural gas stocks and bonds on the expectation that U.S. oil wells that generate gas as a by-product will close fast enough to make up for the collapse in global natural gas demand. Some Appalachian gas producers are especially well-positioned to benefit from such a prospect. Global consumption of natural gas is on track to drop by 5% in 2020, according to the International Energy Agency (IEA). While that number sounds harmless, it represents a huge shock to the gas industry which has enjoyed ten years of uninterrupted demand growth, until the COVID-19 lockdowns brought that streak to an end. Early evidence of the impact has already cropped up in the first quarter data, even though the lockdowns in Europe and the United States were still relatively new. While global demand fell more than 3% in 1Q 2020, demand in the United States dropped 4.5% from a year earlier, … Continue reading

Brien Lundin: To Insure Yourself Against Financial Upheaval, Buy Gold and Silver Now

Source: Maurice Jackson for Streetwise Reports 05/12/2020 Brien Lundin, sector expert and publisher of the Gold Newsletter, offers his perspective on the monetary ramifications of the COVID-19 pandemic in this conversation with Maurice Jackson of Proven and Probable. Maurice Jackson: Today we will discuss the 2020 financial crisis and investment opportunities for your portfolio. Joining us for a conversation is Brien Lundin, the president of Jefferson Financial. Mr. Lundin, investors are in a state of confusion and they’re looking for some sound guidance. These are truly unique times. For someone who says, “We’ve been here before, it’s going to be all right,” can you please share what are the primary differences between the global financial crisis of 2008 versus 2020? Brien Lundin: Well, two things really. The primary difference, first off, is the degree of monetary accommodation and stimulus efforts. We always predicted this would happen to a greater degree this next time around. But the second big difference has been the rapidity of the move. We expected—and I had been predicting in Gold Newsletter for a couple of years now—that the next crisis would come, they would find some excuse to demand more easing from the Federal Reserve, and the patient would demand more of the drug this time, so they would have to do more than they did before. But I expected all of this to play out over, say, five years. I did not expect it to play out over veritably five days, as it has. That’s … Continue reading