For Skyharbour Resources, the Answers May Lie in the Basement

Source: Streetwise Reports 11/07/2019 The company is moving ahead with uranium exploration in the high-grade Athabasca Basin amid a changing supply and demand paradigm. Uranium development company Skyharbour Resources Ltd. (SYH:TSX.V; SYHBF:OTCQB) holds six projects in the Athabasca Basin in northern Saskatchewan, home of the highest grade depository of uranium in the world. The company has been actively exploring and drilling the flagship Moore Lake project over the last several years and is planning an upcoming program that holds the potential to be a key catalyst in the near term. It acquired the project from the company’s largest shareholder and strategic partner, Denison Mines. Denison CEO David Cates sits on Skyharbour’s board. For its other five projects, Skyharbour employs prospect generation, bringing in partner companies to advance and fund exploration. Currently Skyharbour has deals on two projects. Orano, France’s largest uranium mining and nuclear company, is spending up to $8 million to earn up to a 70% interest on the Preston project. That project is located next to Fission Uranium and Nexgen’s high-grade properties. Plans for a 2020 exploration program are expected to be announced shortly. “Orano has been pretty aggressive with the exploration carrying out several drill and work programs over the past few years. They are a large company with a long history in the Athabasca Basin making them a great strategic partner to have,” Skyharbour CEO Jordan Trimble told Streetwise Reports. Skyharbour’s other partner is Azincourt Energy, which is smaller, and in a 2017 deal, the company … Continue reading

Q3/19 Active, 2020 Outlook Positive for Canadian Oil Company

Source: Streetwise Reports 11/06/2019 The producer’s Q3/19 financial and operating results are reviewed in an iA Securities report. In an Oct. 31 research note, iA Securities analyst Michael Charlton reported that Whitecap Resources Inc.’s (WCP:TSX) Q3/19 production was a beat and its new joint venture adds potential upside. In Q3/19, Whitecap produced about 68,255 barrels of oil equivalent per day (68,255 boe/d), which surpassed iA Securities’ estimate and was within guidance, Charlton noted. This resulted from Whitecap spending less capital than expected. The company is on pace to meet its average annual production of 70,000–72,000 boe/d with capital spending at about $400 million. “The quarter was active as Whitecap drilled 104 (89.9 net) wells, advancing all its core areas and enhancing and expanding its assets to maximize shareholder value, supportive of its long-term dividend and growth model,” Charlton commented. As for Q3/19 cash flow, it was about $154.3 million, or $0.37 per share, reflecting a sequential decrease of about 12% “but tight (within 1%) to our forecasts,” indicated Charlton. This resulted from, one, lower realized prices of $52.76 per barrel of oil equivalent (boe), down about 10% from Q2/19. Lower netbacks was a second contributor. They dropped by about 15% to $27.92 per boe due to reduced realized prices and slightly higher operating and transportation costs. Looking forward, Whitecap’s 2020 budget is between $360 and $380 million, annual production guidance is about 71,000–72,000 boe/d and plans are to drill about 150 wells, Charlton pointed out. “With the 2020 capital budget … Continue reading

Standard Lithium Arranges C$5 Million Convertible Loan Financing

Source: The Critical Investor for Streetwise Reports 11/05/2019 The Critical Investor delves into a lithium company’s financing and its implications. It seems more and more likely that Standard Lithium Ltd. (SLL:TSX.V; STLHF:OTCQX; FRA: S5L) is displaying a serious commitment of giant JV partner Lanxess these days, with construction of the demonstration plant advancing rapidly along the way. Standard managed to arrange a C$5 million (US$3.75 million) convertible loan and guarantee agreement with Lanxess AG (LXS:DE) on October 30, 2019, and has already been paid out to Standard. The proceedings will be used for the ongoing development of the mentioned demonstration plant, which is capital intensive. All presented tables are my own material, unless stated otherwise. All pictures are company material, unless stated otherwise. All currencies are in US Dollars, unless stated otherwise. According to the news release, the terms are as follows: “The principal amount of the Loan will be convertible at the option of the Lender at a rate such that for each C$0.80 of principal converted, the Lender will receive one common share of Standard Lithium (each, a “Common Share”) and one-half of a warrant to purchase an additional Common Share with an exercise price of C$1.20 per Common Share and a term of three years (each whole warrant, a “Warrant”). Assuming full conversion of the Loan principal, the Lender would receive 6,251,250 Common Shares and 3,125,625 Warrants. All securities issued upon conversion of the Loan will be subject to four-month-and-one-day statutory hold period from the date the … Continue reading

Energy MLP Makes 'Contrarian Play Outside the Renewables Arena'

Source: Streetwise Reports 10/28/2019 A description of and comments about the play, an acquisition, are provided in a Raymond James report. In an Oct. 22 research note, Raymond James analyst Pavel Molchanov reported that Nextera Energy Partners LP (NEP:NYSE) agreed to acquire the Meade Pipeline for $1.37 billion. Closing is expected in November. This deal comes at a time when “it seems like a stretch to expect even more multiple expansion [for Nextera], hence our Market Perform rating,” Molchanov indicated. Thus, the acquisition is positive in that it does not involve drop-down transactions as most do for the master limited partnership (MLP). Molchanov described the asset being acquired. Low risk and fee based, the Meade Pipeline holds a 39.2% interest in the Central Penn Line, a 1.7 billion cubic feet per day pipeline in the Marcellus, transporting gas to the Mid-Atlantic markets. Transco, which contracted 100% of the capacity to nine shippers, has a minimum 14-year lease with Meade. The deal will take Nextera into the Marcellus Shale and beyond its current pipeline assets in Texas. As for the acquisition cost, “the ‘headline’ valuation is pricey,” Molchanov pointed out, with the $1.37 billion translating to 14x EBITDA of $90–100 million. When the proposed pipeline expansion is completed, EBITDA is expected to rise to $105–115 million. Because Nextera’s purchase of Meade Pipeline is not wind and solar energy centered, Molchanov described it as contrarian and wrote that the MLP’s management still remains focused on low-carbon energy. As for drop-downs, Molchanov noted, … Continue reading

Energy Company Divests Stake in Offshore Gasfield

Source: Streetwise Reports 10/28/2019 How the transaction benefits the London-based oil and gas firm is outlined in a Pareto Securities report. In an Oct. 21 research note, Pareto Securities analyst Tom Erik Kristiansen reported that Panoro Energy ASA (PEN:OSE; 1PZ:FRA) agreed to sell its noncore stake (a 12.2% economic interest) in the Aje field in offshore Nigeria to PetroNor for US$10 million in shares plus long-term upside. “We believe the transaction could unlock significant value and view it as positive for both companies.” For Panoro, Kristiansen indicated, the timing and structure around divesting the Aje stake were ideal. He noted the positive effects the transaction will have on Panoro. Financially, the valuation impact on the United Kingdom company of the US$10 million in shares is about NOK1.5 per share, according to Pareto’s estimate. However, if the natural gas resources at Aje are developed, Panoro could receive up to US$25 million in royalty payments. “Panoro intends to dividend out the shares in PetroNor, which we view as shareholder friendly,” wrote Kristiansen. Finally, for Panoro, the transaction will “free up additional resources that now can focus on Panoro’s core assets and potential future mergers and acquisitions transactions, which in our opinion is a significant positive,” Kristiansen highlighted. Pareto has a Buy recommendation on and expects to increase its current NOK23 target price on Panoro Energy. Sign up for our FREE newsletter at: Disclosure: 1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an … Continue reading

Appraisal Well 'Demonstrates Stable Natural Gas Production'

Source: Streetwise Reports 10/28/2019 The test results and next steps are provided in a Mackie Research Capital Corp. report. In an Oct. 21 research note, Mackie Research Capital Corp. analyst Bill Newman reported that Valeura Energy Inc. (VLE:TSX; PNWRF:OTCMKTS) completed the final test of the Inanli-1 appraisal well in Turkey, which, like the first three, showed stable natural gas production. Of the four tests of Inanli-1, the first, or deepest, zone had the “most encouraging” results, noted Newman. It had the highest average flow rate and a low, decreasing water rate. The other three tests flowed gas but more slowly than the first. The final test achieved a maximum sustained flow rate of 643,000 cubic feet per day at its deepest point. “Valeura remains optimistic that certain zones within the Inanli-1 well hold the potential for exploitation through horizontal drilling and potentially through comingled vertical completions,” relayed Newman. Valeura will begin testing the Devepinar-1 appraisal well, located 20 kilometers to the west of Inanli-1. The aim is to “better understand the lateral and vertical reservoir characteristic and hydrocarbon composition of its potential massive basin-centered natural gas accumulation (BCGA),” explained Newman. The analyst added that whereas the potential size of the BCGA is “massive,” further drilling and testing are needed to derisk the play and advance the project to the development phase. Accordingly, Mackie has a Speculative Buy rating and a CA$3.50 per share target price on Valeura, recently down from CA$5.75 per share and versus the CA$0.82 current share price. … Continue reading

Halliburton Shares Trade Higher on Q3 Earnings

Source: Streetwise Reports 10/21/2019 Shares of Halliburton Co. at times traded greater than 8% higher after the firm reported improved Q3/19 earnings results versus Q2/19. This morning before the opening bell Halliburton Co. (HAL:NYSE) announced its third quarter earnings for the period ending September 30, 2019. The company reported net income of $295 million, or $0.34 per diluted share, during Q3/19. This compares to reported net income for Q2/19 of $75 million, or $0.09 per diluted share, and adjusted net income for Q2/19 of 303 million, or $0.35 per diluted share, excluding impairments and other charges. Operating income was $536 million during Q3/19, compared to reported operating income of $303 million and adjusted operating income of $550 million for Q2/19. Jeff Miller, Halliburton’s chairman, CEO and president commented, “Our organization executed effectively in the third quarter. We managed the market dynamics and delivered our financial results as per expectations…Total company revenue was $5.6 billion and operating income was $536 million, representing decreases of 6% and 3%, respectively, compared to revenue and adjusted operating income in Q2/19…International revenue, which was flat sequentially, was up 10% year to date and we remain confident that we will achieve high single-digit international growth for all of 2019. International growth continues across multiple regions, benefitting both our Drilling and Evaluation and Completion and Production divisions…Our North America revenue decreased 11% sequentially driven by customer activity declines and the execution of our new playbook. I am proud of how our team performed in this challenging market. … Continue reading

Analyst: Energy Firm's Weak Q3/19 'Could Offer Attractive Buying Opportunity'

Source: Streetwise Reports 10/21/2019 The factors at play in the company’s recent quarterly output are provided in a Pareto Securities report. In an Oct. 18 research note, analyst Tom Erik Kristiansen reported that Pareto Securities expects Equinor ASA (EQNR:NYSE; EQNR:Oslo) to report a weak Q3/19, but that “could offer an attractive buying opportunity ahead of Sverdrup production impacting reported earnings and with European gas prices also being a recent positive (up 20% month over month).” Kristiansen noted the indicators that Equinor will post a dampened Q3/19 even if it were to decrease its 2019 capex. For one, the company’s Norwegian natural gas production was down in September more than 30% from the average. Two, prices continued to be low. Three, output expectations for its international business in Q3/19 also are reduced. “We estimate adjusted EBIT of US$2.5 billion, 6% below consensus,” the analyst noted. Kristiansen concluded with, “We have not changed our long-term positive view on Equinor.” Thus, Pareto has a Buy rating and an NOK210 per share price target on the energy company. Sign up for our FREE newsletter at: 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 article are billboard sponsors of Streetwise … Continue reading

Seplat Petroleum to Acquire Eland Oil & Gas

Source: Streetwise Reports 10/17/2019 A glance at the deal is provided in a Pareto Securities report. In an Oct. 15 research report, Pareto Securities analyst Tom Erik Kristiansen reported that this morning, Seplat Petroleum Development Co. Plc (SEPL:LSE) offered to acquire Eland Oil & Gas Plc (ELA:LSE) for GBp166 per share. “We view it as fair,” he added, noting the amount was just above Pareto’s target price of GBp160 per share. The offer, recommended by Eland’s board and accepted by holders of 59.9% of the outstanding shares, represents a premium of 28% to yesterday’s closing price. “With the high preacceptance, this will likely be the end of the Eland story as an independent company,” commented Kristiansen. Sign up for our FREE newsletter at: 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 article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. 3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. 4) The article does not constitute investment advice. Each … Continue reading

Energy Company 'Shaking Things Up With Royalty, Infrastructure Spinout'

Source: Streetwise Reports 10/16/2019 The transaction details are relayed in a CIBC report. In an Oct. 10 research note, CIBC analyst Dave Popowich reported that Tourmaline Oil Corp. (TOU:TSX) intends to spin out, into a new private royalty and infrastructure company called Topaz Energy, a gross over-riding royalty interest across its properties plus a nonoperated 45% working interest in two of its gas plants. In exchange, Tourmaline will receive CA$135–185 million in cash and retain a 75–81% equity share of Topaz. Existing Tourmaline staff members will manage the new entity under a contract. “Topaz expects to seek a public liquidity event in H1/20,” Popowich indicated. “The company will initially pay out about 75% of its expected $90 million of annual revenue.” Popowich commented that the “transaction allows Tourmaline to monetize a fairly low-risk portion of its cash flow base while retaining some upside in an investment vehicle that should value it at a higher multiple in the public market.” Previously, management indicated several times that its infrastructure has consistently been undervalued in the past. The expected changes to CIBC’s estimates on Tourmaline as a result of the transaction are minimal, Popowich noted, and no major impacts to the investment thesis are predicted in the short term. However, that could change, he added, were Tourmaline “able to use Topaz as a platform to roll up additional royalty and/or facility interests in a basin that is clearly ripe for consolidation.” Looking to this winter, AECO and/or NYMEX prices should improve, thus benefitting … Continue reading