Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Komakino - I must say when they suspended again I didn’t think they would take the full 6 months thought we would have had something by now. All I care about now is we get something either on 12th June or in the period leading up to it and it’s a deal go ahead. Can’t take another suspension or an extended suspension at this moment in time think 2+ years of stuck in deals which don’t fully complete has got to the end of my tether a bit anyways rant over.
Let’s hope as the saying goes all good things come to people who wait applies here
At this rate we'll be doing multiple reverse takeovers till it's impossible to get any bigger, unless he decides to finish by taking over Walmart!
Perhaps we could be wrapping up another oil and gas acquisition to wrap up into the admission document
With another week coming to a close it’s clear to see that we are not likely to get an rns on Sudan anytime soon with a GM before the Sudan conference looks like we will have to wait till the morning of 12th June to see if we will be out of suspension or whether they ask for extension or something else.
Pt2
Rosenberg has analyzed PE ratios by energy stocks by looking at historical data since 1990 and found that, on average, the sector ranks in just its 27th percentile historically. In contrast, the S&P 500 sits in its 71st percentile despite last year’s deep selloff.
Even better, the outlook for the energy sector remains bright. According to a Moody's research report, industry earnings will stabilize overall in 2023, though they will come in slightly below levels reached in 2022.
The analysts note that commodity prices have declined from very high levels earlier in 2022, but have predicted that prices are likely to remain cyclically strong through 2023. This, combined with modest growth in volumes, will support strong cash flow generation for oil and gas producers. Moody’s estimates that the U.S. energy sector’s EBITDA for 2022 will clock in at $$623B but fall to $585B in 2023.
The analysts say that low capex, rising uncertainty about the expansion of future supplies and high geopolitical risk premium will, however, continue to support cyclically high oil prices.
In other words, there simply aren’t better places for people investing in the U.S. stock market to park their money if they are looking for serious earnings growth.
Market Deficit
But the biggest reason to be bullish about the sector is that the current oil surplus is likely to morph into a deficit as the quarters roll on.
Oil prices have only been treading water since the big initial gains from the shock announcement, with concerns regarding global demand and recession risks continuing to weigh down the oil markets. Indeed, oil prices have barely budged even after EIA data has shown that U.S. crude stockpiles have been falling while Saudi Arabia will hike its official selling prices for all oil sales to Asian customers starting May.
But StanChart has predicted that the OPEC+ cuts will eventually eliminate the surplus that had built up in the global oil markets. According to the analysts, a large oil surplus started building in late 2022 and spilled over into the first quarter of the current year. The analysts estimate that current oil inventories are 200 million barrels higher than at the start of 2022 and a good 268 million barrels higher than the June 2022 minimum.
However, they are now optimistic that the build over the past two quarters will be gone by November if cuts are maintained all year. In a slightly less bullish scenario, the same will be achieved by the end of the year if the current cuts are reversed around October.
Via the oil price app
Interesting read
Oil prices have lately lost their forward momentum, with both Brent and WTI crude plunging this week. A rather puzzling trend is being observed in the oil markets: there’s a big disconnect between inventory data and oil prices.
Crude oil inventories have fallen below the five-year average for the first time this year. Last week, implied gasoline demand rose by 992 thousand barrels per day (kb/d) w/w to a 15-month high of 9.511mb/d, taking the month-to-date y/y increase. Despite this positive inventory data, WTI prices have declined from $83.26 per barrel on April 12 to $68.85 on May 3 while Brent prices have declined from $87.33 to $72.54 per barrel over the timeframe.
Normally, U.S. inventories and oil prices have a strong inverse relationship, with falling inventories pushing prices higher while rising inventories have the opposite effect. However, large inventory draws over the past couple of weeks have failed to prevent significant price falls. As commodity analysts at Standard Chartered have noted, these dislocations tend to be temporary and come at times when prices are moved primarily by other oil market fundamentals, expectations, broader asset markets and financial flows. In this case, recent optimism regarding OPEC+ production cuts has failed to counter worries about demand linked to a weakening economic backdrop and a hawkish Federal Reserve leading to oil prices remaining range-bound. Further, there are reports that Russian crude shipments remain strong despite sanctions and embargoes: Reuters reported April oil loadings from Russia's western ports are on track to reach their highest since 2019 at more than 2.4M bbl/day.
Inventories
Source: Standard Chartered Research
Thankfully, a cross-section of Wall Street still thinks the energy sector remains good for the long haul.
Goldman Sachs has advised investors to buy energy and mining stocks, saying the two sectors are positioned to benefit from economic growth in China. GS’ commodities strategist has forecast that Brent and WTI crude oil will climb 23% and trade near $100 and $95 per barrel over the next 12 trading months, an outlook that supports their upside view for profits in the energy sector.
"Energy trades at a discounted valuation and remains our preferred cyclical overweight.We also recommend investors own mining stocks, which are levered to China growth through rising metals prices," the investment bank stated in a note to clients.
Indeed, energy stocks remain real cheap, both by absolute and historical standards.
The energy sector is the cheapest of all 11 U.S. market sectors, with a current PE ratio of 6.7. In comparison, the next cheapest sector is Basic Materials with a PE valuation of 10.6 while Financials is third cheapest at a PE value of 14.1 . For some perspective, the S&P 500 average PE ratio currently sits at 22.2. So, we can see that oil and gas stocks remain dirt cheap even after last year’s massive runup, thanks in large part to years of
So Exxon after performing due diligence decided to sell their assets to a company with no money. Also chad negotiated with that same company to run renewable energy projects in CHAD. Al Capone would raise an eyebrow at the antics of these so called gangsters
The British oil company Savannah Energy is reacting to N’Djamena’s accusations over the Exxon Mobil file, while Chad is normalizing its relations with Cameroon.
https://euro.dayfr.com/trends/amp/157796
‘The Minister of Finance went further by saying that “Savannah has no money, she could not raise the money to give it to Esso, who gave her her shares on credit”, before continue “I think that Savannah tried to corrupt people in Chad and in other countries, and it was known”, declared Tahir Hamid Nguilin in front of the transitional council acting as parliament.’
Corrupt these people ?
That’s rich coming from Chad. lol.
However, on March 20, the Minister of Trade gave Mr. Paul Biya his opinion on this transaction in a note. The senior official, in office since 2004 and from the same region as the President, had indicated his opposition to Chad's acquisition of more than the majority of infrastructure shares on its territory.
On March 23, 2023, Chad nationalised the shares that Savannah Energy acquired from ExxonMobil in December 2022 (40% of the Doba and oil pipeline deposits between Doba and the border with Cameroun through Totco). While Savannah Energy had also planned to buy Petronas' shares in this territory, the SHT had opposed it. She had asserted her right of pre-emption. So far, the Chadian state has not found the necessary funds.
In order to normalise its relations with Chad and reiterate Cameroon's support in the takeover of Petronas, Mr. Ferdinand Ngoh Ngoh went to N'Djamena on April 26 to meet with President Mahamat Idriss Déby,
Mr. Adolphe Moudiki is one of the very few executives of the Cameroun state to enjoy a direct channel with the president. He does not agree to take orders from any other minister or official, including Mr. Ferdinand Ngoh Ngoh. The latter has never succeeded, even as Secretary General of the Presidency, in appointing any executive in the state firm.
At the head of the SNH since 1993, after having been successively Minister of Labour, Director of the Civil Cabinet under the Presidency of Cameroun and Minister of Justice, Mr. Adolphe Moudiki knows the president Mr. Paul Biya for more than fifty years. If he has never done an active policy, he is the real great silversmith of the country, the SNH being the cash machine of Cameroun.
After studying in France, Mr. Paul Biya at Sciences-Po Paris and Mr. Adolphe Moudiki in Bordeaux, the two men had quickly climbed the ranks of the senior public service together in the first years of independence before Mr. Paul Biya became president in 1982.
The Cameroun government has suffered an internal crisis since the SNH bought 10% of the company that manages the pipeline between Doba and Kribi. In a series of confidential letters, the Secretary General of the Presidency, Ferdinand Ngoh Ngoh, and the Director General of the National Hydrocarbons Society, Adolphe Moudiki, strongly oppose.
Savannah Energy's sale of 10% of Cameroun Oil Transportation Co (Cotco) to the National Hydrocarbon Company (SNH) fuels political rivalries between senior dignitaries in Yaoundé. In addition to the tensions caused with Chad, it highlights the dispute between President-General Ferdinand Ngoh Ngoh and SNH Director-General Adolphe Moudiki.
The culmination of their disagreement occurred on April 20 during the transfer ceremony held at the SNH headquarters, to which Mr. Ferdinand Ngoh Ngoh had not been invited, even though he is the chairman of the board of directors of the state oil company.
A few days later, on April 25, during Cotco's board of directors in Paris, Mr. Ferdinand Ngoh Ngoh had sent a letter stamped "very urgent" to Mr. Adolphe Moudiki through the Cameroun ambassador to France André-Magnus Ekoumou. In the letter, the Secretary General of the Presidency asked the Director General of the SNH
"To refrain from any act confirming the said sale of assets or to make any commitment alongside the said Savannah Energy company. While waiting for the very high definitive instructions of the Head of State on this issue".
A few days earlier, Chad had recalled its ambassador for consultation, to express its dissatisfaction.
Mr. Adolphe Moudiki did not take this into account. The two Cameroonian directors within Cotco Igor Soya and Judith Menquelé voted in favour of all the resolutions proposed by Savannah Energy, represented for the occasion in Paris by Yacine Wafy, Joseph Pagop Noupoué, Antoine Richard and Roger Schaefer.
The two men do not intend to stop there. In a letter dated April 27 addressed to the Minister of Trade Mr. Luc Magloire Mbarga Atangana, with in copy with that Mr. Ferdinand Ngoh Ngoh, or Mr. Adolphe Moudiki strongly opposed the Doba Fields transaction in Chad and the export pipeline between the Chad Hydrocarbon Company (SHT) and Petronas. Mr. Adolphe Moudiki protested in the document against the favourable opinion given to this transfer.
The day before, the Cameroun Minister of Trade Luc Magloire Mbarga Atangana had issued it by mail to the authorities of the Economic and Monetary Community of Central Africa (CEMAC). He gave the agreement of Cameroun on the purchase of the shares of Petronas by the SHT from the antitrust authorities of the CEMAC, after instructions from Mr. Ferdinand Ngoh Ngoh. If this transaction were successful, it would allow Chad to hold 55% of Cotco.
OR
Save just looks to get involved in Etinde, in whatever way they deem optimal, via an arrangement with Bowleven around its Etinde stake/carry, please*
(perhaps with Perenco and Cameroon blessing, ideally.. including Save having cash to put too large development costs for bigger share of the pie from Lukoil & Perenco in return....
...or, alternatively, if Save feels the need to play hard ball with Perenco re Chad government and it maybe getting in bed together; without Perenco's blessing, even.. etc.. )
If with Perenco's Blessing: Save and Pereoco become friends via Etinde .. and, off the back, friendly around Chad 'arbitration situation' too ( eg reach a three way arrangement between Chad Government, Perenco and Save to take - ex Exxon - Chad assets forward strongly and mutualy beneficially)
Please *: as my bet on Bowleven, while pretty small, is now at basket case status.. and it/Bowleven likely needs saving asap now..
Maybe not Perenco stake but lukoil also has 37.5% we could go for that
Taking Etinde from Perenco would be pure karma.
TIL - Bowleven expect transaction to complete in June 2023.
https://www.bowleven.com/system/files/press/Bowleven-Interim-results-announcement-30-March-2023-v9-FINAL_0.pdf
Zengas do you believe we could steal Etinde from perenco ? and could Cameroon choose to sell it to us ? I wonder if there were pre conditions attached to the renewable deal sale 10% pipeline stake and sign the renewable project plus a oil and gas acquisition ?
See my 24th April post. Perenco for one still waiting a year almost to get a deal signed off re Etinde Cameroon.
Cameroon benefits tremendously from its oil and gas reserves. According to the U.S. Energy Information Administration, Cameroon’s petroleum production was 70,000 barrels a day in 2019 and 67,000 barrels a day in 2020. Cameroon has natural gas reserves estimated to be 4.8 billion cubic feet. Much of this gas remains undeveloped. In the meantime, Cameroon continues to concentrate on upstream and downstream activities. Downstream, the country plans to refurbish the national oil refinery, SONARA, although the facility suffered a devastating fire of an unknown cause in June 2019. There are opportunities in storage, pipelines, and gas-to-electricity power stations.
https://www.trade.gov/country-commercial-guides/cameroon-oil-and-gas
I would be interested to know whether there are oil and gas deals available in Cameroon not sure what it’s oil and gas sector is like don’t think it’s big so probably renewables ? Does anyone else know if there is oil and gas assets in Cameroon
Savannah Energy Plc, the British independent energy company, says it is seeking to continue to expand in Cameroon and review other potential investment opportunities in the country’s energy and sector.
https://independent.ng/savannah-energy-mulls-expansion-of-operations-in-cameroon/
South Sudan should threaten them and say they will look at alternate export routes if they continue the war which in turn will affect their revenues and see if they play nice.
South Sudan Playing a key role in hopefully bringing peace
Agree Zengas - couldn’t have articulated it better myself I would suspected even with all the instability in Sudan oil exports will have to continue they may be distruptions of course but I would like to believe that for exports to close for long periods I.e weeks and months would be small. The asset is still worth going for and it will depend on financing structure. Our assets our production assets in South Sudan so there is a element of risk for sudan if they continue to harm the pipeline they are looking at potentially losing revenue if South Sudan start to build an alternate export route so they will have to protect the pipeline at all costs to guarantee their future tariff income on export. I am interested to see if South Sudan continue with the oil summit if they do I will take it as a positive sign of things to come. Also If we don’t snap up these assets someone eventually will and perenco are always circling so I hope that we press ahead with this deal.
Re should or shouldn't SAVE walk away from the S.Sudan deal.
First of all i believe any deal has to be non recourse to the parent group/other asset holdings just like Chad, Cameroon and Accugas Nigeria. Therefore i don't see it as putting the group at risk and no one would be that reckless least of all AK without ring-fenced financing.
If anyone is likely to pull the deal it could be the actual entity that is/was there to finance it and not so much Save.
It could be Petronas themselves who finance it - do or will they offer a financing agreement like Exxon and on what terms. They may be even keener to leave more than ever especially as they also operate in Sudan where their complex/office in Sudan has been damaged in recent days with people unable to leave.
Any opportunist will see the potential in S.Sudan. Perenco themselves were reported as interested. Things continue as normal so far and the main worry is going to be relying on one export route - so yes i see now as the time for S.Sudan to address and develop an alternative route faster than ever. They have land bought at Djibouti for this purpose.
Can any deal be structured in a way that Save can continue say if oil exports were offline for 3-6-12 months at any point ? and it might not happen - totally unknown but i'm sure that risk has been considered.
AI reports Save will predominantly only be a partner in S.Sudan - they won't have anyone to pay as they need little staff, it all comes down to the loan financing and perhaps length of it. Seplat managed to survive in a one country jurisdiction with its oil exports severely constrained for a number of times over many months while alternatives were found and the original export route re-instated.
What about the breaking story back on 18/1/22 when AI reported that it was a grand plan by the Vitol - Savannah duo for S.Sudan. Vitol is awash with serious cash and more so this past few years of high oil prices, and somebody like them could be more than willing to see this through with Save as they gain access to marketing the oil.
I may be wrong but to leave S.Sudan high and dry because of what's going on with it's neighbour would be a big blow for the South Sudanese (not their fault) and anyone thinking of investing in S.Sudan pre June if the Savannah Petronas deal collapsed - so again i'd be surprised if Save decided to pull the deal on neighbouring instability. Yes they could delay it or suspend it but i think that would open the deal to other potential buyers
I do not want to see the deal collapse and i don't think Save will either but it will be more so in the hands of the right financing terms relative to the above.
Just goes to show US influence across the globe is weakening once they were the power brokers now they are seen as instigators by many. Likes of Saudi, Russia and India will play major roles across the global a role once filled by US and Europe