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BP share price up over 3% in early trading as oil major returns to profit and ups dividend

The BP share price has gained 3.4% over the first hours of trading today…
The post BP share price up over 3% in early trading as oil major returns to profit and ups dividend first appeared on Trading and Investment News.

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The BP share price has gained 3.4% over the first hours of trading today after the oil and major announced a roaring return to profit on the back of higher oil prices. The better-than-expected profit, $2.8 billion compared to analysts’ forecasts for $2.2 billion, gave BP the confidence to announce the firing gun on a $1.4 billion share buyback.

The energy company will also hike its dividend payment by 4% to 5.56 cents-a-share, despite announcing it would hold payouts at current levels, they were halved last year as oil prices plunged at the start of the coronavirus crisis, and return any excess cash by way of buybacks only. The extent of the turnaround from the record $17.7 billion loss sustained over the same period last year has convinced BP to renege on its position on increasing dividends again.

bp plc

The huge loss last year was the result of massive writedowns on asset values based on a more pessimistic outlook for oil prices. However, despite industry analysts last year bracing oil companies for a sustained period of depressed oil prices, the supply to demand dynamic has quickly shifted. Prices are now expected to hold at around $70-a-barrel for the foreseeable future.

Even at $60-a-barrel, BP says it expects to be able to consistently buy back an average of $1 billion of shares a quarter and to increase the dividend by around 4%-a-year until 2025.

BP’s chief executive Bernard Looney said the new confidence to commit to more funds to share buybacks and dividend payments was reflective of

“the underlying performance of our business, an improving outlook for the environment and confidence in our balance sheet”.

Last year the price of a barrel of Brent crude had dropped to less than $30. However, a stronger than expected bounce back in demand as the Covid-19 pandemic eases, as well as carefully managed supply, saw an average price of $69-a-barrel over the second quarter. It’s currently trading at just under $73, down from a recent high of $76.33-a-barrel.

BP produced the equivalent of 3.2 million barrels of oil a day over the first half of 2021, between its own operations and those of Russia’s Rosneft, which it holds a 19.75% stake in. New chief executive Looney is leading a major structural shift towards renewable energy, with BP having committed to becoming a net zero carbon emitter by 2050. The pledge does not include the company’s Rosneft stake.

The current strategy is to allow its oil and gas output to decline by 40% over the remainder of the current decade while simultaneously developing an additional 50 gigawatts of capacity from renewable sources. The BP management is fighting to convince investors it can remain profitable while undergoing such a radical shift in strategy.

Looney commented on progress:

“We are a year into executing BP’s strategy to become an integrated energy company and are making good progress — delivering another quarter of strong performance while investing for the future in a disciplined way.”

The post BP share price up over 3% in early trading as oil major returns to profit and ups dividend first appeared on Trading and Investment News.

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Get Ready for the Coming Oil Crisis (SBOW, VKIN, CPE, RRC, XOM, CVX, SM, CEI, OIH)

The landscape is in place for a coming supply shortage crisis in the oil market, and the only place to hide for investors may be in small-cap oil stocks. The world is adjusting to the next chapter – the post-pandemic period – and global oil demand…

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The landscape is in place for a coming supply shortage crisis in the oil market, and the only place to hide for investors may be in small-cap oil stocks.

The world is adjusting to the next chapter – the post-pandemic period – and global oil demand is recovering powerfully, on pace to hit new all-time highs by early next year. 

At the same time, non-OPEC oil supply is falling, down over 2 million barrels per day from its 2019 peak. Even more to the point, non-OPEC oil supply growth will turn negative over coming years, according to new forecasts from the IEA.

That inflection will foster a gap between supply and demand with structural implications. By just 12 months from now, demand will encroach on total production potential for the first time in 160 years – since we first started ramping up the oil industry in the 19th century.

This may well become the most important investment theme over coming years. But it won’t just impact the fortunes of the world’s major integrated producers like Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX). It will define the landscape for the entire market, and the biggest beneficiaries will likely be the small-cap oil players now trading at cheap levels.

With that in mind, we take a look at a few of the more interesting names in the space and cover some recent catalysts.

SilverBow Resources Inc (NYSE:SBOW) is a growth-oriented independent oil and gas company in the dead-center of what you might call the small-cap growth niche in the US shale energy space.

The company engages in the acquiring and developing assets in the Eagle Ford Shale.

SilverBow Resources Inc (NYSE:SBOW) recently announced it has entered into definitive agreements to acquire oil and gas assets in the Eagle Ford from an undisclosed seller. Acquisition Highlights include: All stock Transaction for approximately $33 million, consisting of approximately 1.5 million shares of SilverBow common stock, 45,000 total net acres in the Eagle Ford, bolstering SilverBow’s gas position in McMullen and Live Oak counties, while adding new oil positions in Atascosa, Lavaca, and Fayette counties, and April 2021 net production of approximately 1,580 barrels of oil equivalent per day, 39% liquids. Net oil production of 569 barrels per day

Sean Woolverton, SilverBow’s Chief Executive Officer, commented, “We continue to execute on accretive opportunities and bolster our balanced oil and gas portfolio. This marks the second acquisition we have announced since the beginning of August. Our first deal increased our high-return Eagle Ford and Austin Chalk locations, as well as incremental working interest in producing wellbores, in our La Mesa position. Today’s announcement expands our gas portfolio in the Western Eagle Ford, while also adding oil acreage in three new counties. Each transaction is accretive to Adjusted EBITDA and further reduces our pro forma leverage ratio(1) via the assets’ incremental cash flow. Our ability to use stock as consideration reflects the constructiveness of Eagle Ford partners to share in SilverBow’s long-term value creation.”

The stock has suffered a bit of late, with shares of SBOW taking a hit in recent action, down about -9% over the past week. Shares of the stock have powered higher over the past month, rallying roughly 13% in that time on strong overall action. 

SilverBow Resources Inc (NYSE:SBOW) managed to rope in revenues totaling $69.9M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 181.2%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($2.1M against $101.9M, respectively).

Viking Energy Group Inc (OTC US:VKIN) is an emerging small-cap player in the oil and gas space with assets located in North America in Kansas, Missouri, Texas, Louisiana, and Mississippi. Viking also has firm financial backing from its majority owner, Camber Energy Inc (NYSEAMERICAN:CEI), which recently raised $15 million in non-toxic financing that is convertible well above current share pricing.

That suggests Viking has a lot of expansion opportunity here as well, which is a big factor in presenting the stock. Shares have started to heat up as it gets involved in carbon capture technology, which is a very nice addition to the narrative.

Viking Energy Group Inc (OTC US:VKIN), to expand on that point, recently entered into an Exclusive Intellectual Property License Agreement with ESG Clean Energy regarding ESG’s patent rights and know-how related to stationary electric power generation, including methods to utilize heat and capture carbon dioxide. This has the potential to catapult VKIN into a key position in the clean energy space.

According to the release, the ESG Clean Energy System is designed to generate clean electricity from internal combustion engines and utilize waste heat to capture ~ 100% of the carbon dioxide (CO2) emitted from the engine without loss of efficiency, and in a manner to facilitate the production of precious commodities (e.g., distilled/ de-ionized water; UREA (NH4); ammonia (NH3); ethanol; and methanol) for sale.    

James Doris, President and Chief Executive Officer of Viking, commented, “In my view this transaction positions us as an industry leader in terms of being able to assist with the power generation needs of commercial and industrial organizations while at the same time helping them reduce their carbon footprint to satisfy regulatory requirements or to simply follow best ESG-practices. We are excited to be able to use the platform of Simson-Maxwell Ltd., our recently acquired majority-owned subsidiary, to promote the ESG Clean Energy System.”

Viking Energy Group Inc (OTC US:VKIN) is a small but growing oil play with improving financial metrics, and it should be taken seriously as a player in a space that could be heading for a major windfall. The company recently posted double-digit growth in revenues, current assets, and EBITDA for its calendar Q2, and its move to gain exposure to the carbon capture theme is likely to help it gain greater visibility, as evidenced by the stock’s recent 200% multi-week rally.

Callon Petroleum Company (NYSE:CPE) engages in the exploration, development, acquisition and production of oil and natural gas properties in the United States.

The company focuses on unconventional oil and natural gas reserves in the Permian Basin. 

Callon Petroleum Company (NYSE:CPE) recently announced an agreement to acquire the leasehold interests and related oil, gas, and infrastructure assets of Primexx Energy Partners and its affiliates. Primexx is a private oil and gas operator in the Delaware Basin with a contiguous footprint of 35,000 net acres in Reeves County and second quarter 2021 net production of approximately 18,000 barrels of oil equivalent per day (“Boe/d”) (61% oil). The cash and stock transaction is valued at approximately $788 million[1], representing a headline purchase price multiple of approximately $43,800 per Boe/d, based on second quarter production.

Callon President and Chief Executive Officer Joe Gatto commented: “The Primexx transaction checks every operational and financial box on the list of compelling attributes of consolidation. The asset base adds substantial current oil production and a top-tier inventory to our Delaware portfolio, and fits squarely into our model of scaled, co-development of a multi-zone resource base. Our integrated, future development plans will benefit greatly from the combined Delaware scale and we expect to generate approximately 30% more adjusted free cash flow[2] from the third quarter of 2021 through year-end 2023 under our conservative planning price assumptions[3]. The infusion of over $550 million of equity from the acquisition and Kimmeridge’s exchange further heightens the overall benefits, immediately reducing leverage metrics and creating a visible path to net debt to adjusted EBITDA of below 2.0x next year.”

And the stock has been acting well over recent days, up something like 7% in that time. Shares of the stock have powered higher over the past month, rallying roughly 22% in that time on strong overall action. 

Callon Petroleum Company (NYSE:CPE) managed to rope in revenues totaling $440.4M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 180.1%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($3.8M against $813.8M, respectively).

Other key stocks in the small-cap oil space include Range Resources Corp. (NYSE:RRC), Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), SM Energy Co (NYSE:SM), and VanEck Oil Services ETF (NYSEARCA:OIH).

Please make sure to read and completely understand our disclaimer at https://www.wallstreetpr.com/disclaimer. We may be compensated for posting this content on our website by EDM Media LLC. For questions, comments or suggestions please contact ir@edm.media.

The post Get Ready for the Coming Oil Crisis (SBOW, VKIN, CPE, RRC, XOM, CVX, SM, CEI, OIH) appeared first on Wall Street PR.

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Economics

IEA Demands Russia Deliver More Gas To A Reeling Europe

IEA Demands Russia Deliver More Gas To A Reeling Europe

Over the weekend, Morgan Stanley’s global energy head Martijn Rats shared comprehensive yet streamlined analysis of what happened in 2021 that has sent many commodity prices, including..

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IEA Demands Russia Deliver More Gas To A Reeling Europe

Over the weekend, Morgan Stanley's global energy head Martijn Rats shared comprehensive yet streamlined analysis of what happened in 2021 that has sent many commodity prices, including Europe's nat gas and electricity prices, surging to never before seen levels.

For those who missed it, Rats explained that A common set of factors has tied all these commodity rallies together. As often happens, the story starts in China.

The combination of a post-COVID-19 recovery and unusually hot weather has increased consumption of electricity sharply this year. Most of China’s electricity is produced from coal, but domestic coal production is increasingly struggling to keep up – the result of regulatory reforms, under-investment and more stringent HSE inspections. Another important source of electricity generation in China is hydropower, but because of droughts in key parts of the country, hydropower has failed to grow this year too.

Over the summer, this led to power crunches that forced regional governments to curtail consumption – street lights were even switched off at night in a number of regions. Another victim of these measures was aluminum smelting, which is a particularly electricity-intensive process. Normally, China supplies ~60% of the world’s aluminum. With its production curtailed and global demand continuing to grow, aluminum prices soared.

China’s domestic coal shortage compelled it to turn to the seaborne market. However, coal production elsewhere has also had its issues – e.g., heavy rains and staff shortages in Indonesia, railway disruptions in Russia and unrest in South Africa. As the seaborne coal market tightened, global coal prices rallied.

The same factors drove up China’s demand for LNG, but here China was not alone. For example, droughts in Brazil also curtailed its production of hydropower, driving up LNG demand as well. With a number of production outages at liquefaction terminals, the global LNG market has tightened severely in the last few months.

Europe is usually the end market for a substantial share of the world’s LNG. However, with other regions pulling harder, European LNG imports declined sharply this summer. At the same time, power generation from offshore wind disappointed – it has not been that windy in Europe recently – boosting demand for natural gas. Yet, with gas supply from Russia and other regions constrained, Europe was unable to build natural gas inventories as much as it normally does in the summer. European gas inventories are now unusually low for this time of the year, with winter yet to start. As natural gas prices largely set electricity prices, they have surged in tandem.

And while Europe, where electricity prices have hit stratospheric levels that have prompted street protests and forecasts of winter blackouts, has had lots of time to analyze all these factors, the continent which has been at the forefront of the "Green revolution" which is indirectly responsible for the collapse in legacy fossil fuel infrastructure and hence, for the surge in prices, decided to ignore everything else and focus on one single word: Russia.

So, as a result, on Tuesday the International Energy Agency demand that Russia send more gas to Europe "to help alleviate the energy crisis" the FT report, noting that in doing so the IEA becoming the first major international body to address claims by traders and foreign officials that Moscow has restricted supplies.

And so, once again, it's all Russia's fault.

The Paris-based body admitted that while Russia was fulfilling its long-term contracts to European customers - in other words it wasn't in breach of contract - it could always do more, and was supplying less gas to Europe than before the coronavirus pandemic.

“The IEA believes that Russia could do more to increase gas availability to Europe and ensure storage is filled to adequate levels in preparation for the coming winter heating season,” said the IEA, which is primarily funded by OECD members to advise on energy policy and security. “This is also an opportunity for Russia to underscore its credentials as a reliable supplier to the European market.”

This, coming from a continent that as recently as a few months ago was contemplating ending the Nord Stream 2 pipeline from Russia, is hypocrisy at its most astounding; it is also a clear example that beggars can indeed be choosers.

Taking a page out of the Hillary Clinton book where everything is Russia's fault, some industry participants have accused Gazprom, Russia’s state-backed monopoly exporter of pipeline gas, of limiting top-up sales in the spot market to Europe — that has led to a historic surge in prices which is raising household bills and threatening industries across the continent. As the FT adds, the company has also unsettled energy traders by keeping the underground storage facilities it controls in Europe stocked at low levels compared with previous years.

Translation: Europe's politicians are so desperate - only this time instead of explaining Hillary Clinton's stunning loss they have to explain why electricity hyperinflation is transitory - they have pulled the Russia bogeyman out of their sleeves again.

Of course, Gazprom is free to do as it wishes: after all in a world where higher prices lead to more supply, any Gazprom attempt to ramp up prices would lead to more output. Only, in the virtuously green Europe, the continent suddenly finds not only does it not have spare capacity, but global interconnections mean that foreign LNG deliveries are backloffed, making Europe Russia's bitch, just as Putin had intended all along.

Meanwhile, Gazprom’s chief executive Alexei Miller said last week that the company was meeting its supply obligations and was ready to increase production if needed, but warned that prices could rise further in the winter due to shortages in underground facilities. Gas prices rose even higher on Monday after Gazprom declined to book additional capacity for export via Ukraine for October and only reserved one-third of the available space on the Yamal gas pipeline via Poland.

To be sure, Europe has a simple solution: start using the Nord Stream 2 pipeline. The only downside is that this will destroy any leverage Ukraine - the site of the CIA inspired 2014 presidential coup which meant to bring Ukraine closer to NATO but ended up going terrible wrong for Western countries - may have had. As the FT notes, Russia is looking to gain approval to start the Nord Stream 2 pipeline to Germany, which remains contentious because it will redirect some of the gas that flows through Ukraine.

Gazprom and Kremlin officials have said Russia could boost gas sales once Germany and the EU approve the start up of the pipeline. And even though its actions have added to suspicions that it has restricted sales in order to try to accelerate the decision, Russia has every right to lever its natural resources to achieve its geopolitical goals. And since the opportunity cost is half of Europe freezing this winter, Russia will get what it wants.

What is truly hilarious, is that while Europe politicians have generally refused to blame Russia for contributing to the fact that gas prices have more than tripled this year, some members of the European parliament have called for an investigation into Gazprom’s role in the crisis ever since European electricity prices exploded. Needless to say, doing so will only lead to even higher prices in a continent which clearly appears unaware that the global realpolitik has shifted dramatically in the past year.

The IEA’s call for more Russian gas comes as Russian president Vladimir Putin is considering allowing Rosneft, the Russian state-owned oil company, to supply gas to Europe via the pipeline. Russia's energy minister Alexander Novak recommended allowing Rosneft to export 10bn cubic metres to Europe a year via Gazprom’s export transit facilities in a recent report to Putin. The amount is small compared with the 139 bcm that Gazprom has exported outside the former Soviet Union so far this year. But it would spell a highly significant end to Gazprom’s monopoly on gas exports, which are more lucrative than the domestic Russian market.

Not that any of that would matter to Russia: both Rosneft and Gazprom are controlled by longtime allies of Putin.

Amos Hochstein, senior adviser for energy security at the US state department, told the Financial Times this month he was worried that “lives are at stake” in Europe in the event of a severe winter in part because Russia had “under supplied the market compared to its traditional supplies”. Now if only Europe had thought just a few months ahead, secured the highly valuable commodity in advance and not gutted its existing energy infrastructure in the name of the most expensive "green virtue signaling" campaign of all time...

Tyler Durden Wed, 09/22/2021 - 02:45

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Commodities

What is Driving the Price of Natural Gas?

The US is uniquely positioned to capitalize on the rising demand and subsequent rising prices for natural gas by repositioning itself solidly as a natural gas exporter.
The post What is Driving the Price of Natural Gas? appeared first on Investing News…

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Natural gas is a naturally occurring hydrocarbon gas mixture that consists of methane and various amounts of other higher alkanes. It is found either by itself or with oil, and is considered to be an important element in the clean energy movement due to its safety and important applications. 

The price of natural gas has risen significantly over the past 12 months, reaching over US$5 per MCF in early September. This price jump comes after a low of US$1.60 MCF during the initial shock of the COVID-19 pandemic.

In this article, we’ll discuss why an investment in natural gas should be on your radar, what’s driving recent price increases, overall demand, and a few key players.

This INNspired article is brought to you by:

Southern Energy (TSXV:SOU) is Canadian listed, primarily natural gas company focused on acquiring and developing conventional natural gas and light oil resources in the southeast U.S. Gulf States of Mississippi, Louisiana, and East Texas.Send me an Investor Kit

International natural gas exports influencing US prices

Historically, the price of natural gas in North America has been largely driven by domestic demand factors prior to having any method to export from the continent. In the US specifically, natural gas is primarily used to generate electricity, residential and commercial heating as well as some industrial use.

Today, the price of natural gas is impacted by global exports to supply international markets. The US has built significant liquefied natural gas (LNG) supply chains, allowing it to access new and larger natural gas markets in Europe and Asia –– both of which have recently faced large shortages. In addition, significant new pipeline export markets have opened up to the US Gulf Coast area in Mexico.

As a result, natural gas sourced from the US –– specifically from the Gulf Coast –– is now a global commodity as opposed to simply a domestic North American commodity. These new and larger markets are expected to create a long-term increase in demand for US natural gas which is expected to drive prices even higher.

Demand for natural gas is expected to grow

The breakdown of consumption for natural gas in the US is 15 percent from residential, 10 percent from commercial, 27 percent from industrial and 38 percent from electric power generation.

Demand for natural gas through exports has surged due to pipeline exports which have tripled over the past decade to 76.1 billion cubic meters (BCM) and LNG exports which have grown from 1.5 BCM in 2010 to 61 BCM in 2021. Pipeline exports and LNG exports combined are quickly on track to account for 10 percent of natural gas consumption from the US. Experts project that with several new active construction projects, the US LNG export capacity will reach an impressive 20 BCF per day in the mid-2020s.

For the past 10 years, the US has also been phasing out coal-fired power and replacing it with natural gas. The natural gas switch has resulted in a one-to-one switch in Indiana and Kentucky and a 50 percent switch in other states. Additionally, significant nuclear power is being permanently taken offline in the next five to 10 years in the US. Nuclear plants have often been replaced mainly by natural gas in the past and this can be expected to continue in the coming years.

At the current pace, the projected supply gap over the next 10 to 15 years due to these power source changes will likely not be met by renewables. This leaves natural gas in the position to increase its market share for power supply in the macro bullish case for long-term pricing.

Another key factor impacting demand, and ultimately the price of natural gas, is the rise of electric vehicles. For every 1 percent conversion of combustion engine vehicles to electric vehicles in the US, there will be an overall power demand increase of 0.7 percent for natural gas. This could be a real game changer for natural gas demand in the US.

Key players in the US natural gas industry

EQT (NYSE:EQT) is the largest producer of natural gas in the US. The company has established operations in multiple locations in the US including Pennsylvania, West Virginia and Ohio with developments in the Appalachian Basin currently underway. EQT has proved reserves of 19.8 trillion cubic feet. The company’s average daily production of natural gas was 3.982 billion cubic feet in 2019.

ExxonMobil (NYSE:XOM) is the second-largest producer of natural gas in the US and is one of the largest producers in the world. The company has established operations in Europe, Asia, and Australia. The company’s worldwide proved reserves total approximately 15 billion oil equivalent barrels, including 60 percent oil and 40 percent natural gas. ExxonMobil’s average daily production of natural gas was 2.778 billion cubic feet in 2019.

A company that is positioned for growth in the US natural gas market is Southern Energy (TSXV:SOU,LSE:SOUC), which has recently listed its shares in London, UK to access the global equity markets. The company is an established oil and gas producer with interests in over 230 net producing wells in the Southeastern US. The company delivers shareholder value by focusing on conventional, low-decline, long-life assets in fields with an abundance of infrastructure, low operating costs and premium commodity pricing.

The company currently has controlling operating interests in properties covering approximately 30,000 net acres in the Mississippi Interior Salt Basin which is one of the most productive basin in the Gulf Coast Region. According to the company’s most recent corporate presentation, management is targeting significant production growth in excess of 25,000 barrels of oil equivalent per day of primarily US Gulf Coast natural gas production in the next few years.

Investor takeaway

The US is uniquely positioned to capitalize on the rising demand and subsequent rising prices for natural gas by repositioning itself solidly as a natural gas exporter. With Asian LNG import prices currently topping US$20 per MMBtu, it is expected that the US will continue to set record natural gas exports, something that Canada has failed to capitalize on. As a result, investors will likely be interested in US natural gas companies like Southern Energy with diverse and abundant natural gas resources with the potential for significant growth.


This INNSpired article is sponsored by Southern Energy (TSXV:SOU,LSE:SOUC). This INNSpired article provides information which was sourced by the Investing News Network (INN) and approved by Southern Energy in order to help investors learn more about the company. Southern Energy is a client of INN. The company’s campaign fees pay for INN to create and update this INNSpired article.

INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.

The information contained here is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Readers should conduct their own research for all information publicly available concerning the company. Prior to making any investment decision, it is recommended that readers consult directly with Southern Energy and seek advice from a qualified investment advisor.

The post What is Driving the Price of Natural Gas? appeared first on Investing News Network.

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