AUCTUS ON FRIDAY - 03/05/2024

AUCTUS PUBLICATIONS ________________________________________ ADX Energy (ADX AU)C; target price of A$0.75 per share: Raising new equity to fund a high impact activity programme – ADX has raised A$13.5 mm of new equity priced at A$0.105 per share. One free-attaching option will be issued for evert two placement shares with an exercise price of A$0.15 per share and an expiry date of 08/05/2026. The proceeds from the raise will fund (1) the production testing of the 450 m gas column encountered at

Q3: No surprise, good surprise

Shell delivered solid results that were broadly in line with the consensus thanks to oil and gas trading. The 34% yoy decline in profitability showed the company’s resilience compared to its peers thanks to high gas optimization and robust cash conversion. A buyback program amounting to $3.5bn will take the H1 aggregate figure to above the CMD guidance of $5bn. The annual cash pay-out ratio will come in at the upper end of the guidance range of 30-40%.

Q2: 56% plunge in profits does not hamper cash returns

Profits missed the consensus by 9% after quarters of beats over the past year. Shell also saw a 56% annual decline and a 47% quarterly profit slide – a trend that has taken the industry by surprise. Quarterly cash flows (+7% qoq and -19% yoy), however, were primarily helped by a $4.8bn inflow, thereby enabling Shell to continue its share buyback programme with another $3bn due in Q3 and raise the dividend by 15% promised while the capex range has been revised down.

Good cash return near-term, FCF targets questionable, clarity needed beyond 2025

Shell delivered the expected update on how to spend less and return more to shareholders. The 15% dividend increase and committed share buy-backs of at least $5bn in H2 lifted the FY23 yield to over 11%. Despite slashing the FY25 FCF expectation by $10bn compared to that at the 2019 CMD, Shell maintains an ambitious target to register 10% annual growth in FCF/share through 2025. Without big buy-backs and chunky divestments, this will be an onerous target to accomplish.

Q1: Solid results, spending spree until…

Shell delivered the best beat of the Big Oil earnings season with adjusted earnings of $9.6bn, 21% above the street consensus. The results were driven by solid oil and gas trading despite a 20% yoy decline in the Upstream business. Both the Integrated Gas and Products segments benefitted from trading optimization as the latter saw earnings spike by 85% yoy. Cash spending continues with the buyback pace being maintained at $4bn in the Q2 and the capex guidance having been confirmed.

Q4: gas business proves to be Shell’s crown jewel, bringing estimate-beating profits

In defiance of lower oil and gas prices, Shell booked higher quarterly profits in Q4 FY2022 at $9.8bn. While beating estimates by 21%, annual profits more than doubled to $39.9bn The quarterly earnings were largely driven by the strong gas business, which accounted for 60% of the overall profits. Since good results dictate good shareholder returns, Shell increased the quarterly dividend by 15% as announced and declared another share buy-back programme of $4bn to be executed by March 2023.

Only good surprises

After a discouraging trading update in earlier October, Shell beat the estimates and posted the second highest quarterly results. The adjusted EBITDA was a strong beat by nearly 60%. The adjusted earnings were 18% down qoq due to lower profits from the trading activity. While the results were a good surprise, a better one came along with an additional $4bn share buy-back in Q4, raising the shareholder remuneration to 40% of the operating cash flow.

Lower refining and chemicals lead to disappointing Q3 performance

Significantly lower trading and optimization results for the Integrated Gas segment and sliding refining and chemical margins hit Shell’s Q3 earnings after a historically buoyant Q2 FY2022. This serves as a warning to the entire industry as refining and chemical margins weakened in Q3 across the board.

Q2: aggressive on the buyback

Strong results, above consensus, with an adj. EBITDA beating the Q1 record by more than 20%. The gains stem from the Upstream division (adj. EBITDA of $11.2bn, +24% qoq) on higher oil and gas realization prices and the Chemicals & Products division (adj. EBITDA of $3.2bn, +59% qoq) which benefited from record refining margins. A $6bn buyback has been announced for the quarter and the company confirmed that a shareholder distribution in excess of 30% of CFFO.

Auctus on Friday - 06/05/2022

Imperial Helium (IHC CN)C; Under review: Merger with Royal Helium to build a material player with discovered resources and huge upside - Imperial Helium is merging with Royal Helium with Imperial Helium shareholders set to hold ~30% of the combined entity. The share exchange ratio suggests a 10% premium to the Imperial Helium share price on the day prior to the announcement. Shareholders will vote on the transaction in June with completion expected in the 2nd half of June. Management, insiders a

Q1: H2 distribution above 30% of CFFO

The results are above consensus with an adjusted profit of $9.13bn (+43% qoq) and adjusted EBITDA of $19bn (+16% qoq), with gains in Upstream as well as in trading margins. Shell announces that shareholders’ distribution in H2 (div + buy-backs) is going to be above 30% of CFFO, a positive and above the guidance of 20-30% of CFFO. Currently, Shell is busy with its $8.5bn buy-back (announced in Q4 21) with $4.5bn remaining and to be executed this quarter.

Auctus on Friday - 29/04/2022

AUCTUS PUBLICATIONS ________________________________________ ADX Energy (ADX AU)C; Target price of A$0.060 per share: Flow rate at the top end of expectations at important appraisal well - The Anshof-3 well flowed ~75 bbl/d of light oil (and no water) on test from the Eocene reservoir. This has positive implications for production, reserves and the upside case. The flow rate was at the upper end of expectations (40-80 bbl/d). The well has not been acidized yet which could boost production rate b

Auctus on Friday - 08/04/2022

AUCTUS PUBLICATIONS ________________________________________ Looking at E&P Free Cash Flow - While companies still carry hedges contracted at lower prices, we estimate our producer universe will generate ~25% FCF yield (defined as FCF/EV) in 2022 at ~US$100/bbl. At just US$70/bbl, the overall FCF yield is estimated at 15% for 2023 and >20% for 2024. Assuming US$110/bbl, this increases further to ~40% for each of 2023 and 2024. At YE24, balance sheet net cash, after paying shareholder distributio

Morning Note – 1 July 2024

PANMURE LIBERUM: Commodity snapSHOT: Gold’s rate sensitivity, re-emerges

Metallic Minerals Corp. (TSXV: MMG) – Maiden NI 43-101 MRE at Keno Silver; 2024 Drilling Program Underway

• Metallic Minerals Corp. (TSXV: MMG) (“MMG,” or “Company”) has achieved multiple exploration milestones at its La Plata Copper Project and Keno Silver Project. The Company is now earning royalty monies on alluvial gold claims at its Australia Creek property near Dawson City, Yukon, in the historic Klondike gold district. • Inaugural NI 43-101 MRE at Keno Silver: MMG announced its first NI 43-101 mineral resource estimate at the Keno Silver project from four separate deposits (Formo, Fox,

Oil & Gas - Cavendish sector note

Longboat Energy, Chariot, Empyrean Energy, Coro Energy, PetroMatad, Zephyr Energy, Serica Energy, Jadestone Energy, United Oil & Gas, Angus Energy, Echo Energy, Beacon Energy, Caspian Sunrise, Challenger Energy, Africa Oil Corp, Var Energi, Tamboran Resources. Source: FactSet, weekly change 24/06/2024-28/06/2024 Oil settled little changed after retreating from a nearly two-month high as traders weighed swelling supplies against escalating Middle East tensions. West Texas Intermediate crude fell

Caspian Sunrise - Operational Update

Caspian Sunrise has made the following operational updates this morning: Firstly, Well 155 at the shallow MJF structure has been completed over a 22m interval. 16m of that interval was perforated, from which oil has flowed for three days. The company has stated that oil is now flowing from the well a rate of 900-1000 b/d through a 4.5mm choke. Secondly, the company stated testing at the Deep Well 803 (targeting the Yelemes Deep structure) is ongoing in an unexpected shallower oil bearing h

SP Angel Morning View: Copper demand to rise significantly with shift to cleaner energy sources in India

Anglo American (AAL LN) – Operations suspended at Grosvenor mine, Queenland Ariana Resources (AAU LN) – Completion of merger with Rockover Holdings Bluejay Mining* (JAY LN) – Potential for hydrogen and helium by the Geological Survey of Finland on Outokumpu licenses Bushveld Minerals* (BMN LN) – Orion agrees to provide up to $10m buying Company more time to close on Vanchem disposal and FY23 accounts Caledonia Mining (CMCL LN) – Quarterly dividend maintained Eurasia Mining* (EUA LN) – Tempo

Ariana Resources - Takeover of Rockover Holdings (the Dokwe gold project, Zimbabwe) complete

Ariana announced yesterday that the merger between Rockover Holdings and Ariana has been completed. Ariana has issued 687m new shares (now 1,834m shares now in issue) in Ariana to shareholders in Rockover and will appoint a few key Rockover directors to the board of Ariana. Ariana now owns 100% of the Dokwe gold project in Zimbabwe where the resource has been updated to a Global JORC resource of 56Mt grading 1.0g/t gold for 1.8Moz contained gold.

NextSource Materials | Proposed Saudi Arabian battery anode facility

NextSource has published an important update on its global active anode material strategy which follows hard on the heels of the proposed IFC debt funding for the expansion of the company's Molo graphite mine to 150kt pa. NextSource has released the results of a study on a potential 20kt pa Battery Anode Facility to be built in Saudi Arabia with contemplated expansion to 100kt pa. The initial plant could have an unlevered post-tax net present value of US$677m, using an 8% discount rate, generat

SP Angel Morning View: EV manufacturers rally after upbeat delivery data

Amaroq Minerals (AMRQ LN) – US$35m Revolving Credit Facilities Bezant Resources (BZT LN) – Mankayan project update Chaarat Gold (CGH LN) – Board changes and refinancing update CleanTech Lithium (CTL LN) – Results of Laguna Verde project PFS process plant location study. Endeavour Mining (EDV LN) 1,731p, Mkt Cap £4.1bn – Lafigue commissioning, reports of a cyanide leak at Ity (presumably) Gem Diamonds (GEMD LN) – Eighth large diamond recovered from the Letšeng mine this year Liontown Resour

Small group reserve reduction expected

NextSource Materials - Initiation

NextSource is uniquely positioned to build a leading vertically integrated position, ex China, in the supply of Lithium-ion battery anode material which is essential for the Energy Transition. The company is commissioning phase 1 of its world-class Molo graphite mine in Madagascar and is in the final permitting process for its first Battery Anode Facility (BAF) to be located in Mauritius. The company is backed by Vision Blue, established by Sir Mick Davis, former CEO of Xstrata. On our calculat

PROGRESSIVE: Petro Matad: Placing to fund operational growth

Petro Matad has announced that it is has completed a capital raising providing gross proceeds of approximately US$9m. On top of the US$4.5m cash at the year-end, this will give Petro Matad sufficient funds to grow the business. The immediate task will be to commence the development of the Heron Oil discovery, which will allow the group to start generating cash flows. Management will also look to drill the high-impact Gobi-Bear prospect and invest in its developing renewables business. We believe

SP Angel Morning View:

Anglo Asian Mining* (AAZ LN) – PSA amendments Aston Bay Holdings (BAY CN) - Drilling underway on Storm copper project, Somerset Island American West Metals (AW1 AU) - Drilling underway on Storm copper project, Somerset Island Arkle Resources* (ARK LN) – Drilling at Stonepark, Co Limerick First Class Metals (FCM LN) – Progress report on Ontario exploration First Quantum Minerals (FM CN) – Government to order an environmental audit of Cobre Panama Sovereign Metals* (SVML LN) – Rio Tinto rais

Serica Energy Plc (AIM: SQZ): Operations on track. High net cash.

• 2023 production to date was 43,781 boe/d. very close to our expectations of 44.3 mboe/d. • Production in June at the Bruce Hub of 25,771 boe/d was particularly strong following the recent Light Well Intervention Vessel campaign. This partially offsets the low production in May at the Triton Hub following a trip of a compressor that shut down production for three weeks (the production at Triton has been restored since then). • A 90 day well intervention campaign at Bruce from mid-July is like

Hybridan Small Cap Feast - 3 July 2024

3rd July 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced, or it is a rumour Dish of the day Admissions: IntelliAM AI plc (AQSE: INT) has joined the Aquis Stock Exchange Growth Market. IntelliAM, an artificial intelligence company focused on the consumer goods industry, acquired 53 Degrees North Engineering Limited, to become the Company’s Consultancy divi