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

Auctus on Friday - 25/03/2022

AUCTUS PUBLICATIONS ________________________________________ ADX Energy (ADX AU)C; Target price of A$0.040 per share: Subsidy from the Australian government – ADX has received a A$1.15 mm subsidy to cover a proportion of fixed costs incurred between September 2020 and February 2021. This amount will boost ADX balance sheet and be allocated to the appraisal and development of the Anshof discovery as well as the Vienna Basin Hydrogen Production and Storage Project. This is a material cash injectio

Auctus on Friday - 04/03/2022

AUCTUS PUBLICATIONS ________________________________________ Vaalco Energy (EGY LN/CN)C; Target price increased from £4.80 per share to £5.30 per share: Very large reserves increase – YE21 SEC proved reserves were 11.2 mmbbl, up 250% compared to YE20 (3.2 mmbbl). This large increase reflects (1) a 5 mmbbl addition associated with improved well performance, field-life extension related to cost savings from the replacement Floating, Storage and Offloading vessel, and the addition of proved undevel

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

Falcon Oil & Gas - Funding a Multi TCF Resource

Falcon has raised gross proceeds of US$8.9m via a placing and subscription at a price of 6p/share and the granting of overriding royalty interests. The net proceeds, together with Falcon’s existing cash resources (cUS$4.3m) will be used to fund Falcon’s net share of 2024 capex (cUS$9m) associated with the 40MMscf/d Shenandoah South Pilot Project, including the drilling, stimulation, and flow testing of two 10,000ft horizontal wells. The funds will also enable Falcon to fund its share of the cost

Initiation of Coverage - Critical raw materials for Europe’s green transition

Beowulf is advancing a portfolio of projects in Europe focussed on metals and minerals that are critical to enabling the continent’s transition to a greener economy. Awareness of Europe’s over-reliance on external supply sources for such vital raw materials is driving growing political support for ‘home-grown’ projects. Beowulf is strategically positioned to leverage this fast-evolving trend – its Kallak project in Sweden holds potential to deliver high-quality iron ore to lower the carbon-inten

Morning Note – 22 April 2024

Morning Note – 24 April 2024

Trifast (TRI LN) - Trading conditions remain difficult but self-help initiatives coming through

Despite end market demand remaining difficult in several regions Trifast has announced that revenue and profitability will be marginally ahead of the guidance provided at the end of January. Self-help initiatives instigated during 2023 are starting to come through providing visibility on the majority of the £3.0m savings identified to come through in the current financial year (Mar FY25). Zeus estimates were in line with guidance of £230m revenue, £11.5m EBIT and £6.0m PBT. We leave forecasts un

Sintana Energy Inc. (TSX-V: SEI): Constrained test rate of 14 mboe/d at Mopane-1X. 10+ bn boe in place confirmed.

• Multiple tests over multiple zones in multiple horizons were run at the Mopane-1X exploration well. The flows achieved during the well test reached the maximum allowed limits of 14 mboe/d. The flow rate was constrained by the size of the available surface facilities. • The AVO-1 horizon encountered at Mopane-1X and Mopane-2X are in the same pressure regime, suggesting that the entire area (8 km diameter) between the two wells is connected. Overall, in the Mopane complex alone, and before dril

Touchstone Exploration+ (TXP, House Stock at 44p) - Closing of expanded bank facilities

LIBERUM: Ferrexpo: Production triples

Jubilee Metals - Operational Update Q3 FY2024

Jubilee today reports its Q3 and third quarter operational results from its expanding operations in Zambia (copper) and South Africa (chrome and PGM). South Africa is on a growth trajectory with record chrome production of 409kt in the quarter (Q2 FY2024 381kt) and a monthly record in March of 145kt and production YTD of 1.13Mt (0.94Mt). Jubilee is well underway to its annual target capacity of 2,1Mt/yr especially with the new 300kt/yr chrome plant at Thutse expected to be operational in August

SP Angel Morning View: Gold prices slide following profit taking as traders look to US data

SP Angel Morning View: Copper prices hit $9,700/t as China smelts concentrates for zero charge Tc/Rc

Hybridan Small Cap Feast - 24 April 24

24th April 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 Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi

I3 Energy (I3E LN) - Canada royalty assets sale

I3 has announced the sale of the majority of its royalty interests in Canada, for US$24.8m cash. This allows the company to fully repay amounts drawn on its debt facility and create a working capital surplus, giving I3 significant additional funding flexibility going forward

Alien Metals - Hancock Project, Mining Lease Granted

Alien today reports intraday that the Western Australian Government has granted a mining licence for the Hancock iron ore project for a 21-year term. The granting of the mining licence is the latest milestone delivered by Alien as it advances the project towards development and production.