Quantafuel and AEC are on the move

Congratulations to those who bought with me Quantafuel last week before the Q1 as I suggested in two posts last week. 31% in three days is a decent return.

I believe that this is just the beginning for Quantafuel. This is trending stock. I believe we have seen a bottom last week. The share price peaked around 80 NOK in September. If the company delivers as they promised on the call, I believe we will see 100 NOK in H2. When they start building a plant with a strategic partner, the share price will be heading to 200NOK. Quantafuel is my second largest position, after ERII (Energy Recovery).

Please note that Dr. Lach who joined Quantafeul from BASF reported share purchases on Friday:

Dr. Christian Lach, Deputy CEO and Chief Commercial Officer in Quantafuel ASA, has today bought 13,500 shares in Quantafuel ASA at a price of NOK 34.98 per share. After the transaction, Dr. Christian Lach holds 13,500 shares and 450,000 options in Quantafuel ASA. Kristian Flaten, CFO in Quantafuel ASA, has today bought 3,000 shares in Quantafuel ASA at a price of NOK 34.70 per share. After the transaction, Kristian Flaten holds 3,000 shares and 200,000 options in Quantafuel ASA.

Africa Energy has not been going as I expected. Since I wrote about it in September, the share price is 40% down. Despite the successful drilling results of 11B/12B, one of the largest deposit of gas condensates in the world, where AEC owns 10% interest. I believe that there were two reasons for the decline. Retail sold the fact and uncertainty over negotiations with the South Africa Government. I believe that AEC bottomed last week. There are two reasons for this:

  • The South African Government submitted the new Energy bill to the parliament. It indicates an agreement – see the article below
  • The drilling campaign on 2B plot is in progress – in the past AEC share price was growing as the drilling progressed. I expect this time it will be the same, multiplied by the South Africa agreement resolution.


Petroleum Bill has lift off at last

14 May 2021

South Africa’s gas potential, and interest from investors, meant government was under pressure to forge ahead with its legislative reforms needed to address upstream issues – which, until yesterday, have been in limbo.

In a media statement released on 13 May 2021, the Ministry in the Presidency announced that Cabinet has approved the submission of the draft Upstream Petroleum Resources Development Bill to Parliament.

“The Upstream Petroleum Bill was first published in the Government Gazette on 24 December 2019. Written submission from industry stakeholders were submitted by 21 February 2020. Government consultations on the industry submissions were conducted by the Department of Mineral Resources and Energy and the Petroleum Agency between April and May 2020. In September 2020 Government verbally presented its proposed amendments to the Upstream Petroleum Bill to industry stakeholders, which amendments aimed to address the concerns of raised by industry stakeholders,” says Megan Rodgers, director at Cliffe Dekker Hofmeyr (CDH) and head of the firm’s oil and gas sector.

“A significant and welcomed amendment to the Upstream Petroleum Bill, would be the introduction of the petroleum right, which will govern the key terms of both the exploration and production phase. We expect to see the introduction of a retention permit which is to be granted in instances where development and production of petroleum not possible owing to unfavourable market or economic conditions and to enable a petroleum right holder to undertake gas market development, if so applicable. We also expect to see the end of granting of technical cooperation permits.

“We hope to see black-owned oil and gas companies having the right to dilute both shareholding equity and participating interest in order to raise funding to meet its participating share of costs,” said Rodgers.

She added that CDH would like to see recoverability on the state carry with a percentage of the state’s annual share of production to be allocated for repayment of its proportionate share of exploration and production costs. “We also hope to see all references to production bonus and petroleum rent tax removed from the Upstream Petroleum Bill, given these fiscal terms had not been fully formed and created investor uncertainty.”

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