Pareto Energy and Shipping Conference – Main Comments

Pareto Securities hold its annual Energy and Shipping conference. More than 150 companies presented to more than 1500 investors. Major event for the year.

Pareto Securities published most important takes from each presentation. I enclose below a few we found interesting. The bold emphasis was added.

Africa Energy

CEO Garrett Soden
• Africa energy and the partners on Block 11B/12B offshore South Africa recently submitted an application for Production Right, thereby reaching an important milestone for the development of large gas condensate resources of >1bn boe gross
• The partners have proposed a fast-track development of the 11B/12B Luiperd discovery using an Early Production System (EPS) with nearby existing infrastructure
A Gas offtake agreement for the 11B/12B development has been negotiated, and Africa Energy expects to announce offtake terms shortly
• The company also highlighted the drilling of the high-impact exploration well, Gazania-1, in Block 2B offshore South Africa which set to commence in late September

Africa Oil
CEO Keith Hill
• Africa Oil highlighted a strong dividend stream from its Nigerian assets held through Prime, resulting in a short payback time for the USD 520m acquisition
• Going forward, the company will focus on optimizing operations and growing the output of its Nigerian asset base through infill drilling and satellite tie-ins, with 9 wells to be drilled over the next 12 months
The company also emphasized that it has several important near-term catalysts including a license extension at OML 130 and the related RBL refinancing
Other important near-term catalysts include the Gazania-1 spud in late September and an announcement of the gas offtake terms in the 11B/12B development in South Africa, both through Africa Energy’s portfolio of exploration companies

Aker Horizons
CEO Kristian Røkke
• Reiterated its ambitious growth targets ahead with emphasis on the opportunity set increasing since the company was established
• Focused on the potential of Northern Norway in terms of establishing green industry at scale driven by the region’s vast hydropower resources. Therefore, the company has already stated to invest in preparations for a larger build-out of capacity
• A comfortable cash position (est. NOK 10bn in cash equity) enables the company to look at both organic and inorganic growth opportunities

Cloudberry Clean Energy
CEO Anders Lenborg
• Cloudberry has a portfolio of projects in operation and under construction totaling 156 MW and another 168 MW in construction permits. Further, the company has a sizeable backlog of 420 MW and a pipeline of >2,500 MW including shallow water projects in the Baltic Sea
• The ramp-ups in production at Bøen I & II and Skåråna are completed
• The 163 MW Odal wind farm is close to complete with 32 of 34 turbines energized
• The company emphasized the strong power price outlook driven by ambitious climate goals and higher energy demand due to the electrification of industries. The outlook is favorable for Cloudberry

GreenCap Solutions
CEO Ørjan Aukland
• GreenCap Solutions reported progress across all segments; the AgTech project is currently being finalized, and the commercialization of their large-scale direct air capture technology with Norske Skog is continuing at full speed, backed by the recently announced partnership with Vanir Green Industries called Removr
• Moreover, the company highlighted the key differentiators from conventional capture technology. Firstly, in a world with volatile energy markets, efficiency is crucial for reaching financially viable capture solutions, and GreenCap’s zeolite-based technology is one of the most efficient capture technologies
• Secondly, utilizing zeolites, compared to traditional amine solutions, offers a strong value proposal – being more sustainable. The company concluded by commenting that in order to achieve full commercialization of their DAC solutions, the company is considering different financing opportunities

HydrogenPro
CEO Richard Espeseth
• HydrogenPro reiterated its main message from its Q2’22 update, noting large growth in its sales pipeline, growing revenue backlog, and capacity expansion plans
• HydrogenPro received an order to deliver 220 MW to the world’s largest green hydrogen energy hub in Utah earlier this year. It also signed a 10-year service agreement to the project and holds a backlog of close to NOK 800m. HydrogenPro will complete the fabrication of the electrolyser systems in Q3 2023, followed by onsite work with completion in late 2024
• The company is increasing its presence in the US, and is looking to build a 500 MW electrolyser manufacturing plant there in 2023. It has a bullish attitude regarding the major trigger for green hydrogen in the US that comes with the recently passed Inflation Reduction Act. Beyond the Utah project, the company has several other opportunities in the US
• As the company targets to ramp up capacity, targeting 1.3 GW total installed capacity by year-end 2023 (expansion of 1 GW) and >5 GW in 2025-2027, the company comments that more financing is needed

Quantafuel
CEO Lars Rosenløv
• Quantafuel is embarking on a large-scale global roll-out. The chemical recycling industry has grown from an entrepreneurial game to an industrial game. The objective for all players in the field is to scale up volume quickly, and Quantafuel is ready to scale
• The company reiterated that Skive has served its main purpose. The knowledge and learnings gathered during the Skive project are now the core of Quantafuel’s IP
• The company’s project in Dubai together with Dubal Holding and BASF will eventually provide scale when commissioned. The targeted timing of production starting in 2024 remains firm
• The technology licensing MoU with Saipem will also drive growth and scalability going forward while adding licensing to Quantafuel’s business model
• However, the company will remain a build, own, operate company with upstream integration through the sorting facility at Esbjerg, which is currently under construction
• After the launching of the Quantafuel MK II, the global roll-out can begin

See the previous post on this blog on my call with QFUEL that includes further updates

Hafnia Ltd. – CEO Mikael Skov
Seeing a remarkably strong product tanker market, with strength across all basins and asset classes at present. Emphasized the stellar timing of its two recent acquisitions; the chemical tanker fleet of Oaktree (previous Navig8 Chemical Tankers) and the LR1 fleet from Scorpio
• Recently published a strong Q2 report, but says Q3 will be better – and that current runrate far exceeds analyst estimates. Q4 likely to be better than Q3 again – at least based on where the quarter is starting off. Highlights how we normally should see a strong winter market than where we are now
• Not at all seen the full effect of Russian cargoes diverted elsewhere yet – but that will be a major positive
• Supply-story positive, stated that ‘even if both Hafnia and our competitors wanted to build this market to pieces, we would not find the yard capacity to do so’
• Has an ‘at lest 50% of EPS’ policy, and does not want to be under-levered. As such, dividend pay-outs of more than 50% of earnings in the near future appears likely

Golar LNG – CEO Karl Staubo
• Golar highlighted how the company has transformed in recent years, selling assets for USD 6.8bn – and now remains solely focused on upstream FLNG units, where they can deliver cheap and reliable LNG production
• This leaves the company positioned to help solve the global energy crisis, with one operational FLNG unit, one under construction (86% complete) and several projects being discussed – backed by USD ~1.5bn in cash and listed securities
• CEO Staubo reiterated how Golar target to announce new FLNG projects within 2022 – and how the company with its net cash position and firm EBITDA generation with a large portion of the commodity upside hedged at firm levels, can execute 2 – 3 projects in parallel

Cool Company – CEO Richard Tyrrell
• CoolCo was spun out of Golar LNG earlier this year, and currently has a fleet of eight TFDE vessels built in 2013 – 14
• States that it is the last LNGC owner that actually has an available ship for the upcoming winter season, and the CEO was firm on his ambition to really take advantage of this position
• Will be a trade-off between spot and shorter/medium term TCs, they will have to evaluate the economics on a case by case basis. They have fixed to of their ships on 1Y TCs this year, at rates rising from USD 120,000 this spring to USD 140,000/day recently
• Perhaps a little surprisingly, they would not rule out newbuilding opportunities. Also has growth options through Quantum Pacific’s fleet of 2+2 modern LNG carriers that recently were taken over from a Sovecomflot-bank
• Also looking to improve its float and trading liquidity, a US listing seems likely

Disclosure:
The goal of the blog is to provide investment ideas for further research. I/we have a beneficial position in the shares discussed above either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. The article does not represent investment advice. Please do your own research before making any investment action.

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