In today’s briefing:
- Insights on the Odds of MBK Ramping up the Tender Price by 20%
- Latin Resources (LRS AU)’s Scheme With Pilbara Minerals
- Sung Woo IPO Preview
- US Rig Count Rises for First Time in Five Weeks as Oil and Gas Rigs Increase
- [US Nat Gas Options Weekly 2024/37] Henry Hub Inched Up on Production Cuts Amid Hurricane Francine
- Antofagasta (ANTO LN): An Initiation on a Mid-Sized Copper Miner
- [US Crude Oil Options Weekly 2024/37] WTI Crude Rises as Hurricane Impact Offsets Demand Concerns
- VAALCO Energy, Inc. – Multiple Catalysts for Future Growth
- Commodity Analysis – US Steel Coil Futures
- Riley Exploration Permian, Inc. – Efficient Growth Results in High Free Cash Flow Conversion
Insights on the Odds of MBK Ramping up the Tender Price by 20%
- MBK can cut their target volume to 12% and, with 2 trillion won, raise the tender price to ₩800,000, leaving them a 20% cushion.
- MBK’s tight schedule aims to hit the 6.98% target while minimizing price volatility and market risk by shortening the offer window.
- MBK plans to sweeten the deal by about 20%, similar to Hankook, aiming for a 6.98% target with a 20% price hike from the start.
Latin Resources (LRS AU)’s Scheme With Pilbara Minerals
- Back on the 15th August, lithium play Latin Resources (LRS AU) entered into a Scheme with significantly larger peer, Pilbara Minerals (PLS AU). Timing appears fortuitous.
- PLS is offering 0.07 new PLS shares for each LRS share held. LRS shareholders will own ~6.4% of the combined entity. LRS’ largest shareholder, José Luis Manzano (7.9%), is supportive.
- The scrip terms back out an implied price of A$0.20/share or a 67% premium to last close. This is done. And trading accordingly. Expected implementation late November, early December.
Sung Woo IPO Preview
- Sung Woo is getting ready to complete its IPO in KOSDAQ in October 2024. Founded in 1992, Sung Woo produces components for cylindrical rechargeable battery, energy storage system, and automotive.
- The IPO price range is from 25,000 won to 29,000 won. According to the bankers’ valuation, the expected market cap is 376 billion won to 436 billion won.
- The book building for the institutional investors will be conducted from 10 to 16 October. The lead underwriter of this IPO is Korea Investment & Securities.
US Rig Count Rises for First Time in Five Weeks as Oil and Gas Rigs Increase
- US oil and gas rig count rose by eight to 590 for the week ending 13/Sep, the first increase in five weeks and the largest weekly gain in a year.
- US oil rig count increased by five to 488 after staying flat for three straight weeks. Gas rigs rose by three to 97, marking its first increase in four weeks.
- For the week ending 13/Sep, US energy producers added three rigs each in Louisiana, Oklahoma, and Wyoming. Conversely, they cut two rigs each in California and Pennsylvania.
[US Nat Gas Options Weekly 2024/37] Henry Hub Inched Up on Production Cuts Amid Hurricane Francine
- US natural gas prices inched by 1.3% for the week ending 13/Sep, as the uptrend moderated following the impact of Hurricane Francine. Production cuts lifted prices last week.
- Henry Hub Put/Call volume ratio rose to 1.45 (13/Sep) from 1.19 the previous week as put volumes rose by 45.4% WoW, while call volumes grew by 19.2%.
- Put volume and OI surged for contracts expiring on 25/Sep, Oct, and Nov. Call OI rose for expiries on Dec, Jan, Feb, and Mar.
Antofagasta (ANTO LN): An Initiation on a Mid-Sized Copper Miner
- Post our initiations Southern Copper: In a League of Its Own and Teck Resources (TECK US): The New Purish Copper Play In Town, we initiate on Antofagasta PLC (ANTO LN)
- The company provides an excellent channel check for Chile’s mining environment. It accounts for 24% of global mined production in the copper market.
- We provide a comparison between all the mining players’ ROIC and which are the favorable names to play in the space.
[US Crude Oil Options Weekly 2024/37] WTI Crude Rises as Hurricane Impact Offsets Demand Concerns
- WTI futures gained 1.45% for the week ending 13/Sep, as Hurricane Francine offset demand concerns. The smaller-than-expected build in US crude inventories aided in the rebound.
- WTI options Put/Call volume ratio increased to 1.30 (13/Sep) from 1.17 the week prior as call volume fell 36.6% WoW while put volume fell by 29.9%.
- WTI OI PCR dipped to 0.76 for the week ending 13/Sep from 0.78 on 06/Sep. Call OI rose 7.6% WoW and put OI picked up by 4.7%.
VAALCO Energy, Inc. – Multiple Catalysts for Future Growth
- VAALCO is an Africa-focused oil producer with a portfolio of short- and long-lead time development and exploration projects that could materially grow the reserve and production base over time.
- The company owns positions in four African countries, including Egypt, Gabon, Côte d’Ivoire, and Equatorial Guinea. It also owns a position in Canada.
- VAALCO has a long operating history in Africa and stations a dedicated country manager in each jurisdiction to foster close cooperative working relationships with the local authorities and partners.
Commodity Analysis – US Steel Coil Futures
- During the period May 24th, 2024 – August 23rd , 2024, a mixed trend was reflected in the prices of steel coil futures amid fluctuations.
- During the period under consideration, there was an overall decrease in the price of steel coil futures.
- The MA-20 was recorded to perform higher than MA-10 in the beginning of the period, but after that there were many fluctuations with the MA-20 ending up again the MA-10 line.
Riley Exploration Permian, Inc. – Efficient Growth Results in High Free Cash Flow Conversion
- Riley’s conventional asset base on the Northwest Shelf portion of the Permian Basin positions the company to efficiently allocate capital to grow the underlying reserve and production base while generating free cash flow that can be used to maintain a conservative balance sheet and support the common stock dividend.
- Our modeling suggests that Riley could convert more than 50% of FY24/FY25 discretionary cash flow into free cash flow.
- Our modeling suggests that estimated FY24/FY25 free cash flow provides more than 4.0x coverage of the current dividend
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