Daily Brief Energy/Materials: Livent, Crude Oil, Seadrill , Alkane Resources and more

• Allkem Ltd (AKE AU) saw its last day of trading on 21 December. There was large volume at the close as one major index provider gave it the boot. 
• Another delayed their treatment at the last minute, and eliminated a cross-flow.
• But there is still a lot of net buy flow tomorrow (3 Jan) and the next day in the US. Perhaps more than I expected. 

• Happy new year guys – another chapter has arrived and it’s time to make the best out of it.
• First of all, let’s look at the past, the now and the costly mistakes we made during the past year.
• Soft commodities dominated the commodity front during 2023.

• Oil prices surge as tensions in the Red Sea escalate with new and strong provocations from Iran.
• Oil oversupply concerns and weak demand persist while ongoing geopolitical tensions support oil prices.
• WTI current implied volatilities still well below elevated levels seen in October 2023.

• SDRL ended 2023 with a contract that is poised to set the course for day rates moving higher in 2024. Prior to Christmas, SDRL announced two new contracts with PBR
• We estimate one of the contracts has a day rate of $500,000 and should result in other bidding activity to reach and eventually exceed this level in 2024
• We are not making changes to our earnings model and believe there is now greater potential for our estimates having to be revised higher

Following an extensive drilling campaign, on 14 December, Alkane announced an update to its Boda mineral resource estimate to include Boda Two and Three, as expected in Q423. The result of the update was a 30% increase in the gold grade and a 22% (or 1.17Moz) increase in contained gold at Boda, which we value at US$28.2m (4.7 US cents or 7.0 Australian cents per share). The Boda deposit remains open at depth and along strike and a subsequent resource update at Kaiser is anticipated in late Q1 CY24 as well as a conceptual mine plan at the combined Kaiser-Boda deposit in due course.