Daily Brief Energy/Materials: Rio Tinto , NOF, Balchem Corp, Denison Mines , CNOOC Ltd, NexTier Oilfield Solutions , SandRidge Energy , Weatherford International , Cabot Corp, Gulf Island Fabrication and more

• Solactive has announced the review results for the Global Lithium Index. There are two additions for the index and there will also be capping changes for some stocks.
• Estimated one-way turnover is 26.3% and will result in a round-trip trade of US$813m. There are some stocks with over 0.5x ADV to trade.
• The index has broken out of the secular downtrend, but investors continue to redeem units from the ETFs tracking the index.

• Japan’s defense budget may be set to surge by about 50%, making NOF’s ammunition business a hot theme.
• Be careful though. NOF’s munitions segment faces production limits and slow capacity expansion, capping near-term profit growth even with new defense spending.
• We think NOF is overvalued, even as we acknowledge consensus forecasts are probably too low. But shorting now would probably just be fighting the tape. Save this idea for later.

• Balchem Corporation reported robust financial performance for the third quarter of 2025, setting record figures across key financial metrics.
• The company achieved consolidated sales of $268 million, which marked an 11.5% increase from the prior year, and delivered record earnings from operations at $55 million, reflecting a 13.7% rise.
• This resulted in a net income of $40 million, up by 19.1%.

• Denison Mines is a leading Canadian uranium development company, strategically positioned to capitalize on the resurgence of nuclear energy through its portfolio of high-grade assets in the Athabasca Basin, the world’s premier uranium district.
• The flagship Wheeler River project, the largest undeveloped uranium project in the eastern Athabasca Basin, is being de-risked with the Phoenix deposit slated to be Canada’s first In-Situ Recovery (ISR) uranium mine, promising potentially industry-leading low operating costs.
• As a pre-production entity, Denison represents a high-risk, high-reward investment proposition, with its valuation heavily dependent on the successful development of its assets, regulatory approvals, and the volatile price of uranium.

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• The last two weeks have seen “Beautiful Skew” behave badly across the ten trading days. CNOOC Ltd (883 HK) is trading too wide for its div into year-end.
• The long reco on Guangzhou Automobile Group (2238 HK) two weeks ago saw the H-share rise 6.8% from the next day through Friday, and the H OUTperformed its A by 2.62%.
• The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Pairs Monitor are both there – free – for all SK readers.

• Transformative Merger: NexTier’s merger with Patterson-UTI Energy has created a leading, integrated North American drilling and completions powerhouse with an enterprise value of approximately $5.4 billion. This combination is expected to generate significant synergies and enhance free cash flow generation.
• Strong Financial Rebound: The company has demonstrated a robust recovery from the 2020 industry downturn, with significant year-over-year growth in revenue and a return to strong profitability and free cash flow generation in 2022 and the first half of 2023.
• Shareholder Return Focus: The combined entity is committed to a strong shareholder return policy, targeting the distribution of at least 50% of its free cash flow to shareholders through dividends and share repurchases.

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• SandRidge Energy is a debt-free, independent oil and gas company focused on the Mid-Continent region of the U.S., primarily Oklahoma and Kansas, with a strategy centered on low-cost operations and shareholder returns through dividends and buybacks.
• The company has shifted from a growth-oriented model to one focused on maximizing value from its existing low-decline asset base, supplemented by bolt-on acquisitions like the recent Cherokee play assets in the Western Anadarko Basin.
• Financial performance is highly sensitive to volatile commodity prices; while recent years have shown strong profitability and the initiation of a dividend, revenue has been on a declining trend, reflecting a mature asset base and strategic shifts away from aggressive drilling.

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• Weatherford International’s third-quarter 2025 performance exceeded expectations, demonstrating resilience despite ongoing market challenges.
• The company navigated a soft macroeconomic environment and operational headwinds, showing slight sequential growth in North America due to a seasonal boost in Canadian activity and a modest recovery in offshore businesses, although offset by a decline in U.S. land operations.
• Latin America marked a 10% revenue increase, primarily in Mexico, suggesting emerging stability after prior declines.

• Cabot Corp is a leading global specialty chemicals and performance materials company, holding strong market positions in its core segments of Reinforcement Materials and Performance Chemicals.
• The company is strategically focused on driving growth through innovation in high-performance applications, such as battery materials for electric vehicles, and expanding its portfolio of sustainable and circular products.
• Strong financial performance is characterized by robust cash flow generation, improving profitability margins, and a consistent track record of returning capital to shareholders through dividends.

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• Gulf Island Fabrication (GIFI) has successfully executed a strategic turnaround, shifting from significant losses in 2023 to profitability in 2024, driven by improved project execution and cost controls within its core fabrication business.
• The company is strategically positioning itself to capitalize on growth in the renewable energy sector, particularly offshore wind, leveraging its decades of experience in complex offshore steel structures for the oil and gas industry.
• While the financial recovery is notable, GIFI faces risks tied to the cyclical nature of the energy and infrastructure sectors, project-based revenue concentration, and intense competition, making sustained profitability and growth contingent on continued operational excellence and securing a consistent project backlog.

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