In today’s briefing:
- NPS Will Vote Against the Merger Between SK Innovation and SK E&S
- NPS Effectively Decides to Exercise Appraisal Rights Against SK Innovation: Trading Considerations
- [ETP 2024/34] Oil Slips on Weak Economic Indicators in US & China; Nat Gas Battles Oversupply
- Teck Resources (TECK US): The New Purish Copper Play In Town
- Panoro Energy ASA (OSE: PEN): Reserves Addition in Gabon. Strong Financials
- Murphy Oil Corporation: Expanded Presence In Vietnam As A Critical Growth Lever!
- TM: Q1 Financials: Positive OCF & EBITDA
NPS Will Vote Against the Merger Between SK Innovation and SK E&S
- NPS will vote against the merger between SK Innovation and SK E&S, mainly due to significant concerns about destroying shareholder value (especially for SK Innovation shareholders).
- Sustinvest also recommended that institutional investors vote against this merger, citing that the merger ratio between SK Innovation and SK E&S is disadvantageous to SK Innovation’s general shareholders.
- If NPS exercises its appraisal rights, this could put a knife in the wheel of the M&A merger between SK Innovation and SK E&S.
NPS Effectively Decides to Exercise Appraisal Rights Against SK Innovation: Trading Considerations
- NPS’s opposition suggests a likely vote against the merger, but if they plan to exercise appraisal rights, they might abstain to preserve that option.
- NPS typically exercises appraisal rights when the spread exceeds 5%, as seen in past mergers like Celltrion and Samsung. They didn’t act when the spread was below 5%.
- The key question is whether SK Innovation can boost its stock price to avoid NPS exercising rights. Otherwise, the merger may pass, but the stock could drop significantly.
[ETP 2024/34] Oil Slips on Weak Economic Indicators in US & China; Nat Gas Battles Oversupply
- For the week ending 16/Aug, US crude inventories dropped by 4.6 mb, exceeding the expected 2 mb drawdown. Gasoline and distillate stocks also declined, surpassing analyst expectations.
- US natural gas inventories rise 35 bcf for the week ending 16/Aug, exceeding analyst expectations of a 26 bcf buildup. Inventories are 12.6% above the 5-year seasonal average.
- UBS cut its target prices on Halliburton and Schlumberger but raised it for ExxonMobil and Occidental. Jefferies lowered its target price on Chevron.
Teck Resources (TECK US): The New Purish Copper Play In Town
- After selling its coking coal business to Glencore Plc (GLEN LN), Teck Resources (TECK US) has pivoted to copper as its primary growth driver.
- The 7.3 bn CAD cash (20% of Mkt cap) received from the sale of the coal business stake is being used for buybacks, debt repayment, and growth opportunities.
- The stock is cheap on an EV-EBITDA basis at 7.5x, but we are not too fond of the business’s low ROCE.
Panoro Energy ASA (OSE: PEN): Reserves Addition in Gabon. Strong Financials
- The 1H24 production and the cash position had been reported previously.
- Panoro generated ~US$54 mm cash from operations (we expected ~US$48 mm) with a US$22 mm positive working capital movement.
- At the end of June, current accounts receivable of ~US$72 mm were well above the current payables of ~US$43 mm.
Murphy Oil Corporation: Expanded Presence In Vietnam As A Critical Growth Lever!
- Murphy Oil Corporation reported a solid performance in its second quarter of 2024, reflecting the ongoing execution of its fundamental strategic priorities: Delever, Execute, Explore, and Return.
- The emphasis has been on consistent debt reduction, operational enhancements, and enriched shareholder value through opportunistic share repurchases and dividends.
- During this quarter, the company notably repurchased $50 million of senior notes, and it remains on track to meet its long-term debt target of $1 billion.
TM: Q1 Financials: Positive OCF & EBITDA
- Trigon announced its Q1/25 financial results, reporting strong numbers with Q1 being the first full quarter of underground production.
- TM more than doubled its revenues from the previous quarter ($10M vs. $3.9M) and reported its first positive operating cash flow since starting production.
- The Company reported an improved adjusted EBITDA of $1.8M and a further decreasing C1 cash cost of $3.23/lb.
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