Daily Brief Energy/Materials: Vedanta Resources, Crude Oil, Medco Energi, Ionic Rare Earths, Kinetik Holdings and more

Vedanta Resources (VRL) has launched a roadshow to market its USD 144A/RegS benchmark-sized notes (likely to be 5NC2 or mainly 5NC2, and/or 7NC3), with a potential total size of USD 1.5 bn. The proceeds will be used to refinance the USD 13.875% 2027 notes (USD 470 mn outstanding) and USD 13.875% 2028 notes (USD 1,008 mn outstanding). VRL has sent a conditional redemption notice to trustees of the 2027 notes and 2028 notes, assuming the proposed notes issuance is successful.​ VRL has concurrently launched a tender offer for the 2027 and 2028 notes. 

We expect the proposed 5NC2 notes to price at c. 10%, and the 7NC3 notes at c. 11%.

• For the week ending 30/Aug, US crude inventories fell by 6.9m barrels, surpassing analysts expectations a 600k barrel drawdown. Distillate stocks surprisingly dropped, while gasoline inventories unexpectedly rose.
• US natural gas inventories rise 13 bcf for the week ending 30/Aug, missing analyst expectations of a 26 bcf buildup. Inventories are 10.7% above the 5-year seasonal average.
• ADNOC to acquire a 35% stake in ExxonMobil’s proposed low-carbon hydrogen facility. BPN Paribas raised the target price on Chevron, while Grupo Santander downgraded TotalEnergies.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Greentown China
• Medco Energi

• Ionic Rare Earths Ltd (ASX:IXR) is a magnet (REOs) recycling (Belfast, UK) and REE mining explorer (Uganda) plus a Brazilian REE Refining JV, excluded from our NPV, with Viridis Mining and Metals Limited (VMM).
• ACF visited IonicTech’s magnet recycling demo plant in July 2024.
• Since our last IXR Flash Note, we raise our valuation by 16% to A$ 0.109 vs A$ 0.094 previously and put Makuutu in a maintenance period.

• Kinetik’s Second Quarter 2024 earnings results reflect a period of significant transition and growth, underscored by its expansion through strategic acquisitions and portfolio adjustments.
• The quarter marked the closure of the GCX divestiture and the Durango acquisition, broadening Kinetik’s operational footprint in the Permian Basin, particularly into the northern Delaware Basin.
• This expansion not only diversifies Kinetik’s geographic footprint and customer base but also improves its balance sheet and aligns with its strategic growth ambitions.