Archive for Energy

Uranium Explorer Set to Profit in Market Upswing

The Energy Report

Source: Maurice Jackson for Streetwise Reports   07/12/2019

In this interview with Maurice Jackson of Proven and Probable, the head of this junior miner in the Athabasca Basin discusses recent developments in the uranium market and the projects his company is focused on the region.

Maurice Jackson: Joining us for a conversation is Jordan Trimble, the president, director, and CEO of Skyharbour Resources Ltd. (SYH:TSX.V; SYHBF:OTCQB), a preeminent uranium explorer in Canada’s Athabasca Basin. Sir, please introduce us to Skyharbour Resources, and the opportunity you present to the market.

Jordan Trimble: Skyharbour is a high-grade uranium exploration and early stage development company with six projects scattered throughout the Athabasca Basin, which is in northern Saskatchewan in Canada. For those of you not familiar with the Athabasca Basin, it’s the highest grade depository of uranium in the world. Saskatchewan is ranked as the number three mining jurisdiction in the world by the Fraser Institute—so, really, it’sthe best place in the world to be looking for and developing uranium deposits.

We started the company about six years ago, and what we saw was the contrarian opportunity in the uranium space to go out and really build a foundation, build a company up that would allow investors to get exposure to a couple of things.

[First, we saw] an improving uranium market, so as a uranium-focused company, when the uranium price moves up, we’ll see our share price respond positively. Post-Fukushima, when we started the company, we saw an opportunity to go out and basically build an asset base, put a team together to take advantage of that.

And then secondly, we are an exploration company. We’re out there looking for the next big, high-grade deposit in the Athabasca Basin. If you look at recent discoveries in the Athabasca Basin, some notable companies like NexGen Energy Ltd. (NXE:TSX; NXE:NYSE.MKT), Fission Uranium Corp. (FCU:TSX; FCUUF:OTCQX; 2FU:FSE), and Hathor Exploration Ltd. previously, which was acquired by Rio Tinto Plc (RIO:NYSE; RIO:ASX; RIO:LSE; RTPPF:OTCPK) for $650 million. These companies went from small cap, $20 to $30 million valuations, to hundreds of millions on the back of high-grade uranium discoveries in the Basin. At Skyharbour, that is our main focus. We are an exploration, discovery-driven company. We’re out there looking for more high-grade uranium mineralization.

In addition to that we act as a prospect generator, so we do have a dual prong strategy at the company. We have our main flagship project, called the Moore Lake Project, which is situated in the eastern part of the Athabasca Basin, near the infrastructure, near mills and roads, and power. That is where we’re drilling and exploring, and that’s where we feel we have the best shot of finding more high-grade mineralization. It’s important to note that we do have high grade at the project already, at what’s called the Maverick Zone. We’ve found, and previous operators have found, high-grade uranium mineralization. We reported results as high as 21% U3O8over a meter and a half, 6% U3O8over six meters.

We have five other projects that we’ve acquired over the last five and a half, six years, in addition to our flagship, Moore. Those five other projects we look to option or joint venture out. We look to bring in partner companies, strategic partners if we can, and those partners come in and fund the exploration and development at those projects. We also get some cash and stock payments, typically, as well, and then they earn in, and thereafter, a joint venture partnership is formed.

So, that really allows us to have multiple irons in the fire. It allows us to have potentially exposure to multiple discoveries and successful exploration programs. As a shareholder, exposure to high grade discovery in the Athabasca Basin, which we’ve seen with other notable companies, has yielded significant returns for shareholders in recent years.

Maurice Jackson: The company employs a simple, efficient business model, known as PTP. What is PTP?

Jordan Trimble: It’s an acronym we like to use to simplify the three real, key pillars of the business. It’s the people—and within that you have the management team, the board, you have the technical and geological team, you have two notable strategic partners, one of which is our largest shareholder, Denison Mines Corp. (DML:TSX; DNN:NYSE.MKT). They’re listed in New York. They’re one of the larger publicly traded uranium companies out there. Their president and CO, Dave Cates, is on our board, so [we have] a very close working relationship with them. And another strategic partner at the project level is a company called Orano, which is France’s largest uranium mining company, headquartered in Paris—a state-run, big, multinational company. They’re earning in 70% at one of our projects called the Preston Project, and to earn up to 70%, they have to spend $8 million, the bulk of which being spent in exploration and development activities over a six year period.

And then last but not least, within the people involved in the company, running the company, and helping us grow this company, are our shareholders, and there’s some notable, large shareholders, that are a part of Skyharbour Resources.

The next letter stands for timing, and timing has everything to do with where we’re at in the uranium cycle, where we’re at in the uranium market right now. As I said earlier, we started this company in a depressed uranium market. We saw an opportunity to go in there and acquire projects at attractive valuations, and build a project portfolio, which we’ve been doing over the last five and a half, six years. We’re starting to see a recovery. It appeared to have bottomed out in late 2016, traded down to $17.75, which is one of the lowest it’s traded at, and that’s on a per pound basis. It’s one of the lowest it’s traded at, in inflation adjusted terms, ever. And since then it’s been ticking up.

It’s been somewhat volatile, but we’ve seen it trade in between the low $20s and high $20s, but clearly the trend has reversed. So, timing with the uranium market, I think especially right now, is very important, and a key talking point for us as a uranium company.

And then last but not least, the projects—the asset base. As I talked about earlier, we have two strategies. One, we’re focused on drilling and advancing our flagship Moore Project. You’ll see a news flow out of that over the coming years. We just announced recent drill results from a winter spring program, and planning an upcoming summer program. And then secondly, prospect generation at the other properties, bringing in partner companies to fund and advance those projects, so that we can focus our time, money and effort at our flagship Moore Project.

Maurice Jackson: With regards to PTP, let’s begin with the letter T. Jordan, I believe it’s paramount for audience members to have a full comprehension on the supply and demand fundamentals of uranium, to truly appreciate the opportunity that Skyharbour Resources presents to the market. Mr. Trimble, what is the current and future demand for energy, and how does uranium fit into this narrative?

Jordan Trimble: Uranium is predominantly used for nuclear power. Globally right now, you are seeing a number of countries leading the charge, in particular in the developing world, specifically China, India, other parts of the developing world, which are pushing forward their nuclear power plant agendas. Nuclear energy provides base load, CO2 emissions-free, low-cost energy, right? So, it really is the only source of 24/7 clean electricity. It generates electricity to over 90% capacity factor, unlike renewables, [where] you need the wind blowing, you need the sun shining for wind and solar; you need rivers for hydro.

So, nuclear can generate clean electricity 24/7. It’s effective. It’s cost-effective, and it’s quite safe, as well, despite what we may see in the media. Nuclear is reliable, it’s low cost, and it’s quite safe. It also provides grid and price stability, and anchors local community with jobs and a tax base, so it’s a very important part of the global energy mix. It actually accounts for about 11% of global electricity generation. In the United States, it’s about 20%, one in five homes, and if you look at countries like France, for example: France gets over 70% of its electricity from nuclear, so it’s a very important part of the global energy mix.

It is unmatched electricity generation in a megawatt-per-square-kilometer basis. If you look at the largest offshore wind farm in the world, the Walney [Wind Farm in the Irish] Sea, it generates less than 2 megawatts per square kilometer, whereas the largest nuclear power plant in the world generates just under 2,000 megawatts per square kilometer, so it’s also important to note that you can get a lot of clean electricity in a very small area.

So nuclear, as it pertains to the global energy mix, is important, but it’s also going to be very important going forward combating climate change. So, if you look at the Paris Climate Agreement from a few years back, trying to limit the rising global temperatures to two degrees by the end of the century, if you run the models, nuclear has to play an important role. You have some major and well-known investors and thought leaders globally that are pro-nuclear, in particular a couple well known people in the U.S., including Bill Gates and Peter Thiel. These are perfect examples of individuals, thought leaders, successful entrepreneurs that have done their research and understand the importance of nuclear as a part of a clean energy grid and generation going forward.

Bottom line is you have global demand for electricity expected to grow by almost 80% by 2030, a big part of that being the advent of electric vehicles, and this is where uranium as the fuel for nuclear power is going to play a very important role. We need to find more of it. We need to see more investment in projects going forward, in new mines that can deliver that uranium, that fuel to the next wave of clean nuclear reactors.

Maurice Jackson: Multilayered question: How many operable reactors in the world, how many are under construction, and how many more are being planned and or proposed?

Jordan Trimble: It’s a great question. Currently you have 447 operable reactors globally. You have 56 reactors under construction, and you have about another 450 reactors ordered, planned and proposed. The growth centers for nuclear are in the developing world, where you have billions of people coming up into new middle classes, and these are the places that need a lot of clean electricity. They need base load power. China, India, even parts of Africa, are looking to build nuclear power plants. One good example also is Saudi Arabia, which is planning on developing about 16 nuclear reactors—$100 billion that they’re planning to invest in nuclear, and that’s quite interesting, given that it’s the oil and the solar capital of the world. That says something about nuclear going forward.

So, you see a pretty steady growth in nuclear reactors, and uranium demand going forward. Just to give you some numbers there: In 2019 we’re expecting over 196 million pounds of demand of uranium, and over the last several years, we’ve seen major supply curtailments, project deferrals and mine closures. You’ve seen, in 2016, where the primary mine supply amounted to about 163 million pounds of uranium. That’s fallen to less than 138 million pounds here, and we expect that number could continue to decrease with new projects that are being deferred. . .mines that have been producing uranium that are coming to the end of their mine lives, and simply underinvestment in new projects. So there is a major supply deficit looming here, with primary mine supply well below the average consumption of uranium. That supply deficit has had to be met by secondary supply, so we’ve been eating into inventories and secondary supplies to meet the annual demand and annual reactor requirements.

Maurice Jackson: What does the current cost of capital for uranium producers, versus the current spot price, suggest?

Jordan Trimble: Yeah, so this is a big talking point right now, where you have the current spot price at about just under $25 a pound. The contract, long-term contract price is about $32 a pound. The average all-in cost, globally, is between $40–45 a pound, and the price needed to incentivize new production to come online, new builds, new project development, a lot of analysts are estimating that between $50 to $60 a pound, so you are trading at a significant discount to the average, all-in cost of production, as well as the price needed to incentivize new development, and that’s where it gets exciting in terms of the potential upside.

We’ve seen the price of this commodity over a 50-, 60-year period go through these boom and bust periods. It’s a very cyclical commodity. We’ve seen it go through long periods of low prices, and it’s like a coiled spring. It goes through these long bear markets, and then we see the supply side respond, which is what we’re seeing right now. We see demand continuing to grow, and all of a sudden, we see the price shoot up, and we saw this a couple times in the last 15 years. In 2006–2007, we saw the price move from $15–20 a pound in the early 2000s, to a high of over $130 a pound, and needless to say, uranium equities did very well during that period of time. A lot of money was made.

And then again, after 2008, the price got down to $40 a pound, and we saw it almost double back up to $70 a pound in 2011, right before the Fukushima accident happened. So, now we’re back down to $24–25 a pound, and I think we’re gearing up for a big move over the coming years.

Maurice Jackson: With uranium, the spot price is only part of the story. What gets overlooked in the discussion is the contract price. Where is the supply going to come from, and at what cost?

Jordan Trimble: You see two prices for it. The spot price, which again is in the mid-$20s, seems to be what equity market participants look at. But the reality of it is most uranium historically has traded through these long-term contracts, and the current contract, long-term contract price is about $32 a pound. And what we see happen in this sector is the largest buyer of uranium—being utility companies, nuclear utility companies globally—typically get their uranium through these long-term contracts with mining companies, and so you don’t see it like the spot market, moving as much on a daily basis. . .It’s a little stickier, and it’s based off of recent contract prices, but that’s really the price that, again, most of the material is traded at, is bought at. So that’s really the price that needs to be looked at.

Nonetheless, people still focus in on the spot price. We have seen quite a bit of spot market activity in the last several years, and I think this is a bullish indicator. In 2018, we saw over 88 million pounds transacted on the spot market, which is one of the highest, I believe, level of spot market activity in volume ever. So, when we talk about the price of the uranium, we look at 2016, and the spot market, as a bottom being put in. We are now seeing the volume indicate, along with the rising price, indicate a real recovery underway, and I think it’s all gearing up for a breakout. There are a couple of key catalysts on the near term horizon that we’ll talk about, but this is all bullish for the price, and it is, again, important to distinguish the contract long-term price, and the spot price.

Maurice Jackson: Does Section 232 in the United States factor into this discussion?

Jordan Trimble: That’s a great question, and I’ll get to that, but just before I do, and this ties in with that question, as well, I’d like to just talk briefly about what I think will be the biggest catalyst for the price, both in the spot and the contract price going forward—[which] is a new contracting cycle. And we’ve seen this in the past, 2006, 2007, 2009 to 2011: What really drove the price were new long-term contracts, big contracts being signed between the mining companies and the utility companies. If you look at the next five to ten years, there are a lot of uncovered requirements. That means uncovered fuel requirements at the current, operating nuclear reactors.

So, that’s current contracts that will be expiring, and have to either be renegotiated. That material will then have to be bought somewhere else. So, if you look at the numbers here, about 20% of demand for 2021, 2022 is uncovered, 50% by 2025, and almost two thirds by 2030. And the U.S. nuclear utilities: In the next several years, their uncovered requirements go up quite a bit, so they’re going to have to come back to the market here shortly, and that’s important when we talk about this Section 232.

So, for those that aren’t familiar with Section 232: It’s a petition. A group of U.S. nuclear or uranium mining companies lobbied the Department of Commerce to open up an investigation into where the U.S. is importing its uranium from, and the effects of that on the domestic uranium mining industry. So, just a couple of stats here: As I said, nuclear power accounts for about 20% of electricity in the United States. It’s the majority of clean electricity that’s generated in the United States, but a lot of people don’t know this. The U.S. actually has to import over 95% of its annual uranium demand now, and that is what they deem to be a national security issue, especially given that 40% of that comes from three, as they call them, adversarial nations: Kazakhstan, Russia, and Uzbekistan.

The U.S. only produces a very small amount of uranium domestically. In fact, in 2019, it’s expected to be less than one million pounds. They consume almost 50 million pounds with the nuclear reactor fleet. And you’ve got to remember, the U.S. is still the largest consumer of uranium, they have the largest nuclear reactor fleet, so it’s a big part of annual demand, yet they are reliant on foreign supply, in particular from those three nations, to get it.

The Section 232 investigation looked into this. A report announcing and reporting on the final findings of that investigation has been submitted as of mid-April, and there’s a 90-day review period, which is currently underway, which ends in the middle of July, in which the Trump Administration will review this investigation and the report, and they will come out with a ruling.

Now, what this has created, and I don’t think this was the intention of it, is a bit of a lull. It’s created uncertainty in the market. U.S. nuclear utilities don’t know what the findings are, and don’t know what the ruling is going to be. What they’re pushing for, and this was a part of the investigation, is pushing for a 25% quota system, so U.S. nuclear utilities would have to buy 25% of their uranium requirements from domestic sources of uranium. Now, the issue there is that the U.S., as I said, is not producing anywhere near that amount right now. For them to get to that level—of about 12 to 13 million pounds, up from less than one million pounds currently—is going to take probably five to seven years, and you’re going to need to see a much, much higher uranium price, probably close to a doubling of where the spot price is right now. So, you need to see a two-tiered price system.

Even if that 25% quota is implemented, it’s going to take a while to get there, and you’re going to need to see a much higher price paid, because U.S. producers can’t make a profit at the current spot price. What I think you’ll see happen in the short period of time right after 232 [is] a number of positive things happen in the space. One, it’ll take the uncertainty away from the utility companies. This cloud that’s been hanging over the whole sector—that’s put downward pressure, I believe, on the price recently. You will now see, I think, utility companies, especially in the U.S., come back to the market. As we talked about earlier, there’s a lot of uncovered requirements in the next few years, so they’ll have to come back to the market, but they’ll have some clarity on where they have to get their uranium from.

So, you’ll see these utilities coming back. They have not been contracting. There’s been very little contracting over the last few years, and in particular in the last year, where you’ve had this uncertainty surrounding 232. I think you’ll see utilities, the main buyer, coming back, [with] the largest buyer being U.S. nuclear utilities. That, I think will spur a price rally in the coming months, but also, it could benefit Canadian companies, and Australian companies, allies of the U.S., because where is the U.S. going to get supply of uranium over the next few years, if mining companies cannot supply what they need to meet that quota? It’s likely that U.S. nuclear utilities will look north to Canada, and that will benefit Canadian uranium companies.

Maurice Jackson: What’s going on on the demand side for uranium?

Jordan Trimble: Yeah, so we’ve talked about what’s happening in the United States. That’s really dominated headlines with 232, and it’ll be good to have that out of the way. But globally, nuclear is growing, as I said, in the developing world. China’s really leading the charge: Currently, [it has] 45 operating reactors, 13 under construction, and over 200 more planned and ordered. They’re planning to triple their nuclear capacity by 2030. Air quality is a big problem in China. Millions of people a year are dying from poor air quality—pollution generated from coal plants, from gas and oil plants—o that’s where nuclear and nuclear power comes in.

And if you look at what China’s been doing over the last five or six years, they’ve made strategic investments into uranium companies, and in particular, into Athabasca Basin, high-grade uranium companies. In 2015, CGN [China General Nuclear Power Group] invested $82 million into Fission Uranium, becoming the largest shareholder, CGN being one of China’s largest nuclear utility companies. And then also in 2016 and 2017, CEF Holdings Ltd.—Li Ka-Shing—has invested close to $200 million into NexGen Energy, so you are seeing Chinese money coming into Canadian Athabasca Basin stories.

And then if we move over to India, again, [we find] another growth center for nuclear power, [with] 22 reactors operating, 7 under construction, 42 reactors planned and proposed. Canada and India recently announced a $350 million deal whereby Cameco Corp. (CCO:TSX; CCJ:NYSE), the largest publicly traded uranium mining company based here in Canada, [will] supply India with uranium and nuclear fuel over a five-year period. And more recently, India’s just approved the construction of 12 new nuclear reactors, so China and India are really leading the charge on new nuclear reactors. As I said, new nuclear reactors also being built in the Middle East, in Russia, in other parts of the developing world.

And then last but not least, Japan. And Japan really has been the elephant in the room. We all know what happened at Fukushima. Japan was one of the largest consumers of uranium, had one of the largest nuclear power plant fleets. They shut almost all of those down after Fukushima. We have started to see an acceleration in Japanese nuclear restarts. We now have nine reactors up and running, up from three in 2016. There are 26 reactor restart applications in Japan that the NRA (Nuclear Regulatory Authority) is looking at. And last but not least, you have a leading government there, the Abe Administration, that has stated they are pro nuclear. They want to bring nuclear back up to over 20% of Japan’s electricity generation by 2030, so they’ll need about 30 reactors online to do that, up from the current nine.

Maurice Jackson: Can you address some of the concerns on the supply side?

Jordan Trimble: This is really what has started this initial recovery, is we’ve seen the supply side respond to the low-price environment we’ve been in. It really started in 2016 and 2017. You had Cameco shut down a few of its mines. Orano, previously known as Areva, shut down some of its production. And then the big news came in 2017, when Kazatomprom, which is Kazakhstan’s state-run uranium mining company, Kazakhstan’s largest producer of uranium globally, they announced initial production cuts at some of their mines. And it’s important to note that these are some of the lower cost mines in the world.

We’re not talking about higher-cost, marginal production being shut down because of a low uranium price. We’re talking about lower-cost producers shutting down production; a wave of curtailment and reduced production from several mining companies. Cameco followed suit by shutting down the world’s largest uranium mine, at McArthur River. This accounts for about 12% of global annual production. It simply is more profitable right now for Cameco to buy material in the spot market in the mid-$20s, and then sell it into their higher price, longer-term contracts, than it is to be producing from the highest-grade uranium mine in the world at McArthur River.

So, that production has been shut down. It’s going to take time for that to come back online. They’re going to need to see a much higher price. We’ve seen a number of notable production curtailment, and we’ve also seen projects deferred, and we’re now starting to see some big projects, some bigger mines that are coming to the end of their mine lives. . .a few in Africa, Rossing being one. We’re seeing a few, [like] Akdala in Australia, as well, that are simply coming to the end of their mine lives, so millions of pounds will be coming offline over the coming years. Again, the supply side is starting to respond. I think that’s what started this recovery that we’re in, and I think you’ll see that continue.

And then we’ve also now seen some funds, some new financial buyers, over the last couple years that have come in. They’ve recognized this structural mispricing in the uranium market. Most notably, about a year ago, a group of London called Yellow Cake Plc (YCA:LON), which is listed in London, raised over $200 million to buy just over eight million pounds of uranium directly from Kazatomprom, effectively taking that material out of the spot market, which has strengthened the market. Now, they have an option to raise and buy $100 million worth of uranium each year for the next nine years. So you’ve seen new funds, new financial buyers, coming into the market to take advantage of this structural mispricing. And then last but not least, again, I talked about Cameco shutting down McArthur River.

Cameco still has to deliver into these long-term contracts that they have, and it’s more profitable for them right now to buy in the spot market, at the low price in the mid-$20s, and then sell into those contracts. Now, 2018 was the first year they started doing this. They helped drive the price this time last year from the low mid-$20s to the high $20s. We saw the uranium mining companies move up with that. We’ve seen that kind of stall out and pull back a little bit, and a big reason for that is that Cameco has been less active in the spot market recently.

I think we will see them coming back in, in a more meaningful way, between now and the end of the year. We know that they have to buy millions and more pounds before year-end to deliver into their contracts, so I think that’s going to be yet another big near-term catalyst that will drive a higher price.

Maurice Jackson: Boy, what an opportunity we have before us in uranium. Let’s discuss the value proposition before us in Skyharbour Resources. Now, Skyharbour is an exploration company, and prospect generator, in the Athabasca Basin. Strategically, why did the company invest most of its project portfolio in the Athabasca Basin?

Jordan Trimble: There are a couple of reasons that we were interested in building a project portfolio in the Athabasca Basin. We’ll start with the fact that is the highest-grade depository of uranium in the world. It’s unparalleled. The average grade in the Athabasca Basin is about 2% U3O8, whereas the global average is about 0.1% U3O8.So, a combination of unique geological qualities and characteristics create the environment for these super-rich uranium deposits, and as an exploration and early-stage development company, that’s exciting for us. Because even in a low uranium price environment, as we’ve been in, you can still generate significant returns for shareholders through new high-grade discoveries.

And perfect examples of that, as I mentioned earlier, are NexGen, Fission, Hathor, Denison at the Gryphon Deposit recently, and previously at Phoenix. There’s been a number of notable high-grade discoveries in the last 10 years in particular.

And secondly, when we started the company, we saw an opportunity to go into projects, acquire projects in the Basin, with a new look, using some new techniques, some new ideas, some new methodologies that have been used effectively to make these recent high-grade discoveries. [These include] some new geophysical techniques, understanding the geology and the geochemistry better, using some new drilling techniques, and then a big one has actually been looking for uranium deposits in what’s called the basement rock.

I won’t get in the weeds on the geological lingo, but there are a couple types of deposits in the Basin. You have the sedimentary sandstone above, and then below that, you have what’s called the basement rock, and the contact between these two types of rock is what’s called the unconformity. You typically find the uranium deposits above, in the sandstone, at the unconformity, or in the basement rock. More recently, exploration drilling has been focused on finding these new high-grade deposits in the underlying basement rock. That’s where NexGen’s deposit is, that’s where Fission’s deposit is. There’s a lot of potential in the Basin on projects that have high-grade uranium in the sandstone or at the unconformity, but haven’t been properly tested for the feeder zones, the source of that high-grade mineralization in the underlying basement rock. That is one of the key themes that we’re going on, the key strategies that we’re employing at our flagship project right now. We know we have high grade at the unconformity, and in the sandstone, but very little historical drilling [has been done] in the underlying basement rock. And just recently, we’ve started hitting our first high-grade zones of mineralization in the underlying basement rock, which is quite exciting for the company.

Maurice Jackson: I like the business acumen in the use of optionality. Skyharbour has six projects in the Athabasca, encompassing over 200,000 hectares, that have approximately $80 million worth of historical exploration, and was purchased at over four and a half million. Let’s discuss the exploration projects first, and then cover the project generator second. Skyharbour has two deposits. Let’s go to the Moore Lake flagship project. What makes Skyharbour Resources confident that you have the next big, great discovery here?

Jordan Trimble: We’ll start with a quick overview of the project base before getting into a deeper dive on the specific project. So, six projects, about half a million acres worth of land scattered through the Athabasca Basin, both on the east and the west side of the Athabasca Basin. The flagship [is] our Moore Project—that’s where we’re drilling, that’s where we’re exploring, but we also have the five other projects, where we are looking to bring partner companies in as a part of our prospect generator model.

As far as valuation’s concerned, we’ve acquired these projects at really pennies on the dollar, as you mentioned—about four and a half million in stock cash, and over a period of the last five and a half, six years. To shed some light on valuation, these projects have had over 80 million in historical exploration and development work on them. At one point in time, two of the projects, Moore Lake and Falcon Point, were in a company that was valued at over $350 million in the previous uranium boom in 2006-2007, so there’s a strong rerating potential with the current asset base in the company right now.

If you go and look at our flagship project, Moore Lake, this is really what is going to be providing us and our shareholders the most catalyst coming up. We own 100% of it, and this is the most advanced stage project of all of them. There’s a high-grade zone there called the Maverick Zone. There’s actually several high-grade lenses, and as I said previously, we’re just starting to drill a little bit deeper, looking for the source of that high-grade mineralization in the basement rock.

But in addition to the Maverick Zone—which is hosted on a four-kilometer corridor, so it’s only a few hundred meters long for this Maverick Zone, or multiple lenses—there’s other zones along strike that have yet to be fully drill tested. About two kilometers of that four-kilometer-long corridor has yet to be properly drill tested, as well as systematically drill tested.

There’s still a lot of room to move along strike, and as I said, also at depth in the basement rocks. We do have about a dozen other regional targets on the property, and in our most recent round of drilling, we actually made a new discovery about seven kilometers away from the Maverick Zone, at what’s called the Otter Zone. This is a brand-new zone that we just finished a couple drill holes at, and we hit, in one of the holes, uranium mineralization, so there will be some follow-up work regionally, as well as at the Maverick Zone, and the Maverick corridor, in our upcoming drill programs.

[In terms of] recent success at the Maverick Zone, some of our recent drill holes returned very high-grade mineralization, up to 21% U3O8 over a meter and a half. Just to put some perspective on that, 1% U3O8 is equivalent to about 20 grams per ton of gold, 1,400 per grams per ton of silver, almost 14% copper. So that just gives you an idea of how valuable that mineralization is on a per ton basis.

Maurice Jackson: To your second deposit, Falcon Point, which has an NI 43-101 published in 2015 demonstrating high-grade in the inferred category. Why are uranium investors excited about this project?

Jordan Trimble: Falcon Point is a very important project in our portfolio. It has an NI 43-101 inferred resource, both uranium and thorium credit, as well. We own 100% of it.

Now, Falcon Point plays in with our prospect generator strategy. We are currently looking to bring partner companies in there, when we can option off or joint venture off a part of the property. We have the deposit area on the south end of the project, but interestingly, we have a very high-grade surface showing that runs up to 68% U3O8at surface. We have plans to bring in a partner company that can then go and further test that high-grade surface showing. Some more geophysics can be done there, and then [we] ultimately look to drill test that.

With the NI 43-101 resource on the south end, high-grade surface showing at the north end of the property, and ties into our broader prospect generator strategy, our Preston Project and our East Preston Project are important part of our portfolio. These are perfect examples of where we’ve actually brought in partner companies to fund the exploration and development work going forward, starting with a strategic partner in Orano. Orano, as I mentioned, is France’s largest uranium mining and fuel processing company. It is based in Paris. They have mines and projects all over the world. They have a big geological team. They know the Basin quite well, so we get to leverage that technical expertise as they fund the exploration and work at our Preston Project.

The deal is structured as such: [Orano] can earn up to 70% of the property by spending a total of $8 million over a six-year period. They’re about halfway through that—$7.3 million of that in exploration, $700,000 in cash payments. At that point, a joint venture partnership will be formed, and Orano will become the majority owner of the project. They, this year, have a $2.2 million budget. They just completed a winter-spring drill program, with results to follow. They are planning for additional exploration and drilling programs going forward, so that’s an important part of our story.

Just beside that project, on a property we have called the East Preston Project, we structured a similar deal with a company called Azincourt Uranium Inc. (AAZ:TSX.V), and Azincourt can earn up to 70%, as well, by spending just under $4 million in exploration and cash payments. They have $1.4 million that needs to be spent by March 2020, and then a couple hundred thousand dollars in cash payments that come in, as well. They’ve just announced recent drill results—the first drill program that they’ve carried out at East Preston—[and are] seeing all the right things. They are planning for a much larger program soon. They will get the drill rig back there to drill over a dozen undrilled targets that they have, and follow up on the first few holes that they drilled earlier this year.

So, collectively those two companies have made a big spend over a six-year period—about $11.5 million in project consideration, $9.8 million of that combined in exploration, $1.7 million in cash payments, and those companies can earn up to 70%.

Maurice Jackson: Is the ultimate goal for Skyharbour Resources to build a mine, or arbitrage?

Jordan Trimble: My history, and my management team and board of directors, we have a history of selling companies, selling projects—that is the ultimate goal here. We would like a larger company to come in and buy the projects, and or buy the company. We are looking for an ultimate acquisition of the company upon making new discoveries and advancing the projects, and hopefully we see that in a rising uranium market, and that will help get us a much higher valuation.

Maurice Jackson: Good. Let’s address the bad. What can go wrong, and what is your action plan to mitigate that wrong?

Jordan Trimble: So, I think one of the things that does keep me up at night is we are in the business of exploration. It’s high risk, high potential return, so you can’t guarantee exploration or drilling success. What we do, though, as I mentioned, is we are using some innovative techniques. We are going through all of the, and have gone through all of the historical data, and adding the recent data from all the work that we’ve done, to really give us and our shareholders the best shot, the best potential of being a part of a new, big discovery. And so, that to us is a big part of what we do on a daily basis, when we go out there and we carry out these drill programs, or our partner companies carry out these drill programs and exploration programs, we want to know we have the best targets selected.

And there’s a lot more tools at our disposal: geophysical techniques, certain types of drilling, directional drilling, more targeted drilling, some new geochemical analysis and understanding that we’ve done at our flagship Moore Project, that really give us the best chance at finding additional zones of high-grade mineralization, so you can never guarantee exploration success, but you can certainly increase your odds of finding more.

Maurice Jackson: Switching gears, let’s discuss the people responsible for increasing shareholder value. Mr. Trimble, please introduce us to your board of directors.

Jordan Trimble: Getting back to the acronym PTP, this is the first P, and this could be one of the more important parts of the business, the people running it, the strategic partners, and as I said, the larger shareholders. So, I teamed up with my head geologist, a gentleman named Rick Kusmirski. We like to call him Radioactive Rick. He’s been working in the Athabasca Basin for over 40 years. He’s made multiple high-grade uranium discoveries in the Basin. He was previously the exploration manager at Cameco, and then he left Cameco and started his own company, JNR, in the late ’90s, early 2000s. He had success there. He took the company from a $4 or $5 million valuation, and was trading at over $300 million in 2006–2007. He ultimately sold the company to Denison Mines. As I mentioned earlier, Denison is a strategic partner of ours. They’re our largest shareholder, and Dave Cates, who’s the president and CO of Denison Mines, is on our board of directors.

David Cates is an important part of the team. Again, a very close working relationship with Denison, and Dave’s team there. And then the chairman of the company, who I’ve worked with for a number of years now, is Jim Pettit. Jim has over 30 years of experience in the industry. Previously, he ran a gold company called Bayfield Ventures. That’s where I started my career in the industry. I was working with Jim at Bayfield, and what we did at Bayfield was we made a high-grade gold discovery in Ontario in 2010, we had success there, and then ultimately, the company was acquired by New Gold Inc. (NGD:TSX; NGD:NYSE.MKT) in 2013 and 2014. That’s when I started Skyharbour, so Jim is the chairman. He and I work together here in Vancouver. My geological team, led by Rick, is in Saskatoon.

And then some other notable names on the board and advisory board. Paul Matysek is a strategic advisor, very well-known individual in the mining space. He’s built and sold a number of companies in the last 12 years, most recently Lithium-X, as well as Goldrock Mines, but his biggest win was a company called Energy Metals Corp., which he started in 2004 at a $10 million valuation, and sold it three years later for $1.8 billion, to Uranium One Inc. (UUU:TSX). Paul knows a thing or two about building companies, about selling these companies; an important advisor to our team.

And then we also have Simon Dyakowski, who runs corporate development. He’s a 10-year veteran, worked as a stockbroker and, as well, worked at a few larger banks, including RBC and Bank of Tokyo-Mitsubishi. And then [there is] Christine McKechnie, who’s a consulting geologist, one of the head field geologists for us. She actually wrote her thesis on the deposit that we have at the Falcon Point project, so she knows our project base well. She previously worked at Eagle Point uranium mine in the Basin with Cameco. Dave Billard, who works directly with Rick, is one of our geologists as well. Nick Findler handles the investor relations, and then Don Huston, who’s an industry veteran as well, is a director of the company.

So, [our] very well-rounded team [brings] capital markets experience, and management experience, as well as a geological and technical team with focused expertise on uranium exploration in the Basin. It’s important to have people that know how to find specific types of deposits, and we have that with Rick, Christine and Dave leading the charge on the properties.

Maurice Jackson: Who is Jordan Trimble, and what makes him qualified for the task at hand?

Jordan Trimble: Yeah, so I started the company, like I said, about six years ago. I saw an opportunity to build a uranium company, to ride this next wave up—specifically, high-grade uranium exploration in the Athabasca Basin. As I said, previously I was working at a gold company with Jim called Bayfield Ventures. We had exploration success, and were ultimately acquired by a larger gold mining company. Again, this is what we’re trying to accomplish here at Skyharbour.

I come from more of an entrepreneurial background. I’ve worked with several companies in the past, specializing in corporate finance and strategy, shareholder communications, deal structuring, capital raising and management. And I’m a CFA charterholder, I currently serve as a director on the board of the CFA Society, Vancouver. Been working in the industry for about 10 years now, so again, looking to have success here with Skyharbour, in the field, on our projects, with our partners, but also in the backdrop of a rising uranium market.

Maurice Jackson: Please provide the capital structure for Skyharbour Resources.

Jordan Trimble: Skyharbour has 64 million shares issued and outstanding. We trade on the TSX Venture at about CA$0.33—0.34, so [we have] about a CA$21 million market cap—still small cap, with a lot of room to move. We do have a U.S. OTCQB listing, SYHBF in the U.S., and the ticker symbol in Canada on the TSX Venture is SYH.

The structure? It’s a very well-structured company, as I said, with 64 million shares issued and outstanding. The public float on that, I would say is about 50%, and just to cover some of the notable and strategic shareholders, we have management and insiders, we own a large position in the company. We believe in what we’re doing. Denison Mines is our largest strategic shareholder. Marin Katusa and the KCR Fund: Marin’s been a cornerstone investor, really from day one. He and his fund are two of our larger shareholders.

OTP Fund Management, which is OTP Bank, the largest bank in Hungary—they have a resource fund that is a large shareholder of the company. Extract Capital out of New York and Toronto [as well]. Sachem Cove Partners, run by Mike Alkin, is a new uranium fund that’s taken a large position in the company. And then a couple of other notable names: Paul Matysek, who’s a strategic advisor, and Jeff Phillips, down in California, are very large shareholders of the company.

Maurice Jackson: Multilayered question: What is the next unanswered question for Skyharbour Resources? when can we expect a response? And what determines success?

Jordan Trimble: The biggest one has to do with our exploration and drilling. So we just announced results from our winter and spring program. You can see those results. Again, the new zone, East Maverick zone, our first drill hole into it we’ve intersected high-grade uranium in the basement rock, so a big success for us there. Also, we found new zones of uranium mineralization regionally, new discoveries, so we want to follow up on all of this with our upcoming summer program, which will commence in the coming months. We will have news flow from that through the summer and into the fall.

Drilling and exploration really is the main catalyst for Skyharbour. Again, you look at recent discovery stories, like NexGen and Fission, and Hathor, previously: This is really what drives a higher share price with exploration drilling success. But secondly, as a uranium company, we do offer exposure to the underlying commodity, and as I’ve highlighted in this interview, there’s some notable upcoming catalysts in the near term—again, the resolution of Section 232, Cameco spot market purchasing, supply cuts, and a supply side response. That’s, I think, helping to drive higher uranium prices.

We will benefit from a rising uranium price. It’s important to note that there’s very few uranium companies left. We’ve seen a major contraction in the industry, and the combined market caps of all publicly traded uranium, of all publicly traded uranium companies, is less than CA$15 billion. We’ve seen a major contraction from hundreds of publicly listed uranium companies back in 2006–2007, to really less than 40 active companies.

So, what that means is that when money comes back into the space, and is looking to get investment exposure to the space, it only has a few names to go to, and Skyharbour is one of the few companies that’s stuck around, that’s been able to take advantage of these depressed market conditions. We’ll be one of the first companies to benefit as we see this continued recovery, and I think break out in the next year or two with uranium price.

Maurice Jackson: Last question. What did I forget to ask?

Jordan Trimble: Everything. Again, getting back to the people, the timing, the projects, we have the right team in place to execute on our business plan, and our dual prong strategy going forward. The right management team, technical geological team, and strategic partners in Denison and Orano. Timing with the uranium market, I think that’s vital right now. We’re seeing a recovery play out. I think we’ll see continued momentum, especially as new, longer-term contracts are signed, as 232 comes to a head.

And last but not least, the asset base, the projects, right? We’re exploring them, we’re advancing them. These projects were worth a lot of money in a previous company back in 2006–2007. I think there’s strong rerating potential, and Skyharbour offers investors exposure, again, not only to high grade discovery potential at our project base, and with our partner companies, but also to a rising uranium price.

Maurice Jackson: The website is www.skyharbourltd.com. For direct inquiries, contact Nick Findler at (604) 639-3850 or you may e-mail [email protected] Skyharbour Resources trades on the TSX.V: SYH |OTCQB:SYHBF. Skyharbour Resources is a sponsor of Proven and Probable.

As a reminder, I’m a licensed representative for Miles Franklin Precious Metals Investments, where we provide a number of options to expand your precious metals portfolio from physical delivery, offshore depositories, precious metal IRAs and private blockchain distributed ledger technology. Call me directly at (855) 505-1900 or you may e-mail [email protected]

Finally, please visit provenandprobable.com for Mining Insights and Bullion Sales.

Jordan Trimble of Skyharbour Resources, thank you for joining us today on Proven and Probable.

Maurice Jackson is the founder of Proven and Probable, a site that aims to enrich its subscribers through education in precious metals and junior mining companies that will enrich the world.

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Disclosure:
1) Maurice Jackson: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: Skyharbour Resources is a sponsor of Proven and Probable. Proven and Probable disclosures are listed below.
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4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Skyharbour Resources, a company mentioned in this article.

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The Information presented in Proven and Probable is provided for educational and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The Information contained in or provided from or through this forum is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice. The Information on this forum and provided from or through this forum is general in nature and is not specific to you the User or anyone else. You should not make any decision, financial, investments, trading or otherwise, based on any of the information presented on this forum without undertaking independent due diligence and consultation with a professional broker or competent financial advisor. You understand that you are using any and all Information available on or through this forum at your own risk.

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WTI Crude Oil Speculators slightly trimmed their bullish bets after 3 weeks of gains

July 13th – By CountingPips.comReceive our weekly COT Reports by Email

WTI Crude Oil Non-Commercial Speculator Positions:

Large energy speculators lowered their bullish net positions in the WTI Crude Oil futures markets this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of WTI Crude Oil futures, traded by large speculators and hedge funds, totaled a net position of 390,149 contracts in the data reported through Tuesday July 9th. This was a weekly decrease of -2,661 net contracts from the previous week which had a total of 392,810 net contracts.

The week’s net position was the result of the gross bullish position (longs) dropping by -7,484 contracts (to a weekly total of 505,696 contracts) while the gross bearish position (shorts) fell by -4,823 contracts for the week (to a total of 115,547 contracts).

The large speculators cut back on their bullish bets this week following three consecutive weeks of gains and a rise by a total of +41,155 contracts over that period. Previously, crude oil bets had been on a streak of seven weekly declines from April 30th to June 11th that shaved -195,704 contracts off the bullish position.

Overall, the speculator position remains firmly in bullish territory but has now been under the +400,000 net contract level for four straight weeks.

WTI Crude Oil Commercial Positions:

The commercial traders position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -392,967 contracts on the week. This was a weekly uptick of 5,264 contracts from the total net of -398,231 contracts reported the previous week.

WTI Crude Oil Futures:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the WTI Crude Oil Futures (Front Month) closed at approximately $57.83 which was an increase of $1.58 from the previous close of $56.25, according to unofficial market data.

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators).

Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).

Article By CountingPips.comReceive our weekly COT Reports by Email

McDermott Awarded Single Largest EPCI Offshore Contract for Saudi Aramco

The Energy Report

Source: Streetwise Reports   07/10/2019

McDermott International has been awarded a US$3 billion contract for Saudi Aramco. The company will partner with China Offshore Oil Engineering Company to increase production by 300,000 barrels per day.

McDermott International Inc. (MDR:NYSE) announced that it has been awarded a contract in excess of US$3 billion for Package 1 of Saudi Aramco’s Marjan Increment Development Mega-Project to provide engineering, procurement, construction and installation (EPCI) of the Gas-Oil Separation Plant (GOSP), in a consortium with China Offshore Oil Engineering Company (COOEC), a subsidiary of China National Offshore Oil Corporation.

The award reportedly represents the single largest EPCI offshore contract awarded by Saudi Aramco. The Marjan Increment Project will increase production from 500,000 to 800,000 barrels of oil per day, with Package 1 GOSP facilities at the core of the development. The project includes EPCI of a gas-oil separation platform, compression and accommodation facilities. McDermott is leading the consortium with COOEC.

The scope of the project includes the fabrication of over 165,000 tons consisting of six major topside platforms and jackets, 12 bridges and six bridge support platforms and jackets, and over 40 miles of 36-inch oil export trunk lines along with more than 55 miles of 230kV composite subsea cables.

McDermott is a fully-integrated provider of technology, engineering and construction solutions to the energy industry in both shallow water and deepwater construction. The firm designs and builds end-to-end infrastructure and technology solutions from the wellhead to the storage tank and transportation and transformation oil and gas into product. The company employs 32,000 in 54 countries and operates a diversified fleet of specialty marine construction vessels and fabrication facilities.

McDermott shares have been up 10%–15% today in higher than average volume, trading between $9.59–10.99/share. Shares are currently up 12.78% ($10.50/share,+$1.19) over yesterday’s close of $9.31. The company’s stock is already up over 70% since its low of $5.91/share in late May 2019 and is up 58% year-to-date. However, shares are still down nearly 44% year-over-year and there is a huge short interest of 26.6%.

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Disclosure:
1) Stephen Hytha compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

( Companies Mentioned: MDR:NYSE,
)

Crude Rallies As US Inventories Decline

By Orbex

Oil prices surged higher yesterday in response to the latest report reflecting a further drawdown in US crude stores.

Oil prices initially began to move higher on Tuesday in response to the weekly report from the API. The API report showed a large 8.1 million barrel crude inventories drawdown. On Wednesday, prices then shot up higher as the weekly report from the EIA confirmed the data.

Crude Inventories Fall Again

The report from the Energy Information Administration, covering the week ending July 5th, showed that US crude stores had fallen by 9.5 million barrels.

This decrease was well above the 3.1 million barrel decrease the market was looking for. It also marks the fourth consecutive week of drawdown in US crude stores.  

Gasoline & Distillates Down

Elsewhere, the report showed that US gasoline stocks had also fallen by 1.5 million barrels. This was, again, more than the 1.3 million barrel drop forecast.

Refinery crude runs jumped by 148k barrels per day. They hit 17.4 million barrels per day, marking their highest levels since January. Distillate inventories, which include diesel and heating oil, jumped by 3.7 million barrels, far outstripping expectations for a 739k barrel increase.

Refinery Utilization Rates Increase

Refinery utilization rates rose by 0.5% to hit 94.7%, their highest level since January. This increase came despite a reduction in refinery operation capacity on the East Coast in the wake of the Philadelphia Energy Solutions Complex shutdown.

Oil prices have also been boosted by an incoming cyclone in the Gulf of Mexico. The cyclone has caused major oil producers in the area to close drilling facilities and evacuate staff.

Net us crude imports were down over the week, falling 341k barrels. Meanwhile, US crude production was actually seen ticking up by 100k barrels per day, to 12.3 million barrels per day. This is just off the all-time highs of 12.4 million.

OPEC Production Cut Extension Feeding Through

The uptick in oil this week might also be attributed to the market having digested OPEC’s announcement last week that it is extending the current production cuts by a further nine months.

Oil prices fell initially, likely in response to concerns over the demand outlook. However, in the wake of continued declines in US crude inventories, reflecting solid demand, the extended cuts now seem to be helping keep the market supported.

Middle East Tensions Supporting Oil

Tensions in the Middle East have also played a role in driving higher prices. 

Last week, the UK seized an Iranian oil tanker. Iran responded by warning the UK. Consequently, a British oil tanker in the region has been sheltering off the coast of Saudi Arabia for fear of being seized by Iran.

This morning, the market was rocked by the news that Iranian military ships attempted to take over a UK oil tanker in the strait of Hormuz, forcing a UK navy warship which was accompanying the naker to train its guns on the Iranian ships and warn them off. With over a third of oil seaborne oil moving through the channel, the situation is causing concerns over supply disruptions.

Technical Perspective

WTI

The rally in crude has seen prices breaking back above the recent 60.07 resistance level which capped the last advance. This rally has also seen price breaking back above the bearish trend line running from year-to-date highs. Focus is now firmly fixed on a further push higher for oil, with the 64.02 level the next key target for bulls. Above this, the 2019 highs of 66.56 will be the main test. To the downside, any retest of the broken trend line should provide support, with the 57.98 level coming in just below.

By Orbex

 

Predictive Modeling Suggest Oil Headed Much Lower

By TheTechnicalTraders.com

Our Adaptive Dynamic Learning (ADL) predictive price modeling system is suggesting Crude Oil will likely continue to find resistance near $64 as a price ceiling and trend lower over the next 3 to 5 months – eventually breaking below the $40 price level near the end of 2019 or in early 2020.

Our research team believes this move could very well be contingent on a continued decline in global economic activity as well as our research suggesting that global currencies could be setting up for a breakdown event.

The USA and FED will do everything in their powers to keep the economy looking strong and to hold markets up like talking about rate cuts, but eventually the music will stop, but until then we need to be long and strong stocks and keep a close eye on leading indicators like small caps, oil, transportation and industrial sectors for early warning signs.

Please read the following research posts for more information:

Report #1: PART III – DEBT CRISIS TO BE REBORN IN 2020

Report #2: KING DOLLAR RIDES HIGHER CREATING PRESSURES ON FOREIGN ECONOMIES

Report #3: FEAR DRIVES MARKET EXPECTATIONS

We believe the breakdown in support for Crude Oil will coincide with a general perception of global economic weakness, foreign Central Bank posturing and the possibility that foreign currency weakness may push global demand for Oil much lower than current expectations.

The volatility increased suggested near the right side of this chart, in late 2019 and early 2020, are indicative of oil prices reaching a critical support level while attempting to re-balance supply/demand-side economic factors against historic price lows.  This will likely become a period where global oil traders feel the need to try to push oil prices higher while supply/demand factors settle to establish a basis price level for future price trends.

IN CONCLUSION:

If our ADL predictive modeling is correct, we will see rotation between $47 and $64 over the next 3+ months before a breakdown in price hits in November 2019.  This will be followed by two fairly narrow price range months (December 2019 and January 2020) where oil prices will tighten near $45 to $50.  After that tightening, we believe an extremely volatile price move will happen in February through April 2020 that could see oil prices trade as low as $22 and as high as $51 over a two to three-month span.

As we’ve continued to state, 2019 and 2020 are going to include incredible opportunities for skilled technical traders and investors.  Think about how a more like this in Oil and the global markets will reflect into the precious metals markets and the US Dollar?

Be prepared for these incredible price swings before they happen and learn how you can identify and trade these fantastic trading opportunities in 2019, 2020, and beyond with our  Wealth Building & Global Financial Reset Newsletter.  You won’t want to miss this big move, folks.  As you can see from our research, everything has been setting up for this move for many months – most traders/investors have simply not been looking for it.

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I can tell you that huge moves are about to start unfolding not only in currencies, metals, or stocks but globally and some of these supercycles are going to last years. A gentleman by the name of Brad Matheny goes into great detail with his simple to understand charts and guide about this. His financial market research is one of a kind and a real eye-opener. 2020 Cycles – The Greatest Opportunity Of Your Lifetime

As a technical analysis and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for both short-term swing trading and long-term investment capital. The opportunities are massive/life-changing if handled properly.

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Natural Gas Analysis: EIA raises US natural gas consumption forecast

By IFCMarkets

EIA raises US natural gas consumption forecast

The United States Energy Information Administration (EIA) raised its forecast for US natural gas consumption for 2019 and 2020. Will the NATGAS quotations growth continue ?

EIA published the Energy Overview (Short-Term Energy Overview) for July. Compared to the June overview, gas consumption in the United States is expected to increase by 0.42 billion cubic feet per day to 84.59 billion cubic meters in 2019 and by 0.16 billion cubic feet per day to 2020 to 84.54 billion. In other words, gas consumption should be reduced in the United States next year. It is difficult to say whether this is possible. This EIA forecast assumes the recovery of US natural gas reserves. For a long time (from September 2017) they are below their 5-year average. And in March of the current year they were one third lower than this average. Large-scale plans to increase the export of American liquefied natural gas (LNG) can help reduce reserves and increase quotes for ordinary natural gas. In this and next years, several large LNG terminals will be launched in the USA. Note that, according to U.S. The Commodity Futures Trading Commission for the past week, the number of positions for the sale of natural gas (net short) reached a maximum since November 2015, and the number of positions for purchase (net longs) has been at a minimum since December 2011. If speculators are forced to close short positions, the upward movement of gas quotations may receive an additional impetus.

Natgas

On a daily timeframe Natgas: D1 broke up the downtrend resistance line and adjusted upward. Various technical analysis indicators have generated an uptrend signals. Further growth of quotations is possible in case of an increase in demand in the USA and a massive closure of short positions.

  • The Parabolic indicator shows a signal to increase.
  • The Bolinger bands narrowed, indicating a volatility decrease. Both Bollinger lines are sloping up.
  • the RSI indicator is above the 50 mark. It formed a weak divergence to increase.
  • The MACD indicator gives bullish signal.

The bullish momentum may develop if Natgas exceeds its last maximum: 2.45. This level can be used as an entry point. The initial stop lose may be placed below the two last lower fractals, the bottom Bollinger line, the minimum since May 2016 and the Parabolic signal: 2.1. After opening the pending order stop shall be moved folowing the signals of Bollinger and Parabolic to the next fractal minimum.Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place a stop loss moving it in the direction of the trade. If the price meets the stop level (2,1) without reaching the order (2,45), we recommend to cancel the order: the market sustains internal changes that were not taken into account.

Technical Analysis Summary

Position Buy
Buy stop Above 2,45
Stop loss Below 2,1

Market Analysis provided by IFCMarkets

Company Named ‘Top Small-Cap Growth Story’

The Energy Report

Source: Streetwise Reports   07/06/2019

The reasons for the positive outlook are given in a Raymond James report.

In a July 3 research note, analyst Praveen Narra reported that Raymond James maintained its Strong Buy rating but reduced its target price on Newpark Resources Inc. (NR:NYSE) to $12 per share from $13 (current share price about $7.18) due to the “softer U.S. oilfield and rig count.”

Due to the market change, Narra noted that Raymond James now conservatively estimates a Q2/19 EBITDA of $22.5 million, a 10% reduction in 2019 EBITDA and a 9% drop in 2020 EBITDA. For Newpark, the financial services firm lowered its Q2/19 margin projection by 5% and its year-end 2019 margin by 6%.

However, the analyst highlighted that growth is expected in all of Newpark’s divisions, thereby increasing margins. The company’s fluids segment, he wrote, “still has room for margin expansion as new Gulf of Mexico work and international contracts should offer strong incremental margins.”

Margins should see a boost from the company’s move into stimulation chemical sales, from which it achieved its first revenue in Q2/19. “The fruits of the fluids expansion are beginning to pay off,” Narra indicated. “We model about $80 million in stim/chem sales for 2020.”

The shift in its composite mats segment, which serves utilities, toward larger transmission and distribution (T&D) customers, once the transition ends, should also positively impact margins due to higher volume and longer term contracts. “For 2020, we expect topline growth of 15.2% year over year as both exploration and production and T&D work continues to grow,” Narra added.

He concluded, “Newpark remains our top small-cap growth story for its unique exposure both in and out of the oilfield,” noting that with the free cash flow expected in the next two years, the company remains undervalued. At its current share price of $7.18, Raymond James’ target price offers about 60% upside and “is one of our highest upside names,” he commented.

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Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Disclosures from Raymond James, Newpark Resources Inc., July 3, 2019

ANALYST INFORMATION

Analysts Holdings and Compensation: Equity analysts and their staffs at Raymond James are compensated based on a salary and bonus system. Several factors enter into the bonus determination, including quality and performance of research product, the analyst’s success in rating stocks versus an industry index, and support effectiveness to trading and the retail and institutional sales forces. Other factors may include but are not limited to: overall ratings from internal (other than investment banking) or external parties and the general productivity and revenue generated in covered stocks.

 

The analysts Praveen Narra and J. Marshall Adkins, primarily responsible for the preparation of this research report, attest to the following: (1) that the views and opinions rendered in this research report reflect his or her personal views about the subject companies or issuers and (2) that no part of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views in this research report. In addition, said analyst(s) has not received compensation from any subject company in the last 12 months.

RAYMOND JAMES RELATIONSHIP DISCLOSURES
Certain affiliates of the RJ Group expect to receive or intend to seek compensation for investment banking services from all companies under research coverage within the next three months.

Raymond James & Associates, Inc. makes a market in the shares of Newpark Resources, Inc.

Raymond James & Associates received non-investment banking securities-related compensation from Newpark Resources, Inc. within the past 12 months.

Additional Risk and Disclosure information, as well as more information on the Raymond James rating system and suitability categories, is available here.

( Companies Mentioned: NR:NYSE,
)

WTI Crude Oil Speculators upped their bullish positions for 3rd week

July 8th – By CountingPips.comReceive our weekly COT Reports by Email

WTI Crude Oil Non-Commercial Speculator Positions:

Large energy speculators raised their bullish net positions in the WTI Crude Oil futures markets last week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Monday (delayed due to July 4th holiday).

The non-commercial futures contracts of WTI Crude Oil futures, traded by large speculators and hedge funds, totaled a net position of 392,810 contracts in the data reported through Tuesday July 2nd. This was a weekly boost of 14,007 net contracts from the previous week which had a total of 378,803 net contracts.

The week’s net position was the result of the gross bullish position (longs) growing by 16,239 contracts (to a weekly total of 513,180 contracts) while the gross bearish position (shorts) rose by just 2,232 contracts on the week (to a total of 120,370 contracts).

The large speculators boosted their bullish bets for a third consecutive week last week and by a total of +41,155 contracts over that period. This follows a streak of seven weekly declines from April 30th to June 11th. Overall, the spec position remains firmly in bullish territory but has now been under the +400,000 net contract level for four straight weeks.

WTI Crude Oil Commercial Positions:

The commercial traders position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -398,231 contracts on the week. This was a weekly loss of -23,323 contracts from the total net of -374,908 contracts reported the previous week.

WTI Crude Oil Futures:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the WTI Crude Oil Futures (Front Month) closed at approximately $56.25 which was a decrease of $-1.58 from the previous close of $57.83, according to unofficial market data.

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators).

Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).

Article By CountingPips.comReceive our weekly COT Reports by Email

‘High Growth Production Ahead’ for International Oil & Gas Company

The Energy Report

Source: Streetwise Reports   07/05/2019

The reasons for the positive outlook are presented in a Pareto Securities report.

In a July 2 research note, analyst Tom Erik Kristiansen reported that Pareto Securities raised its year-end 2020 production estimate but lowered its target price on Panoro Energy ASA (PEN:OSE; 1PZ:FRA) to NOK 22 per share from NOK 23. Buy-rated Panoro is currently trading at NOK 16.70 per share.

Pareto decreased its target price on Panoro to “adjust for the operator’s (BW Energy) new and more conservative estimate of the resource potential of the largest exploration prospects on the [Dussafu] block” in Gabon, explained Kristiansen.

As for the energy company’s net production, Pareto expects Dussafu block output to more than double over the next three years due to Phase 2 of the Tortue development and a final investment decision of Ruche and Ruche North East, both expected this year, Kristiansen indicated. Additionally, Panoro also guided to 25% production growth at its Tunisian fields by year-end 2019, “which we find impressive considering that the asset was acquired less than one year ago (with no growth expected),” the analyst added.

Pareto increased its overall production estimates on the company for 2019 and 2020 by 4% and 24%, respectively. This means Panoro could double production to 4,000 barrels of oil equivalent (4,000 boe/day) by year-end 2022 and also reduce opex by 30–40% to $15/boe.

Regarding that anticipated production growth, Kristiansen highlighted that significant potential exists for derisking it as well as for further upside via exploration and appraisal drilling. This is because exploration wells will be drilled, one each, at Hibiscus and Salloum in H2/19. Were the latter well to produce the 1,800 boe/day gross that it did on a short test, it would boost Panoro’s production amply and with high value barrels.

Kristiansen concluded that Pareto sees “significant near-term upside as Panoro continues to grow production and prove up more of the exploration potential on its blocks.” Also, he noted, “we think Panoro could surprise on the upside with further accretive mergers and acquisitions.”

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Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Disclosures from Pareto Securities AS, Panoro Energy, July 2, 2019

 

This publication or report has been prepared solely by Pareto Securities Research.

Opinions or suggestions from Pareto Securities Research may deviate from recommendations or opinions presented by other departments or companies in the Pareto Securities Group. The reason may typically be the result of differing time horizons, methodologies, contexts or other factors.

Analysts Certification
The research analyst(s) whose name(s) appear on research reports prepared by Pareto Securities Research certify that: (i) all of the views expressed in the research report accurately reflect their personal views about the subject security or issuer, and (ii) no part of the research analysts’ compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analysts in research reports that are prepared by Pareto Securities Research.

The research analysts whose names appears on research reports prepared by Pareto Securities Research received compensation that is based upon various factors including Pareto Securities’ total revenues, a portion of which are generated by Pareto Securities’ investment banking activities.

Conflicts of interest

Companies in the Pareto Securities Group, affiliates or staff of companies in the Pareto Securities Group, may perform services for, solicit business from, make a market in, hold long or short positions in, or otherwise be interested in the investments (including derivatives) of any company mentioned in the publication or report.

In addition Pareto Securities Group, or affiliates, may from time to time have a broking, advisory or other relationship with a company which is the subject of or referred to in the relevant Research, including acting as that company’s official or sponsoring broker and providing corporate finance or other financial services. It is the policy of Pareto to seek to act as corporate adviser or broker to some of the companies which are covered by Pareto Securities Research. Accordingly companies covered in any Research may be the subject of marketing initiatives by the Corporate Finance Department.

To limit possible conflicts of interest and counter the abuse of inside knowledge, the analysts of Pareto Securities Research are subject to internal rules on sound ethical conduct, the management of inside information, handling of unpublished research material, contact with other units of the Group Companies and personal account dealing. The internal rules have been prepared in accordance with applicable legislation and relevant industry standards. The object of the internal rules is for example to ensure that no analyst will abuse or cause others to abuse confidential information. It is the policy of Pareto Securities Research that no link exists between revenues from capital markets activities and individual analyst remuneration. The Group Companies are members of national stockbrokers’ associations in each of the countries in which the Group Companies have their head offices. Internal rules have been developed in accordance with recommendations issued by the stockbrokers associations.

This material has been prepared following the Pareto Securities Conflict of Interest Policy. The guidelines in the policy include rules and measures aimed at achieving a sufficient degree of independence between various departments, business areas and sub-business areas within the Pareto Securities Group in order to, as far as possible, avoid conflicts of interest from arising between such departments, business areas and sub-business areas as well as their customers. One purpose of such measures is to restrict the flow of information between certain business areas and sub-business areas within the Pareto Securities Group, where conflicts of interest may arise and to safeguard the impartialness of the employees. For example, the Corporate Finance departments and certain other departments included in the Pareto Securities Group are surrounded by arrangements, so-called Chinese Walls, to restrict the flows of sensitive information from such departments. The internal guidelines also include, without limitation, rules aimed at securing the impartialness of, e.g., analysts working in the Pareto Securities Research departments, restrictions with regard to the remuneration paid to such analysts, requirements with respect to the independence of analysts from other departments within the Pareto Securities Group rules concerning contacts with covered companies and rules concerning personal account trading carried out by analysts.

Pareto Securities AS may have prepared or distributed investment recommendation, where Pareto Securities AS has been lead manager/co-lead manager or have rendered publicly known not immaterial investment banking services over the previous 12 months: Panoro Energy.

Pareto Securities AS may hold financial instruments in companies where a recommendation has been produced or distributed by Pareto Securities AS in connection with rendering investment services, including Market Making.

( Companies Mentioned: PEN:OSE; 1PZ:FRA,
)

Oil Started Consolidating

By Dmitriy Gurkovskiy, Chief Analyst at RoboForex

At the beginning of the week, Oil prices are stable as Brent is trading at 64.42 USD.

Right now, there are no obvious speculative drivers that may push the commodity market in some particular direction. According to the weekly report on the Crude Oil Inventories and the Natural Gas Storage, both indicators are going down, which is quite okay for this time of the year. The Middle-East factor is rather calm, so there is no support to aggressive buyers. Moreover, the USD is looking pretty stable, but this week may change a lot.

The Baker Hughes Oil Rig Count report published last week turned out to be in favor of bulls. The report showed -4 units in comparison with the previous week and 963 units total. On YoY, the decline has already reached 89 units, which is quite serious.

To be more detailed, the current number of oil rigs is 788 units, while the highest number in 2018 was 888 units.

In the H4 chart, Brent is trading upwards. Possibly, the pair may grow with the first target at 67.50. Later, the market may start a new correction to reach 63.75 and then resume trading inside the uptrend with the short-term target at 70.00. From the technical point of view, this scenario is confirmed by Stochastic Oscillator, as its signal has reversed away from the “oversold area” and is currently moving upwards.

As we can see in the H1 chart, Brent is trading to break 64.90. After that, the instrument may continue trading inside the uptrend with the short-term target at 65.50 and then start a new correction towards 65.00. Later, the market may form one more ascending structure with the first target at 67.50. From the technical point of view, this scenario is confirmed by MACD Oscillator, as its signal line has broken 0 to the upside. As a result, the price may boost its growth towards 66.50.

Disclaimer

Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.