Despite decreasing inflation cutting into commodity prices, select opportunities in the space remain attractive.
WTI, down by roughly 25 per cent since June 2022, still stands at a four-year high of approximately US$75.57 per barrel. Brent crude is in a similar situation at a five-year-high of roughly US$79.64 per barrel.
These prices bode well for producers strategically positioned to supply the European continent, as well as Asian countries aligned with the West’s refusal to traffic in Russian crude due to its unprovoked war in Ukraine.
Given how zero-emission goals tend to use 2050 as a target, there is also a healthy runway for traditional fossil fuels to create shareholder value before green technologies develop enough to carry the global industrial complex.
Natural gas prices, for their part, have fallen over 70 per cent since August 2022 thanks to a warmer European winter, prompt imports into the Union, and robust U.S. supply, all of which should cause global input reductions to bring supply and demand back into harmony. Additionally, the fuel’s role as a cleaner alternative to crude oil is seen as a bridge toward a zero-emission world, granting it further potential for future price appreciation.
Another mineral with favorable prospects is graphite, which benefits from demand from the steel, EV and energy storage industries, as well as concerns over market leader China’s production and exports amid geopolitical tensions.
Natural graphite is an important conductivity additive in batteries and fuel cells, acting as the anode material into which lithium ions are intercalated. A standard EV vehicle will contain up to 38 kg of graphite, with worldwide production barely surpassing 1 million tonnes in 2021.
In fuel cells, graphite is a preferred raw material for bipolar plates, offering unique properties beyond high electrical conductivity, such as chemical inertness, an extremely low permeation coefficient, mechanical stability, and a favorable price at a fraction of other conductors like nickel, cobalt and manganese.
According to Benchmark Mineral Intelligence, the global graphite shortage will reach 8 Mt by 2040, with demand growing over the next decade at a CAGR of 10.5 per cent, and supply expanding at only 5.7 per cent per year. This should create upward pressure on prices, which are directly negotiated between buyer and seller, as graphite has no spot or futures market as of yet.
With tangible headwinds to build an investment thesis around graphite, oil and natural gas as the renewable energy movement continues to slowly take hold, here are three related stories from the past week that grabbed our investor community’s attention.
Trillion Energy’s (CSE:TCF) West Akcakoca well enters production
Trillion (TCF) has released flow test results for the West Akcakoca-1 well at the SASB gas field offshore Turkey.
The company perforated the well for a total of 7 m of natural gas pay on March 24, 2023, with flow tests coming in at a rate of 5.9 MMcf/day.
The well will now enter long-term production.
Approximately 48 m of gas pay remains to be perforated, affording West Akcakoca-1 a long-term production horizon.
Colin Robson, VP Corporate Development, spoke with Simon Druker about the news.
Trillion (TCF) is up by 30 per cent over the past year and 200 per cent over the past five years.
Canada Carbon (TSXV:CCB) interprets highly prospective results from Asbury Property
Canada Carbon (CCB) has received new results from its Asbury Property in Quebec.
December 2022 drilling and trenching completed on the eastern part of the property highlight the possible northeast extension of graphite mineralization reported in MC8805 (8.14 per cent Cg over 18.9 m).
Highlights include 5.00 per cent Cg over 33.5 m.
More assays are forthcoming as the company progresses toward an Asbury resource estimate.
CEO Ellerton Castor spoke with Shoran Devi about the news.
Canada Carbon (CCB) is down by over 60 per cent over the past five years, opening the door for a potential value play contingent on due diligence.
Tenaz Energy (TSX:TNZ) reports reserves and profitable 2022 results
Tenaz Energy (TNZ) has released Q4 and year-end 2022 results, as well as a 2022 reserves summary.
Net income for Q4 2022 was C$0.7 million, up from $0.2 million in Q3, as a result of increased operating netback.
Full year 2022 net income was $5.2 million, down from $8.3 million in 2021, driven by an impairment reversal recorded in 2021.
Total proved + probable reserves increased 20 per cent to 13.6 million boe, with after-tax NPV10% increasing 94 per cent to $141.1 million.
CEO Anthony Marino spoke with Brieanna McCutcheon about the news.
Tenaz Energy (TNZ) is up by over 168 per cent since its COVID low, showcasing the benefits of working oil and natural gas production in a time of global shortages.
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