Politicians Just Don’t Get It on Kinder Morgan

Royalty Revenue by Product Stream

Source: Rick Mills for Streetwise Reports 05/23/2018

Rick Mills of Ahead of the Herd opines on the political situation with Kinder Morgan’s pipeline.

The Canadian Constitution couldn’t be clearer about who controls pipelines that cross provincial boundaries—as in Kinder Morgan’s proposal to twin an existing pipeline that runs from Edmonton to Burnaby, BC. According to the 1867 Constitution, section 92(10)(a), the federal Parliament has jurisdiction over railways, canals and “other works and undertakings” (including pipelines) that extend across provincial boundaries. If the federal government approves a pipeline, as Justin Trudeau’s Liberals did with the Kinder Morgan TMX Expansion project in 2016, no provincial government may, within the limits of our Constitution, override the decision. The “declaratory power” of section (c) strengthens federal jurisdiction even more if the project is considered to be in the national interest. The following is from Tom Flanagan, a professor of political science at the University of Calgary, who knows the Constitution inside-out:

This allows Parliament to declare a work, even though “wholly situate within the province,” to be for the general advantage of Canada, or of two or more provinces, and therefore to come under federal jurisdiction. Parliament could invoke the declaratory power over all the local roads, bridges, storage facilities, hydro connections and any other physical installations necessary to construct and maintain a pipeline. – Tom Flanagan

So, all the federal government needs to do is pass a law stating that we WILL build a pipeline to allow Alberta oil to get to tidewater and enjoy international prices rather than the current $27 discount Canadian producers of Western Canadian Select must accept versus the North American West Texas Intermediate benchmark. Instead, we have the Minister of Finance, Bill Morneau, saying Wednesday that they have agreed to write Kinder Morgan a cheque to ensure that the pipeline gets built despite the steadfast opposition of the BC government. In other words, the federal government’s solution to what has become a ridiculous dog and pony show of separate interests all fighting each other instead of working together in what could be a national infrastructure project of benefit to all Canadians, is for the costs of any delays to be picked up by you, the taxpayer. And so far Morneau has given no limit as to what he’d pay. It’s a blank cheque. How did we get to this sad state of affairs, where our government has to pay off a company just to get a key piece of infrastructure built?

A brief history

It all goes back to the decision in 2016 by newly minted PM Justin Trudeau. The golden boy who could do no wrong, despite the Trudeau name being a curse word in Alberta for Trudeau Senior’s hated National Energy Program, decided to reject Northern Gateway and approve Kinder Morgan’s project, aka the Trans Mountain pipeline. Why did Trudeau do that? In a bit of twisted logic, Trudeau and his Environment Minister, Catherine McKenna, reasoned that in order for Canada to meet its international carbon emissions reduction obligations, it would impose a national carbon tax. Knowing that a carbon tax wouldn’t go over big in Alberta, Trudeau rejected Northern Gateway, which faced impossibly high hurdles in First Nations and environmental opposition, and instead green-lighted Kinder Morgan.

The proposal would twin the Texas-based company’s existing pipeline, allowing a tripling of crude oil from 300,000 barrels to 890,000 barrels a day, while also triggering a seven-fold increase in the number of oil tankers coming and going from Vancouver Harbour.

Since it was not a new pipeline but an extension of an existing one, Trudeau likely reasoned it would face less opposition than Northern Gateway (people forget that the National Energy Boardan independent regulatory agency recommended that the federal government approve it, with 157 conditions). He was obviously wrong about that, as the ongoing protests on Burnaby Mountain, just outside of Vancouver, demonstrate. Thus, the bargain struck in 2016 was a carbon tax in return for Alberta being granted a route for its bitumen from the oilsands, and a way out of the current dilemma of chock-full pipelines forcing producers to accept a discount on Canadian crude oil. The oil flowing through Kinder Morgan’s new pipes would be exported, meaning it could fetch the higher Brent crude price. Win win, right? Wrong.

Remember Christy Clark? The former BC premier was instrumental in cutting a deal with Alberta Premier Rachel Notley that would satisfy BC’s concerns that it was getting a fair shake over this Kinder Morgan pipeline proposal. Clark and Notley’s predecessor, Alison Redford, got off on the wrong foot right away (their relationship was described as “frosty”) when Clark demanded that she wouldn’t agree to the pipeline unless five conditions were met:

  • world-leading marine and land oil spill response
  • protection and recovery measures for B.C.’s coast and land areas
  • environmental reviews
  • First Nations consultations
  • participation and economic agreements that reflect the level and nature of the risk the province bears with a heavy oil project.

On January 11, 2017, after five years of negotiations, Clark announced that the five conditions had been met and therefore gave the pipeline environmental approval, with 37 conditions. The deal included a revenue-sharing agreement worth up to $1 billion; the money from the fund was supposed to go into local environmental projects. Kinder Morgan promised that between $25 million and $50 million would flow to BC provincial coffers every year for the next 20 years. Four months later, an agreement was cemented with Kinder Morgan Canada, along with separate agreements with 33 BC First Nations and 19 cities in BC and Alberta. The 30-page document came with a poison pill, though. If the BC government resorted to undue regulatory hurdles, the company could declare it null and void. “The province will continue to endeavor to have a timely and efficient regulatory and decision-making process for all provincial regulatory matters related to …read more

From:: The Energy Report

Q1/18 Revenue Beat for Solar Power Firm, Continuing Growth Expected

Source: Streetwise Reports 05/23/2018

Pardeep Sangha, an analyst with Haywood Securities, reviewed this energy solutions company’s first quarter financial results.

In a May 16, 2018 research note, Analyst Pardeep Sangha with Haywood Securities indicated that UGE International Ltd. (UGE:TSX.V; UGEIF:OTC) posted “strong results for Q1/18 with revenue beating our estimate and adjusted EBITDA in line with our expectations.”

Q1/18 revenue was $6.1 million ($6.1M) an increase of 10% year over year and 46% quarter over quarter. It exceeded Haywood’s estimate of $5.6M. Reported adjusted EBITDA was a loss of $0.1M, equal to Haywood’s forecast and better than Q1/17’s result of $0.2M. Gross margins in the quarter were 17.9%. “Growth was driven by strong performance in the U.S. and Philippines,” Sangha explained.

As of March 31, 2018, UGE had $1.5M in cash and $7.4M in debt. Quarter-end net debt of $5.8M was $1M more than at year-end 2017.

In the near term, Q2/18 “should be a solid quarter,” Sangha noted, supported by the Peterborough contract, a $41.2M project backlog and new jobs. Longer term, he projected revenue growth of 31% in 2018 and 36% in 2019.

Sangha concluded that UGE “is experiencing very strong growth and plans to report positive adjusted EBITDA for full-year 2018.” Haywood, which expects the same, maintained its Buy recommendation and CA$0.80 per share target price on the company, whose stock is currently trading at around CA$0.37 per share.

Energy Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

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. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with UGE International. Please click here for more information.
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 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 UGE International, a company mentioned in this article.

Disclosures from Haywood Securities, UGE International Ltd., Research Report, May 16, 2018

Haywood Securities, or certain of its affiliated companies, may from time to time receive a portion of commissions or other fees derived from the trading or financings conducted by other affiliated companies in the covered security. Haywood analysts are salaried employees who may receive a performance bonus that may be derived, in part, from corporate finance income.

Haywood Securities, Inc., and Haywood Securities (USA) Inc. do have officers in common however, none of those common officers affect or control the ratings given a specific issuer or which issuer will be the subject of Research coverage. In addition, the firm does maintain and enforce written policies and procedures reasonably designed to prevent influence on the activities of affiliated analysts.

Analyst Certification: I, Pardeep S. Sangha, hereby certify that the views expressed in this report (which includes the rating assigned to the issuer’s shares as well as the analytical substance and tone of the report) accurately reflect my/our personal views about the subject securities and the issuer. No part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendations.

Important Disclosures

Of the companies included in the report the following Important Disclosures apply: Haywood Securities Inc. or one of its subsidiaries has managed or co-managed or participated as selling group in a public offering of securities for UGE International Ltd (UGE-T) in the last 12 months.

Other material conflict of interest of the research analyst of which the research analyst or Haywood Securities Inc. knows or has reason to know at the time of publication or at the time of public appearance: n/a

( Companies Mentioned: UGE:TSX.V; UGEIF:OTC,
)

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From:: The Energy Report

Oil and Gas E&P Faces Headwind After Posting Solid Quarter

Source: Streetwise Reports 05/19/2018

Raymond James reviewed the issue this energy company is currently tackling.

In a May 11 research note, Raymond James analyst John Freeman reported that Diamondback Energy Inc. (FANG:NASDAQ) “delivered a solid Q1/18 earnings beat, driven by an impressive beat on operating costs. The focus, however, remains on concerns around Permian takeaway and the ability to limit in-basin pricing exposure.”

In Q1/18, the company reported adjusted EBITDA of $361.1 million ($361.1M), above both Raymond James and consensus’ estimates of $349M and $337M, respectively. Similarly, adjusted earnings per share of $1.64 exceeded expectations of Raymond James and consensus, which were $1.53 and $1.58, respectively.

For 2018, Diamondback slightly increased the low end of its production guidance to 110–116 thousand barrels of oil equivalent per day (110–116 Mboe/day) from 108–116 Mboe/day. It lowered its lease operating expense guidance by 13% at the midpoint, to $3.75–4.50 per barrel of oil equivalent. Capital spending and completions remain unchanged.

As for current operations, Diamondback is operating 11 rigs and 5 fracking crews. Given the last rig came online in Q1/18 and the oil price recently has been strong, the company likely will bring on a 12th rig this summer, noted Freeman.

A likely temporary headwind for Diamondback is its lack of near-term solutions to the problem of “extremely limited takeaway through at least early 2019,” Freeman indicated. The company did recently secure 50 Mboe/day in firm transportation on the Gray Oak pipeline, which should help improve its exposure to out-of-basin pricing, but that pipeline will not start up until late 2019. “In the meantime, basis hedges cover ~13% of forecasted 2018 production volumes,” he added.

Freeman pointed out that while Diamondback is pursuing “multiple deals to increase international pricing exposure and while its scale should help lock in a price that is less than the cash market today (we model H2/18 differentials at ~$11 per barrel), any solution here will likely still be relatively expensive.”

Despite the takeaway concerns, however, Freeman concluded, “we remain constructive on the name, given Diamondback’s prime acreage position, strong operational prowess and very attractive growth profile.”

Raymond James maintains its Outperform rating and $176 per share target price on Diamondback, whose stock is currently trading at around $134.58 per share.

Energy Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

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 one week after the publication of the interview or article.

Disclosures from Raymond James, Diamondback Energy Inc., May 11, 2018

ANALYST INFORMATION

Analyst Compensation: Equity research analysts and associates at Raymond James are compensated on a salary and bonus system. Several factors enter into the compensation determination for an analyst, including i) research quality and overall productivity, including success in rating stocks on an absolute basis and relative to the local exchange composite Index and/or a sector index, ii) recognition from institutional investors, iii) support effectiveness to the institutional and retail sales forces and traders, iv) commissions generated in stocks under coverage that are attributable to the analyst’s efforts, v) net revenues of the overall Equity Capital Markets Group, and vi) compensation levels for analysts at competing investment dealers.

The views expressed in this report accurately reflect the personal views of the analyst(s) covering the subject securities. No part of said person’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report. In addition, said analyst has not received compensation from any subject company in the last 12 months.

RAYMOND JAMES RELATIONSHIP DISCLOSURES
Raymond James Ltd. or its affiliates expects to receive or intends to seek compensation for investment banking services from all companies under research coverage within the next three months.

Raymond James & Associates makes a market in shares of FANG.

( Companies Mentioned: FANG:NASDAQ,
)

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From:: The Energy Report

Natural Gas Seasonal Cycles Show Upside Potential

chart

Source: Chris Vermeulen for Streetwise Reports 05/19/2018

A traditional seasonal pattern in natural gas has set up, and may result in a tremendous trading opportunity, writes Chris Vermeulen of Technical Traders.

Recently, we have alerted our members to this play, which is already up over 16%. Additionally, our advanced price modeling systems and Adaptive Dynamic Learning Cycles have recently triggered another buy entry trade (see the chart) with oversold pullbacks.

This seasonality table refers to particular time frames when commodities are subjected to and influenced by recurring tendencies that produce patterns each year.

Our research team has been following the energy sector quite intensely, with oil and natural gas making an impressive move. Our belief is that natural gas will continue to climb higher, moving well above the $3.00 level before the end of this month, as well as potentially pushing well above the $3.20 level on continued price advances in energy. With global concern globally driving energy supply fear and pushing energy prices higher. This seasonal pattern indicates the potential for some strong upside price moves. Smart traders are already positioned for this move, yet there is still quite a bit of opportunity for current entry point.

chart

Any upside price move from current levels to above $3.00 would reflect an additional 4–6% price gain, and any advance above $3.20 would reflect a 11% price advance. Additionally, our predictive price modeling systems and cycle modeling systems are showing this has the potential for quite a bit more, but we can estimate the $3.00–3.20 level is a sufficient upside target for this initial move.

If you would like help finding trade triggers like this and help knowing what to expect each day in the markets, please visit www.TheTechnicalTraders.com to learn how we can help you take advantage of the opportunities that are presented each week in the markets.

Chris Vermeulen has been involved in the markets since 1997 and is the founder of Technical Traders Ltd. He is an internationally recognized technical analyst, trader, and is the author of the book: “7 Steps to Win With Logic.” His mission is to help his clients boost their trading performance while reducing market exposure and portfolio volatility. He is a regular speaker on HoweStreet.com, and the FinancialSurvivorNetwork radio shows. Vermeulen also contributes market insight to several financial hubs like StreetWiseReports.com.

Disclosure:
1) Statements and opinions expressed are the opinions of Chris Vermeulen and not of Streetwise Reports or its officers. Chris Vermeulen is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the article preparation. The author was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) 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.
3) 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.

Charts provided by the author.

Technical Traders Disclaimer: This material should not be considered investment advice. Technical Traders Ltd. and its staff are not registered investment advisors. Under no circumstances should any content from websites, articles, videos, seminars, books or emails from Technical Traders Ltd. or its affiliates be used or interpreted as a recommendation to buy or sell any security or commodity contract. Our advice is not tailored to the needs of any subscriber so talk with your investment advisor before making trading decisions. Invest at your own risk. I may or may not have positions in any security mentioned at any time and maybe buy sell or hold said security at any time.

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From:: The Energy Report

Texas Small-Cap Reports Orogrande Horizontal Well Stimulation Success as It Acquires Additional Acreage

Source: Streetwise Reports 05/16/2018

An independent small-cap Texas oil company moves forward with oil production in the Orogrande and continues to grow by adding property in the Delaware Basin.

Torchlight Energy Resources Inc. (TRCH:NASDAQ) announced at the end of April that the University Founders A25 #1H horizontal well in the Orogrande project has undergone a successful stimulation. Altogether, six stages underwent fracture stimulation at 60 bpm using 2.4 million pounds of sand. Flow testing was initiated and stage plugs have been drilled. Also, within the Penn formation, evaluation of the ~1000-foot lateral interval has begun.

John Brda, CEO of Torchlight Energy, stated, “We are very pleased that all six stages of the stimulation were delivered according to plan. The well treated as expected and the entire proppant package of each stage was placed as designed. Matrix fracture stimulation was accomplished, and we believe this to be a first in the Orogrande Basin.”

“I think we’re going to see a much bigger payoff as the company releases more well results.” – Keith Kohl, Pure Energy Trader

The Orogrande project is located in the Permian Basin, and is the flagship project for Torchlight. The company is also planning to drill two vertical wells in the Orogrande project, one in the northern section and the other in the southern, to further explore the geology of the area.

Bob Moriarty wrote in 321 Gold, Torchlight Energy “has just finished drilling the first horizontal test well in the all-important Orogrande field where the company holds a 67.5% working interest. The University Founders A25 1H well was drilled to 5,500 feet vertical and the company has finished a 1,000-foot lateral. The company is not trying to maximize the production from the well. If they wanted to do that, they would do a 10,000-foot lateral. They want to use the 1,000-foot lateral as a benchmark.”

“A similar well in the Midland Basin would produce 100 BOEPD. The same well in the Delaware Basin would produce 200 BOEPD. Torchlight hopes to hit in between the Midland numbers and the Delaware numbers. Well pressure is higher than expected and that’s a good sign,” Moriarty added.

Keith Kohl wrote in Pure Energy Trader on May 3, “I can’t stress the potential of the Orogrande Basin enough. The company owns a 67.5% working interest in approximately 133,000 net acres, and the play’s primary pay zone is the Pennsylvanian, which can be found between 5,200′ and 6,100′. Let’s assume for a moment that 100,000 acres were prospective, we’d be looking at about 156 sections for the project. And based on similar Midland Basin EURs, we’re talking about 4 to 6 million barrels per section.”

“Even though the stock has lost a little bit of ground since mid-March, I think we’re going to see a much bigger payoff as the company releases more well results,” Kohl concluded.

Torchlight also announced that its partner on the Winkler project in the Delaware Basin, MECO IV, has begun to drill the first well, the UL 21 War-Wink 47 #2H. According to the company, “the plan is to evaluate the various potential zones for a lateral leg to be drilled once logging is completed. The company expects the most likely target to be the Wolfcamp A interval.” This well is being drilled on 320 acres that offset the original leasehold Torchlight acquired in December 2017.

Torchlight’s carried interest is being applied to this new well and will “allow MECO IV to drill and produce potential revenues sooner than originally planned. The primary leasehold is a 320-acre block directly west of the current position and will allow for 5000-foot lateral wells to be drilled.”

CEO Brda stated, “We are excited to be entering the Delaware basin with our technically strong operating partner MECO IV out of Denver. The well is in an excellent area with premier offset operators making excellent wells in multiple pay zones. We look forward to MECO executing on the technical and scientific aspects of the project, ultimately delivering a 5000′ lateral in the best pay zone identified.”

Late last month, Torchlight closed an underwritten public offering of 5,750,000 million shares at $1.15 per share, resulting in net proceeds of approximately $6 million. ROTH Capital Partners was the sole manager of the offering. The company stated that it intends to use the proceeds “primarily to meet its drilling obligations at its Hazel Project and Orogrande Project and for general corporate purposes.”

Torchlight has about 69 million shares outstanding, of which approximately 20% are closely held. Its market cap is around $82 million.

Read what other experts are saying about:

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Disclosure:
1) Jake Richardson 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: Torchlight Energy. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with Torchlight Energy. Please click here for more information.
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 …read more

From:: The Energy Report

Explorer Discovers Lithium Deposit in Nevada

Source: Streetwise Reports 05/15/2018

One of the largest deposits of lithium in North America appears to be extraction friendly.

Cypress Development Corp. (CYP:TSX.V; CYDVF:OTCQB; C1Z1:Frankfurt) recently released the maiden resource estimate for a lithium deposit at its 100%-owned Clayton Valley Lithium Project. It is unique due to its large size, which is 6.54 million tons of lithium carbonate equivalent (LCE). The Indicated resource is 597 million tons with a grade of about 0.09% lithium, or 2.857 million tons LCE. The inferred resource is 779 million tons at 0.089% lithium, or 3.683 million tons of lithium carbonate equivalent. It is one of the largest lithium deposits in North America.

Dr. Bill Willoughby, who joined Cypress as a consultant to commercialize and optimize the new lithium discovery and then became CEO, stated, “This is a major milestone for Cypress. To have advanced from drilling the first hole on Dean just over a year ago to the resources we have now is truly remarkable. It’s exciting not only to see validation to the size of deposit, which is something we’ve anticipated, but also all the other factors line up that affect how a project can become a mine. I’m looking forward now to the PEA next, which I anticipate based on the results today, we will work to complete as quickly as possible.”

The metallurgy at the discovery site appears to be favorable to extraction, whereas some other claystone deposits have not been. “Preliminary test work conducted at SGS Canada Inc (Lakefield) and Continental Metallurgical Services, LLC has shown the material exhibits high lithium extractions with short leach times. Lithium extractions greater than 80% can be achieved in 4 to 8 hours using conventional dilute sulfuric acid leaching. Currently, Hazen Research Inc is conducting additional leach tests and preliminary results confirm high lithium extractions for new mineral zones,” the company noted.

“Cypress Development killed it with its maiden NI 43-101 compliant lithium resource estimate yesterday.” – Peter Epstein, Epstein Research

“The presence of acid leachable lithium presents a significant cost savings by avoiding calcine and regrind of material during processing. Preliminary results also show the consumption of sulfuric acid and other reagents are relatively low,” Cypress Development stated.

The deposit might have a theoretical 200 to 300-year old mine life, according to company representatives. At the moment, the company has not found the bottom of the deposit.

The asset is located in Nevada and is not far from the Tesla Gigafactory. Much of the world’s lithium production is located outside the U.S., so having such a large discovery occur in Nevada is especially noteworthy.

The deposit itself is a milestone but the company is also looking forward to more drilling success in the next 6-12 months. The completion of a preliminary economic assessment is expected by September.

Industry observers hailed Cypress’ maiden resource element. Peter Epstein of Epstein research wrote on May 2, Cypress Development “killed it with its maiden NI 43-101 compliant lithium resource estimate yesterday! The whisper number was 4 to 6 million Inferred tonnes of Lithium Carbonate Equiv. (LCE), (which would have been a tremendous result), but Global Resource Engineering Ltd. determined there’s an estimated 6.54 million metric tonnes LCE.”

“Management has delivered a blockbuster maiden resource, >6 million tonnes of LCE (combined Indicated & Inferred). Therefore, Cypress need never worry again about resource size; it already has huge scale,” Epstein concluded.

The Critical Investor noted on May 9 the speed at which Cypress Development is working: “Cypress Development is proceeding at breathtaking pace, going from its first drill hole at the Dean claystone lithium project in Nevada, U.S., to the very recent announcement of a maiden resource estimate on both Dean and Glory projects in just over a year.”

“As the resource of Dean/Glory is quite large, the potential for a project with very impressive economics could be realistic,” The Critical Investor stated.

The company has approximately 60 million shares outstanding, of which 20% are closely held.

In December 2017, the U.S. government designated lithium as a “critical mineral” of strategic importance. One driver of lithium consumption is its use in batteries for electric vehicles. Many countries around the world are interested in acquiring EVs or making their own because they don’t produce toxic tailpipe emissions and run on electricity, not directly on fossil fuels. Batteries of all kinds utilize about half of all the world’s mined lithium.

Want to read more Energy Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Jake Richardson 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: Cypress Development Corp. 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 …read more

From:: The Energy Report

Potential Russian Law Restricting Uranium Exports to US Is Bullish for American Producers

Source: Streetwise Reports 05/15/2018

A potential Russian backlash to U.S. sanctions could be a boon to U.S. uranium producers.

Russian legislators have drafted a law to restrict various materials that are exported to the U.S. as a response to American federal government actions it found “unfriendly.” The U.S. Congress passed legislation imposing various sanctions on Russia in response to allegations of election influencing and other behaviors. The recently drafted Russian material restrictions may be in retaliation for passing the Countering American Adversaries through Sanctions Act (CAATSA).

One of these materials Russia may restrict is uranium. The U.S. currently imports most of its uranium which is used for fuel in nuclear power plants to generate electricity. About 14% of uranium used in America comes from Russia currently. Another 25% or so comes from Kazakhstan, which was part of the former Soviet Union. Most of the remaining uranium comes from Canada and Australia.

Uranium fuel is an essential part of the American energy mix because nuclear power produces about 20% of US electricity.

Stock Catalyst Report uranium expert Mike Alkin explained, “[the U.S. imports] half of their uranium from Russian and Russia-friendly countries. They import 95 percent, but half of that is Russian, Russian friendly. At the tensions that are right now it takes one sanction against Russia for uranium not to come in, and I think it’s a huge risk.”

The announcements made about Russia’s potential uranium export restriction to the U.S. didn’t have much effect on the spot price of U3O8.

If Russia does restrict uranium exports to the United States, that could be bullish for the price of uranium as well as for uranium companies.

Shares of Energy Fuels Inc. (EFR:TSX; UUUU:NYSE.American), the largest producer of energy in the U.S., and Ur-Energy Inc. (URG:NYSE.MKT; URE:TSX), another U.S. uranium producer, have increased roughly 15% since the release of the news.

Energy Fuels has the White Mesa Mill in Utah, the Nichols Ranch Processing Facility in Wyoming, and the Alta Mesa Project in Texas, providing both conventional and in-situ recovery uranium mining.

Ur-Energy operates the Lost Creek in-situ recovery uranium facility in Wyoming and owns the Shirley Basin and Lucky Mc mine sites, also in Wyoming.

One active explorer is Skyharbour Resources Ltd. (SYH:TSX.V). The company has three on-going exploration programs and another junior explorer is optioning a fourth property in the Athabasca Basin in Canada.

In addition to potential Russian action, another catalyst for the price of uranium could be a limit on the amount of uranium imports to the United States. Energy Fuels and Ur-Energy have submitted a Section 232 petition to the Department of Commerce asking for relief from overseas uranium imports that threaten national security.

Former Assistant Secretary of Commerce for International Economic Policy Thomas Duesterberg wrote in support of the petition in Forbes on April 26, noting, “A viable U.S. uranium mining industry is needed to meet both defense requirements in the future and guard against becoming reliant on Russian and Russian-affiliated suppliers.”

Read what other experts are saying about:

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Disclosure:
1) Jake Richardson 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: Energy Fuels Inc. 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 one week after the publication of the interview or article.

( Companies Mentioned: EFR:TSX; UUUU:NYSE.American,
SYH:TSX.V,
URG:NYSE.MKT; URE:TSX,
)

…read more

From:: The Energy Report

Prospects of Small-Cap Texas Energy Company Increase as the Price of Oil Rises

Amazing Energy Location Map

Source: Streetwise Reports 05/15/2018

This small-cap energy firm’s Permian Basin drilling and testing have been showing good results, and the company has just started.

The price of West Texas Intermediate (WTI) crude oil is staying above $70/barrel, the highest it’s been in over three years.

Amazing Energy Oil & Gas Co. (AMAZ:OTCQX), an independent small-cap energy company, holds rights within 70,000 contiguous acres leasehold in Pecos County, Texas, in the Permian Basin. Its neighbors include Kinder Morgan, Pioneer Natural Resources, ConocoPhillips, Jagged Peak Energy, Diamondback Energy, Apache and Occidental Petroleum.

The company has drilled its first wells and is moving ahead with plans to drill more. The company recently announced that it had reached a production milestone of 100 boe/day in April.

Will McAndrew, CEO of Amazing Energy stated, “We are very excited with the progress of our production as we continue to perform reworks, completions and our drilling program, announced in January 2018. We have an aggressive oil and gas exploration and production plan within defined sections of the rights within the 70,000-acre leasehold focus area.”

“If we factor in both the economics of these wells and the favorable leasehold agreement that Amazing has, I don’t expect shares to stay low for long.” – Keith Kohl, Pure Energy Trader

On May 14, Amazing announced that the company plans to initiate in the next several weeks a chemical squeeze program “around the outer perimeter of Section 91 where the company previously initiated drilling, completion and production operations.” The company says the program “should allow for improved fluid entry on existing wells targeting the Queen formation.”

“We expect to spud a new well within the next 90 days and build on our recent success while expanding our knowledge and production of the Queen A and B and other formations. With the results from our most recent well, we are now looking closely at potential production from drilling horizontal wells in the San Andres formation utilizing the data from Haliburton’s new RockVision logs,” McAndrew noted.

The company has also stated that it has “accomplished increased drilling efficiencies with each new well and expects the trend to strengthen in the coming year as the play matures. Further innovation using the latest drilling techniques are expected to decrease operational costs as production increases.”

Amazing’s goal is to drill and complete or re-work three additional wells per month by the end of the third quarter of 2018.

The bigger picture is also promising. A March 2017 report from Baker Hughes projected $15.3 Billion Probable Reserves on all of its acreage.

Within Amazing Energy’s rights within the 70,000 acre leasehold of Permian Basin land holdings, there could be thousands of new drilling sites. Making matters even more interesting is that Amazing’s land is near the prolific Yates Oilfield, which has produced more than 1.6 billion barrels of oil. The Amazing land is also stacked pay, so it may be possible to extract oil from multiple zones.

Keith Kohl, writing in Pure Energy Trader on May 3, noted that Amazing “expects that it will be drilling and completing, or re-working, at least three additional wells per month by the end of the third quarter. Furthermore, Amazing also plans to spud a new well within the next 90 days and build on its latest success. I’m still shocked the market hasn’t caught on yet. If we factor in both the economics of these wells and the favorable leasehold agreement that Amazing has, I don’t expect shares to stay low for long.”

Technical analyst Clive Maund wrote in a March 17 article about the company, “the prospects for this stock are very bright. . .holders should stay long and it is viewed as an immediate strong buy again here.” Amazing has 48.4 million shares in issue, of which the float is about 22 million.

Bob Moriarty of 321 Gold noted on March 7 that “with a market cap today of under $50 million, the company price doesn’t reflect the future value. Look for more and more news flow. And oil flow while they are at it.”

Read what other experts are saying about:

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Disclosure:
1) Jake Richardson 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: Amazing Energy. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with Amazing Energy. Please click Please click here for more information.
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 …read more

From:: The Energy Report

Following Q1/18 Production Beat, Oil/Gas E&P to Launch Buyback

Source: Streetwise Reports 05/12/2018

Pavel Molchanov, an analyst with Raymond James, reviewed this energy firm’s favorable first quarter production numbers and cash position.

In a May 9 research note, analyst Pavel Molchanov with Raymond James reported that Occidental Petroleum Corp. (OXY:NYSE) Q1/18 production exceeded the top end of guidance and is “on track for above-trend organic growth in 2018.” Raymond James raised its target price to $85 from $80 per share on the company, whose stock is currently trading at around $78.20 per share.

Occidental’s adjusted Q1/18 earnings per share came in at $0.92, much higher than Raymond James’ estimate of $0.67 and consensus of $0.70.

The energy company’s Q1/18 production was 609 million barrels of oil equivalent per day (609 MMboe/day). This exceeded guidance for the quarter of 592–603 MMboe/day. Resources in Q1/18 were 177 MMBoe/day, up 11% quarter over quarter (QOQ). Permian Liquids grew 5% QOQ.

The company has increased full year 2018 guidance to 645–665 MMBoe/day from 640–665, “equating to growth of 9% at the midpoint, above the long-term target of 5–8%,” Molchanov noted. Raymond James’ estimate is midrange, at 649 MMBoe/day.

The bottom line is Occidental “has plenty of cash to return to shareholders,” indicated Molchanov. Pretax income from OxyChem alone in Q1/18 was $298 million, and that was 37% higher than the amount in Q1/17.

For the energy firm, Raymond James projects free cash flow in 2018 of $3.8 billion, twice that of 2017, and even more in 2019. This $3.8 billion compares to $2.4 billion Occidental paid out in dividends last year. “The company clearly has the ability to reinstate share buyback, last seen on a meaningful scale in H1/15, and we are delighted to see management finally pulling the trigger,” wrote Molchanov. In doing so, Occidental would join other oil/gas explorers and producers, including Anadarko, Devon and Hess, and would be “notably, ahead of either Exxon or Chevron in this regard.”

Overall, Occidental has a “longstanding track record of capital discipline, a natural hedge in OxyChem and one of the highest liquids weightings among large caps,” Molchanov described. “The stock’s total return attributes, the yield plus the about-to-resume share buyback are also enticing.”

Raymond James’ rating on Occidental Petroleum is Outperform.

Energy Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

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 one week after the publication of the interview or article.

Disclosures from Raymond James, Occidental Petroleum Corp., May 9, 2018

ANALYST INFORMATION

Analyst Compensation: Equity research analysts and associates at Raymond James are compensated on a salary and bonus system. Several factors enter into the compensation determination for an analyst, including i) research quality and overall productivity, including success in rating stocks on an absolute basis and relative to the local exchange composite Index and/or a sector index, ii) recognition from institutional investors, iii) support effectiveness to the institutional and retail sales forces and traders, iv) commissions generated in stocks under coverage that are attributable to the analyst’s efforts, v) net revenues of the overall Equity Capital Markets Group, and vi) compensation levels for analysts at competing investment dealers.

The views expressed in this report accurately reflect the personal views of the analyst(s) covering the subject securities. No part of said person’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report. In addition, said analyst has not received compensation from any subject company in the last 12 months.

RAYMOND JAMES RELATIONSHIP DISCLOSURES
Raymond James & Associates makes a market in shares of OXY.

( Companies Mentioned: OXY:NYSE,
)

…read more

From:: The Energy Report

Impressive Resource for Clayton Valley Lithium Project

40.jpg

Source: The Critical Investor for Streetwise Reports 05/09/2018

The Critical Investor discusses a maiden resource estimate for a lithium deposit in Nevada.

Drilling at Dean claystone project; Clayton Valley, Nevada

1. Introduction

Some juniors can be agonizingly slow on following up to their self-imposed timelines and ability to deliver results, however there are exceptions. Cypress Development Corp. (CYP:TSX.V; CYDVF:OTCQB; C1Z1:Frankfurt) is proceeding at breathtaking pace, going from its first drill hole at the Dean claystone lithium project in Nevada, U.S. to the very recent announcement of a maiden resource estimate on both Dean and Glory projects in just over a year. Not only this, the company also managed to beat various estimates in the field, including my own, with some margin, as it released a 6.54 Mt lithium carbonate equivalent (LCE) resource estimate. By doing this, Cypress established itself instantly as the holder of a 100%-owned world class sized lithium deposit, which is quite something for a junior with a tiny market cap.

The next step will consist out of two parts: developing and completing metallurgical testing for viable recovery methods (also known as met work in the industry) and doing a Preliminary Economic Assessment (PEA) to provide economics. The met work is ongoing and guided by very experienced CEO Bill Willoughby who holds a PhD in engineering and metallurgy, and the PEA is scheduled for the end of August or September. As the resource of Dean/Glory is quite large, the potential for a project with very impressive economics could be realistic. After talking to management and various industry experts, I will provide a hypothetical outlook on this potential, and together with this my view on valuation potential.

All presented tables are my own material, unless stated otherwise.
All pictures are company material, unless stated otherwise.
All currencies are in US Dollars, unless stated otherwise.

2. Maiden Resource Estimate

Cypress Development released its maiden resource estimate on its fully owned Clayton Valley lithium project on May 1, 2018, and it sure was impressive. The total resource for the Dean and Glory properties came in at 6.54 Mt LCE, which consisted of an Indicated mineral resource of 597 Mt at an average grade of 899 ppm (0.09%) Li, which equates to a contained 2.857 Mt of lithium carbonate equivalent (LCE), and an Inferred mineral resource of 779 Mt at an average grade of 888 ppm (0.089%) Li, which equates to a contained 3.683 Mt of LCE. The total number of 6.54 Mt beat my estimate by about 20%, according to my estimated target of 5.45 Mt LCE, and also my top margin target of 6Mt.

Again, as a continuous reminder, examples of world class sized LCE deposits in each category are brine projects like Cauchari/Olaroz (Orocobre: 6.4Mt LCE, SQM/Lithium Americas 11.7Mt LCE), clay projects like Sonora (Bacanora: 7.2Mt LCE) or hard rock projects like Whabouchi (Nemaska: 4.06 Mt LCE).

The average grade of about 893ppm Li is somewhat lower than my estimated average of about 950ppm Li, but this isn’t out of line and a normal deviation to my numbers as I am estimating without advanced software used by engineering firms. The cut-off grade was also set somewhat low at 300ppm Li, which probably helped to increase the resource but also lowered the average grade.

The deposit is outlined by 23 core holes for 1,891m drilled during 2017 and 2018. As the deposit is lying at surface and is pretty superficial (no deeper than 150m, usually starting at surface) and mineralization appears to be very continuous, drilling it off is relatively very cheap to build tonnage. The deposit remains open at depth, with 21 of the 23 holes ending in lithium mineralization. As this mineralization at the endings of drill cores averaged 300 ppm Li, my view is that the company will not find much more economic mineralization (assuming 800–900ppm Li) at depth, and will focus on infill drilling and advancing the current mineralized body, which is already world class.

Management estimates that an additional 30 drill holes are required to upgrade the Inferred portion of the mineral resource to the Indicated category. The large tonnage of the deposit lends potential to target higher grade lithium mineralization for the PEA, as is seen within the intercepts between GCH-06 and DCH-13:

36.jpg

After discussing this with management, it seems that enough of the deposit is eligible to mine at a higher grade compared to the average grade of the maiden resource. All in all, an average grade of 1,000ppm Li seems to be realistic, and I will use this as a base for my hypothetical PEA estimates later on.

Preliminary test work conducted at SGS Canada Inc. (Lakefield) and Continental Metallurgical Services LLC has shown the material exhibits high lithium extractions with short leach times. Lithium extractions greater than 80% can be achieved in 4 to 8 hours using conventional dilute sulfuric acid leaching. Currently, Hazen Research Inc is conducting additional leach tests and preliminary results confirm high lithium extractions for new mineral zones.

The presence of acid leachable lithium presents significant cost savings by avoiding calcine and regrind of material during processing. Preliminary results also show the consumption of sulfuric acid and other reagents are relatively low, to the tune of 100kg/t LCE.

It was also stated in the news release that the production of high-purity lithium carbonate (a typical salable product) was demonstrated in the laboratory using conventional recovery methods, but the big question always remains costs on a commercial scale with these kinds of bench scale tests, and the potential for economic removal of impurities. This is the next big step Cypress is facing through continuing with its ongoing met work, and as mentioned in earlier updates, if the company succeeds in this department the resource all of a sudden becomes commercially viable and minable, implying vast upside for valuation.

At the same time, Cypress also plans to proceed immediately with a PEA based on the current …read more

From:: The Energy Report