US shale oil output will fall from 2018 and isn’t the balm to high global oil prices that some might hope for, the Secretary General of the Organization of the Petroleum Exporting Countries, Abdalla Salem El-Badri, told clients of Liberum in a recent exclusive meeting in London.
Click on the image below to read a full report in OPEC’s Bulletin of this and other areas of discussion >>
“Tight oil is another source of supply and it can help relax the oil market a little. But it is not a revolution. There is a lot of exaggeration about tight oil’s potential,” he told an 80-strong audience of oil and gas investors, company executives, lawyers and investor relations executives.
“The danger about exaggerating this potential, especially in the US, is that other countries might then tend not to invest in future capacity expansion,” he said. The consequences could be a future supply shortage.
Below: OPEC's Secretary General (foreground) with Liberum's Adam Smallman
US output of shale oil - also known as tight oil - is expected to reach about 3.9 million barrels a day by 2018 if 5m b/d of natural gas liquids are included. “But from 2018, output will decline,” Mr El-Badri added, citing OPEC’s World Oil Outlook.
A vigorous question-and-answer session with Liberum’s guests and event host Adam Smallman, Liberum's Head of Content, saw the Secretary General say that both producers and consumers were comfortable with crude prices around $100-$110 a barrel. “We are not looking for the two extremes in oil prices,” he said after the world had experienced three years of price stability. “This is because the extreme of higher prices at the end of the day will affect demand. And if demand is affected, then our business will be affected.”
Extreme low prices, in turn, can encourage high consumption and deter investment, he added.
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Flybe Group plc, Europe's largest regional airline, has named its first Bombardier Q400 aircraft the 'Spirit of Liberum' as it unveils its brand refresh and re-invigorated product and service offering.
"This brand refresh is a significant moment in Flybe Group¹s corporate history. It marks Flybe¹s return to growth with a reinvigorated product and service offering and a modernised look and feel," Saad Hammad, Chief Executive of Flybe Group, said.
“Liberum's support and positive approach has been a constant during our turnaround and has been appreciated by everyone at Flybe. It is wonderful that we have an opportunity to recognise their contribution by naming our inaugural purple livery aircraft "Spirit of Liberum".
This not only celebrates our future as Europe’s leading independent regional airline, but also marks the start of an exciting journey ahead. Viva Flybe!"
Below: Saad Hammad, Flybe CEO
Simon Stilwell, Liberum Chief Executive, added: "The Liberum team has worked closely with Saad and his team during Flybe’s turnaround. It is therefore a great honour that their inaugural plane in its new purple livery bears our name.
“We believe that at the heart of Liberum's success is our independence, entrepreneurial spirit and ability to work in partnership with our clients. Flybe's business encapsulates that spirit and we are delighted to continue our support and be part of their future in this way."
Contact: Emma Kane/George Parrett at Redleaf Polhill +44 (0) 20 7382 4747
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Liberum acted as Sole Broker and Bookrunner for West Midlands-based property group Real Estate Investors plc (AIM:RLE), in a placing of 40,000,000 new Ordinary Shares at a price of 50 pence per Ordinary Share, raising gross proceeds of £20 million from institutional and other investors.
The proceeds will be used to provide additional resources to capitalise on acquisition opportunities in the West Midlands property market.
Company website >>
Real Estate Research Analyst: Jon Stewart
Sales: Julian Collett
Corporate access: Regan Connor
Liberum has assembled an eclectic mix of companies with strong market positions and growth potential for its second annual Chemicals and Consumer Ingredients Growth Conference which takes place in London on the afternoon of 12 June 2014. The event is for Liberum’s institutional clients.
Mail Jenni Herbert >>, our corporate access manager, if you’re an institutional investor interesting in attending.
Here are short profiles of the companies attending and details on who will represent them.
Croda PLC, CFO + Head of Coatings/Polymers. Croda is a producer of chemicals, primarily from natural ingredients, for use in cosmetics, healthcare, cropcare and industrial markets – markets with an above average blended growth rate through the cycle of around 4-5%. The business also has a fairly defensive track record due to a wide number of products, a wide number of customers, products that usually account for a low percentage of customer product cost and stable consumer end markets. Our guest speakers are well placed to comment on the M&A strategy and the potential for cyclical recovery in the Coatings/Polymers activities.
PureCircle PLC, CFO. PureCircle is the world's #1 in high purity stevia sweeteners for food and beverages with an 80%+ share. It has grown sales 10-fold to $100m since 2007 and should approach full current capacity ($250-300m sales) in the next 2-3 yrs. Stevia is the only natural, zero calorie sweetener viable for large scale production and growth is being driven by the focus to reduce sugar contents of food & drinks. PureCircle has supply agreements with all the major F&B companies (Coca Cola, Pepsi, Nestle etc).
Symrise AG, Head of IR. Symrise is the world’s fourth largest supplier of Flavour and Fragrance (F&F) Ingredients with a global share of 11% and is also niche cosmetic and healthcare ingredient supplier. Based in Holzminden, Germany the Group has been a public company since 2006, since which it has enjoyed a stable CAGR in sales and EBITDA of around 6%. The F&F sector is a very defensive and cash generative sector. Compared to its peers Symrise is particularly strong in vanilla, onion and menthol and leads the way in terms of its share of revenues from Emerging markets.
Air Liquide, Head of IR. Air Liquide has a leading c22% share of the €65bn Global Industrial Gases sector including oxygen, nitrogen, hydrogen and specialty gases. It is Global co-leader in Medical and Electronic gases and Europe’s leading supplier of hydrogen to oil refineries and number 3 in North America to the same. Historically it has the most defensive track record of the Big 4 industrial gas companies reflecting a bigger share of Revenues from Tonnage customers (on take and pay contracts) + Healthcare than any of its principal peers.
Alent PLC, CFO+Head of IR. Alentis a global supplier of specialty chemicals to the electronics, automotive and industrial sectors. The business was demerged from Cookson PLC in December 2012. Assembly Materials (Alpha) is a global supplier of solder and other interconnect materials principally used in phone and computer printed circuit boards and Surface Chemistries (Enthone) a global supplier of electroplating materials for the semiconductor, automotive and plumbing fittings sectors. The company is one of the most cash generative in the UK Specialty Chemicals Group yet trades at a 25% PE sector discount.
Velocys PLC, CEO+CFO. Velocys, previously called Oxford Catalysts,supplies catalysts and reactors for small/medium scale gas-to-liquids (GTL) plants. According to the company, the capital and operating costs of its systems are competitive thanks to the deployment of its compact microchannel FT reactors and super-active catalysts. The USA shale oil sector is a key target as many liquid rich fields have low cost ‘byproduct’ methane. The CEO is an eloquent advocate of his business and the economics of GTL.
Liberum Utilities Analyst Peter Atherton appeared on last night's BBC Newsnight current affairs programme to discuss the implication of Ofgem's referral of the energy utility sector to the Competition and Markets Authority.
CLICK HERE >> to see the clip (Ofgem segment starts at 11:42, Peter Atherton's remarks on Ofgem start at 15:00. Overseas viewers may be unable to use the BBC's iPlayer platform).
CLICK HERE >> to read Peter Atherton's full commentary on the Ofgem decision.
"As expected Ofgem today initiated a referral of the energy utility sector to the Competition and Markets Authority (CMA). However the reasons given by Ofgem for the referral were flimsy at best. Indeed, Ofgem's report seems to describe a market where competition was working. And Ofgem's decision to refer the sector before its own extensive reforms have had the opportunity to work is bizarre We can only conclude that Ofgem has responded to political and media pressure to be "seen to do something". Whilst understandable, Ofgem's action will inevitably damage its own credibility and indeed the credibility of independent economic regulation in the UK."
Below: Peter Atheron, Liberum Utilities Analyst
Two placings on the same day totalling £200 million were supported by Liberum in early March, providing funds for British businesses to expand in real estate and global fertiliser supplies.
Real estate company Shaftesbury PLC announced a placing of new shares at 620p on March 6 to raise £156.6 million. Liberum acted as Joint Corporate Broker and Bookrunner on this transaction.
Shaftesbury invests and manages assets in core central London “villages” such as Carnaby Street (below), Soho, Chinatown, Seven Dials, Covent Garden and Charlotte Street.
Some of the funds raised are to be used to acquire Newport Sandringham at the Eastern end of the Chinatown village for £57.5 million. The balance will provide the company with funds to acquire additional properties and undertake capital improvement projects across the portfolio.
The same day, Sirius Minerals Plc, which seeks to develop a new British potash mine in Yorkshire to meet a rising global need for nutrients to boost food production, announced a £43 million capital raise on March 6, placing new ordinary shares at 12p each. Liberum acted as Joint Global Coordinator, Joint Bookrunner and Joint Corporate Broker on the transaction.
The funds raised will be used to progress project development studies and planning approval applications at its wholly-owned York Potash project near Whitby, Yorkshire.
Sirius is targeting the production of polyhalite (below), a naturally occurring mineral that contains four of the six macro-nutrients required for plant growth.
The company is listed on the AIM Market of the London Stock Exchange with a market capitalisation of over £220 million post admission of the new shares.
CLICK HERE to visit Liberum’s fundraising page here to see how we’re helping companies grow.