TUESDAY EDITION

August 4th, 2015

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editorials

 
Torchlight Energy - A NewCo Turnaround Story That's Been Derisked
  Jul 22  

Opportune Time for Oil & Gas Exposure
Stephan Bogner  May 21  

Oil Market Update
Clive Maund  May 06  

Innovation and Efficiency Drive U.S. Oil Supply and Demand
Frank Holmes  Apr 01  

Oil Market Update
Clive Maund  Mar 29  

»» more editorials in the archives

market data


Ux U3O8 Price (Uranium)July 27th, 2015
$36.00 -$0.25 www.uxc.com

»View Commitment of Traders.

expert analysis & newsletter briefs

Hemisphere Energy Corp.

"Hemisphere Energy Corp. announced that upon annual review, its credit facility has been maintained at $15M, a positive sign in this timid market, and one that reflects the strength of the company's current asset and the potential for increased recoveries through optimization efforts. . .we maintain a Buy recommendation and a $1/share 12-month target price." (7/28/15) - David Ricciardi, Mackie Research Capital

Input Capital Corp.

"Input Capital Corp. is a public company in Canada that has taken the streaming model and adapted it to become the first-ever agricultural streaming company, using canola as the underlying crop initially. The business is off to a great start and is proving that farmers are demanding alternative forms of financing such as streaming. In FY/15, which ended in March, Input deployed ~$49M into new streaming deals, up ~100% year over year; generated $19.3M in revenue, up ~280% year over year, and $9M in cash flow (before changes in working capital), up from $1.5M in FY/14. The stock has been a little weak recently on concerns regarding the health of its farmer clients in western Canada; however, Input's exposure is predominantly in the eastern prairies where conditions are much better. This does bring a key issue to light—the benefit of diversification, both by geography and product. The company's recent announcement about exploring the addition of soybean streaming is an example of how Input can add further diversification to the model, by adding a different crop and gaining more exposure to eastern Canada." (7/28/15) - The Energy Report Interview with Spencer Churchill

Renewable Energy Group, Inc.

"The Senate Finance Committee markup of tax extenders included positive changes to the biodiesel blenders credit that could support a material uplift to Renewable Energy Group Inc.'s 2016 and late 2015 profitability. . .after the blenders credit is signed into law, the benefit will be recognized in GAAP earnings, instead of accumulating for retroactive recognition, and should materially benefit profits and sentiment." (7/22/15) - Craig Irwin, ROTH Capital Partners

Energy Fuels Inc.

"Following the previously granted approvals from the U.S. Nuclear Regulatory Commission and the Wyoming Department of Environmental Quality, the issuance of the final environmental assessment and the approval of the plan of operations represented the final major regulatory approval required for Energy Fuels Inc.'s Hank Unit. The approvals at the Hank Unit demonstrate the near term scalability of Energy Fuels' assets. We continue to forecast production out of Hank to begin in 2017." (7/21/15) - Rob Chang, Cantor Fitzgerald

Input Capital Corp.

"Input Capital Corp. has an excellent streaming model for its canola business. . .the company provides a farmer with an upfront cash payment in return for a share of the farmer's crop production. . .the farm then delivers Input's share of the crop and is paid a discounted contract price per tonne. If the crop yield has improved, Input can buy additional tonnes at the same contracted price, so both the farmer and the company benefit from an improved crop. Input then sells the crops at the market rate and can invest the proceeds into new streaming contracts. . .the company deployed $49.1M in capital during the 2015 financial year and now has 78 cash-producing streams in place, with 10 more being added in Q1 of the 2016 financial year. The company generated $11M in streaming revenue during 2015, which is a 258% increase over 2014. That's a beautiful business model. In terms of the profit margin, Input Capital's total costs per tonne of canola are around $310. It sells the stuff for around $500/tonne. Not bad for a hard day's work, is it? Input gets canola price upside, production upside, compounding cash returns and diversification without the need for heavy management. . .less than a month ago, the company was trading at around $3/share, now it's at about $2.50/share. These are the buying opportunities that investors should be taking advantage of." (7/21/15) - The Energy Report Interview with Tom Wallace


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from the publisher
  Robert J. Moriarty

Welcome to 321energy.



The Energy Report

Phil Flynn
http://www.pricegroup.com/
pflynn&pricegroup.com


The Energy Report for 08/03/2015

Swan Song

Oil prices ended their worst month since the 2008 financial crisis after 3 events in a row knocked oil and other commodities for a loop. Those three events in order are Greece, Iran and China and while I guess you can't call them "black swan" events the timing of all three colliding at the same time led to the oil markets July swan song. Those same three issues are weighing on oil again as we start the new month so let us cover them in the same order that they impacted oil last month.

Greece was first. Greece by playing hard-ball with the EU and the IMF gained noting and hurting not only their economy but took a toll on the global economy as well. Today the reopening of the Greek stock market in Athens, after a 5 week closure, saw its market it crash's 23% before recovering while many stocks hit their daily downside limit. The expectations is for more selling and more turmoil in the days to come. That turmoil does not help oil demand expectations.

The other event that hurt oil was a possible deal with Iran to lift sanctions. Overnight Iran's oil Minister Bijan Namdar boosted that Iran's oil production could increase by 500,000 barrels per day in just one week after international sanctions are lifted. Then he says that they can raise production by 1 million barrels a day one month later. Most experts doubt these claims because of years of sanctions taking its toll on the Iranian oil fields but we know that Mr. Namdar boosts are getting larger. He also says that sanction on Iran's oil industry should be lifted by late November, showing once again that he is the king of optimism.

Yet perhaps the biggest reason why oil crashed was because of the slowdown in china. Even though China oil imports hover near record highs the slowdown talk is causing many to question whether that pace will continue. The AP reports that "two surveys showed Chinese manufacturing weakened in July. The Caixin purchasing managers' index, previously sponsored by HSBC, declined to a two-year low of 47.7 from June's 49.4 on a 100-point scale. Numbers below 50 indicate activity contracting. A separate index by a Chinese industry group, the Federation of Logistics & Purchasing, and the government statistics bureau declined to 50 from June's 50.2. The bigger decline in the Caixin index suggests weakness was concentrated in private and smaller companies, which make up a bigger share of the group surveyed for that report."

I guess we should mention strength in the dollar but the dollar is not a leading indicator on this but reflecting the risk aversion from the fore-mentioned events. Of course Fed policy may be behind some of that strength but if the Fed pauses because of the commodity crash it is more proof that the dollar is just acting as a safe haven away from global turmoil.

Oil also saw some pressure from a drop in rig counts but Dow Jones reports that while the rig count rose for the second consecutive week and third time in the last four weeks for some, like the analysts at Deutsche Bank, this means that "U.S. producers are coming to the point where they start considering growth." However, Morgan Stanley says investors should be cautious about assuming this represents the start of a material increase in the Rig count or much slower U.S. production declines. Lower cost vertical rigs are driving much of the increase but these rigs, as opposed to horizontal ones, generate only marginal production, the bank says."

The commodity crunch has hurt some major players. The Wall Street Journal reported that "Private-equity firm Carlyle Group P has split with the founders of its Vermillion commodity hedge-fund firm after its flagship fund shrank from $2 billion to less than $50 million in assets, according to people familiar with the matter. Vermillion Asset Management LLC's Viridian commodity fund, which traded in oil, metals and agricultural markets, has seen assets dwindle after heavy losses and a wave of investor redemptions, the people said. The fund lost 23% in 2014; the latest investor exits began in the spring and the fund reached a nadir in recent weeks."

See me on the Fox Business Network! Market Watch says I am a must follow! You can now follow me on Twitter @energyphilflynn! You can also like me on Facebook. Traders save money on fancy software and try out my wildly popular trade levels first! Call me at (888-264-5665) or Email pflynn@pricegroup.com. If you want to start trading apply by hitting this link https://newaccount.admis.com/?office=269.

There is a substantial risk of loss in trading futures and options.

Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. PFGBEST, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

Phil is one of the world's leading energy market analysts, providing individual investors, professional traders and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets. Phil's market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, investors and media worldwide.

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Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Alaron Trading Corp. its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

Contact Phil at 800-935-6487 or pflynn&pricegroup.com.



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August 4th, 2015

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