The price of Bitcoin and other cryptocurrencies is set to rise due to the limitations of record-shattering stimulus packages, affirms the CEO of one of the world’s largest financial advisory and fintech organizations.
The comments from Nigel Green, chief executive and founder of deVere Group, come as the European Commission on Wednesday proposed a €750 billion ($826 billion) stimulus package to help the EU towards economic recovery.
In addition, in the U.S., the House passed a record-breaking $3 trillion relief package. Other countries’ central banks, including those in China, Japan and Australia, have taken similar measures.
Mr Green says: “The steps being taken by governments and central banks around the world to boost their respective economies can be expected to trigger a steady increase in the price of Bitcoin.
“As the largest cryptocurrency by market capitalisation, this will have the effect of bringing up the wider crypto sector too.
“By printing huge sums of helicopter money to push into financial systems, traditional currency becomes devalued.
“Bitcoin, of course, cannot simply be printed. Indeed, it is living up to its reputation as ‘digital gold.’ Like the safe-haven precious metal, it’s widely accepted as being a store of value and is valued for its scarcity.”
He continues: “There’s also the legitimate concern over inflation.
“Governments are promising literally boundless stimulus. This money has to go somewhere, so will prices rise? Many experts are expressing fears about a longer-term inflationary boom.
“To hedge against inflation risks, it is likely that more and more investors will increase their exposure to Bitcoin and other digital currencies, driving up prices.”
A high-profile cryptocurrency advocate, Nigel Green has recently noted that looking beyond the current macro climate, we will see an upward, long-term trajectory in the price of Bitcoin due to real-world issues it addresses and increasing adoption.
The deVere CEO concludes: “By the printing of never-seen-before amounts of money, traditional currencies are devalued, inflation fears rise, and crypto prices will steadily increase.”
About:
deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients. It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.
Gold glittered on Friday as anticipation grew ahead of Donald Trump’s press conference amid sizzling tensions between the United States and China.
Given how Trump said he will announce new policies on China after the country enforced a national security law for Hong Kong, things could get really messy, really quickly. Whatever the outcome of the pending news conference, it will certainly have an impact on Bullion prices which are heading for a second monthly gain.
Looking beyond the events of today, the medium to longer-term outlook for Gold remains influenced by conflicting market themes.
On one side of the spectrum, market optimism over economies reopening continues to foster hope that the worst could be over. This sense of positivity has the potential to boost appetite for risk at the expense of safe-haven assets. However, the encouraging mood will most likely be repeatedly challenged by renewed US-China trade tensions and lingering concerns around slowing global growth.
Expect Gold to remain highly sensitive to trade developments and global sentiment moving forward.
Taking a peek at the technicals, prices remain in a wide range on the daily and weekly charts with support at $1680 and resistance at $1760. A solid intraday break above $1730 could open a path towards $1760 which then opens the doors back towards $1800. Alternatively, a move back below $1710 could trigger a decline towards $1700 and $1680, respectively.
Is the rebound over for Oil?
The latest report from Energy Information Administration (EIA) suggests that Oil is in trouble and remains vulnerable to downside shocks.
Oil prices are set to weaken after the EIA reported a 7.9 million drawdown in crude inventories last week. With concerns already in the air over Russia easing up on supply cuts in July, and global growth fears rekindling concerns around anaemic demand, the outlook for Oil is not encouraging.
Looking at the technical picture, WTI Crude may struggle to appreciate towards $40 if oversupply and weak demand fears intensify. Weakness below $30 could pave a path back towards $27.50. Alternatively, a solid move above $35 could instigate a move towards $40.
Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.
After breaking 1.1028 to the upside, EURUSD continues moving upwards to reach 1.1100. Possibly, the pair may reach it and then start a new correction to break 1.1066. Later, the market may continue trading inside the downtrend with the target at 1.1028.
GBPUSD, “Great Britain Pound vs US Dollar”
After breaking 1.2282 to the upside and reaching 1.2343, GBPUSD is expected to correct and return to 1.2282. After that, the instrument may form one more ascending structure with the target at 1.2372.
USDRUB, “US Dollar vs Russian Ruble”
USDRUB is still falling towards 70.00. After reaching this level, the instrument may grow to test 70.50 from below and then form a new descending structure with the target at 69.44.
USDJPY, “US Dollar vs Japanese Yen”
After breaking 107.42 to the downside, USDJPY is expected to continue falling and reach 106.96. After that, the instrument may correct towards 107.30 and then resume trading downwards with the target at 106.60.
USDCHF, “US Dollar vs Swiss Franc”
After breaking 0.9666 downwards and reaching 0.9636, USDCHF is expected to consolidate near the lows. If later the price breaks this range to the downside, the market may resume trading downwards with the target at 0.9600; if to the upside – start a new correction towards 0.9666.
AUDUSD, “Australian Dollar vs US Dollar”
After breaking 0.6629 to the upside, AUDUSD is expected to continue growing towards 0.6675. Later, the market may fall to return to 0.6629 and then form one more ascending structure with the target at 0.6696.
BRENT
Brent is consolidating around 35.50 without any particular direction. If later the price breaks this range to the upside, the market may resume trading upwards with the target at 39.00; if to the downside – start a new correction towards 30.50.
XAUUSD, “Gold vs US Dollar”
Gold is forming one more ascending structure to break 1730.00. After that, the instrument may continue trading upwards with the short-term target at 1750.10.
BTCUSD, “Bitcoin vs US Dollar”
BTCUSD continues forming the ascending wave towards 9660.00. Possibly, today the pair may reach it and then start another correction with the target at 9200.00.
S&P 500
The Index is consolidating around 3040.5. Today, the asset may fall towards 3008.0 and then grow to reach 3040.5. If later the price breaks this range to the downside, the market may resume trading downwards with the target at 2944.4; if to the upside – start a new growth towards 3160.5.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
As we can see in the daily chart, BTCUSD is once again attempting to reach the high at 10072.20 to complete the correction. A breakout of the high is just a question of time because even the MACD lines are directed upwards, thus indicating further uptrend. The next upside target may be 76.0% fibo at 11450.00.
In the H4 chart, after re-testing 23.6% fibo, BTCUSD is forming a Triangle correctional pattern. Under such circumstances, the main scenario suggests that the price may break the channel’s upside border and then reach the high at 10072.10 or even the fractal at 10505.60. However, even in this case one shouldn’t exclude a possibility of a breakout of the pattern’s downside border. After that, the instrument may continue falling to reach 38.2%, 50.0%, and 61.8% fibo at 7727.00, 7002.00, and 6278.00 respectively.
ETHUSD, “Ethereum vs. US Dollar”
As we can see in the daily chart, after testing 50.0% fibo, ETHUSD is growing towards the high at 227.46. After reaching and breaking it, the asset may continue growing towards 76.0% fibo at 241.40 and then the fractal high at 288.98.
As we can see in the H4 chart, after reaching 38.2% at 174.82, ETHUSD has failed to test it properly. At the moment, the pair is steadily moving towards the high at 227.46. The main scenario implies a breakout of this level. However, if the instrument rebounds from it, the price may re-test 38.2% fibo at 174.82 or even reach 50.0% fibo at 158.62.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
The EUR/USD currency pair continues to show a steady uptrend. During yesterday’s and today’s trading sessions, the growth of quotes exceeded 120 points. The trading instrument has updated and fixed above the key extremes. The US has published weak economic releases again. Washington-Beijing conflict is still in the spotlight. Tensions between the two countries continue to escalate due to China’s national security laws for Hong Kong. At the moment, EUR/USD quotes are testing the level of 1.1120. The 1.1070 mark is key support. The euro has the potential for further growth relative to the greenback. We recommend opening positions from key levels.
News Feed on the US Economy for 2020.05.29:
– Consumer price index in the Eurozone at 12:00 (GMT+3:00);
– Personal spending in the US at 15:30 (GMT+3:00).
We also recommend paying attention to the speech by the Fed Chairman.
Indicators signal the power of buyers: the price has fixed above 50 MA and 100 MA.
The MACD histogram is in the positive zone, indicating the bullish sentiment.
Stochastic Oscillator is near the overbought zone, the %K line has crossed the %D line. There are no signals at the moment.
Trading recommendations
Support levels: 1.1070, 1.1035, 1.0990
Resistance levels: 1.1120, 1.1170, 1.1200
If the price fixes above 1.1120, further growth of EUR/USD quotes is expected. The movement is tending to the round level of 1.1200.
An alternative could be a decrease in the EUR/USD currency pair to 1.1040-1.1000.
The GBP/USD currency pair
Technical indicators of the currency pair:
Prev Open: 1.22588
Open: 1.23104
% chg. over the last day: +0.56
Day’s range: 1.22918 – 1.23584
52 wk range: 1.1466 – 1.3516
The last sessions trades on the GBP/USD currency pair have been very active. At the same time, there is no defined trend. Rumors of negative interest rates continue to put pressure on the British pound. Currently, GBP/USD quotes are consolidating. The key range is 1.2290-1.2360. We recommend opening positions from key levels.
The news feed on the UK economy is calm.
Indicators do not give accurate signals: the price is testing 50 MA.
The MACD histogram is in the positive zone, but below the signal line, which gives a weak signal to buy GBP/USD.
Stochastic Oscillator is in the neutral zone, the %K line is below the %D line, which indicates the bearish sentiment.
Trading recommendations
Support levels: 1.2290, 1.2235, 1.2205
Resistance levels: 1.2360, 1.2400
If the price fixes below 1.2290, GBP/USD quotes are expected to fall. The movement is tending to 1.2250-1.2210.
An alternative could be the growth of the GBP/USD currency pair to a round level of 1.2400.
The USD/CAD currency pair
Technical indicators of the currency pair:
Prev Open: 1.37504
Open: 1.37636
% chg. over the last day: +0.07
Day’s range: 1.37531 – 1.37937
52 wk range: 1.2949 – 1.4668
USD/CAD quotes continue to consolidate. There is no defined trend. Financial market participants expect additional drivers. The loonie is testing local support and resistance levels: 1.3730 and 1.3790, respectively. We recommend paying attention to the dynamics of “black gold” prices. A trading instrument has the potential for further decline. Positions should be opened from key levels.
At 15:30 (GMT+3:00), a report on Canada’s GDP will be published.
Indicators do not give accurate signals: the price has crossed 50 MA.
The MACD histogram is near the 0 mark.
Stochastic Oscillator is in the neutral zone, the %K line has started crossing the% D line. There are no signals at the moment.
Trading recommendations
Support levels: 1.3730, 1.3700
Resistance levels: 1.3790, 1.3820, 1.3870
If the price fixes below 1.3730, a further drop in USD/CAD quotes is expected. The movement is tending to 1.3700-1.3670.
An alternative could be the growth of the USD/CAD currency pair to 1.3820-1.3850.
The USD/JPY currency pair
Technical indicators of the currency pair:
Prev Open: 107.730
Open: 107.640
% chg. over the last day: -0.07
Day’s range: 107.081 – 107.316
52 wk range: 101.19 – 112.41
During the Asian trading session, aggressive sales were observed on the USD/JPY currency pair. The drop in quotes exceeded 50 points. The trading instrument found support at 107.10. The 107.30 mark is local resistance. Tensions between the US and China support the demand for “safe-haven” currencies. USD/JPY quotes have the potential for further decline. Positions should be opened from key levels.
Japan published weak data on retail sales and industrial production.
Indicators signal the power of sellers: the price has fixed below 100 MA.
The MACD histogram is in the negative zone, indicating the bearish sentiment.
Stochastic Oscillator is in the neutral zone, the %K line is above the %D line, which gives a signal to buy USD/JPY.
Trading recommendations
Support levels: 107.10, 106.80, 106.50
Resistance levels: 107.30, 107.45, 107.60
If the price fixes below 107.10, a further drop in USD/JPY quotes is expected. The movement is tending to 106.80-106.60.
An alternative could be the growth of the USD/JPY currency pair to 107.45-107.60.
During yesterday’s trading session, the greenback has continued to lose ground against its main competitors. The dollar index (#DX) closed in the negative zone (-0.69%). The US continues to publish rather weak economic releases. In April, the volume of durable goods orders decreased by 17.2% (m/m). At the same time, the indicator has exceeded market expectations at the level of 19.0%. According to preliminary data, the country’s GDP will decline by 5.0% in the first quarter. The number of initial jobless claims has exceeded 2 million again. Pending home sales index counted to 21.8% compared to the forecasted value of -15.0%.
The conflict between Washington and Beijing is still in the spotlight. Tensions between the two countries are escalating due to China’s national security laws for Hong Kong. The Chinese government has approved the adoption of this law. Today, Donald Trump will comment on this decision at a press conference. Financial market participants will also follow the speech by the Fed Chairman.
Oil quotes have been declining. Currently, futures for the WTI crude oil are testing the $32.65 mark per barrel. At 20:00 (GMT+3:00), US Baker Hughes oil rig count will be published.
Market indicators
Yesterday, there was the bearish sentiment in the US stock market: #SPY (+0.18%), #DIA (+0.56%), #QQQ (-0.13%).
The 10-year US government bonds yield has declined. At the moment, the indicator is at the level of 0.66-0.67%.
The news feed on 2020.05.29:
– Consumer price index in the Eurozone at 12:00 (GMT+3:00);
– Personal spending in the US at 15:30 (GMT+3:00);
Despite the stable performance in 10-year US yields over the last few days, the EUR/USD saw a break above 1.1000.
The main driver for the bullishness was the announcement of the EU commission, proposing a 750 Billion Euro fiscal stimulus package with 500 billion Euro in grants and 250 billion in loans.
While this might not come as such a big surprise after Germany and France’s Merkel and Macron proposed a 500 billion EU recovery fund on May 18, which would offer grants to European Union regions and sectors hit hardest by the coronavirus pandemic. This can be considered the first step towards a transfer union in addition to the massive monetary support from the ECB bullish for the Euro.
If today’s US economic projections, especially in terms of Personal Spending, see a further and even sharper than expected drop than -12.6% and after it dropped by 7.5% in March month-over-month, showing the largest decline in personal spending on record induced by the Corona-lockdown, yet bullish momentum in the EUR/USD could accelerate even further.
That’s particularly true if the focus in 10-year US Treasury yields goes back to the important 0.60% mark where a break lower would narrow the yield differential between EU and US bonds further, favouring gains in the EUR/USD:
Source: Admiral Markets MT5 with MT5-SE Add-on EUR/USD Daily chart (between March 29, 2019, to May 28, 2020). Accessed: May 28, 2020, at 10:00pm GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.
In 2015, the value of the EUR/USD fell by 10.2%, in 2016, it fell by 3.2%, in 2017, it increased by 13.92%, 2018, it fell by 4.4%, 2019, it fell by 2.2%, meaning that after five years, it was down by 7.3%.
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Japanese economic data of the last couple of weeks were mixed. Machinery orders declined less than forecast in March, while trade deficit narrowed in April. On the other hand, drops in both industrial production and retail sales were bigger than forecast in April. Thus , machinery orders declined 0.7% over year in March after 2.4% fall in February when a 9.5% drop was forecast. Trade deficit narrowed to 930 billion yen after 5.4 billion deficit in March. Industrial production fell 9.1% over year in April after 3.7% decline in March, when 5.1% fall was expected. And retail sales dropped 13.7% over year after 4.7% decline in March when 11.5% drop was expected. Weak data are downside risk for Nikkei. At the same time Japanese government announced fourth aid package to combat coronavirus damage. The $1.1 trillion stimulus package was announced on Wednesday May 27. It includes rent subsidies for individuals as well as small and medium sized businesses; a one-time $1,860 payment to each front-line medical worker and increased subsidies to businesses hit by the pandemic. The stimulus measures boosting government spending and subsidies are bullish for Nikkei.
All eyes will be on President Trump, who is set to announce new US policies towards China some time on Friday. And market nerves are already showing.
Asian equities are mostly lower, taking some of the gloss off the MSCI Asia Pacific Index’s otherwise remarkable 24 percent advance since the March 23 low. US stock futures are also in the red, while Gold remains elevated above the psychological $1700 level.
Global equities had been willing to look past the risk of escalating US-China tensions over recent weeks because the threats had been confined to mere sabre-rattling. Today, the rheotric is set to be manifested into actual policies, which could shatter the stability that the world sorely needs in these early days of the post-pandemic era.
It’s ironic that President Trump, who had often touted the climb in stock markets as a measure of his administration’s successes, may now be the cause for its declines. Should Trump’s soon-to-be-unveiled policies have more bite than bark, this could trigger more unwinding of the 30+ percent advance seen respectively in the S&P 500 and the Dow since March 23.
Dollar’s decline could be halted by Trump’s new China policies
At least President Trump is getting closer to one of his wishes: a weaker US Dollar, for now.
The Dollar index (DXY) is now testing its 200-day moving average and is trading around its weakest levels since March, as investors shift towards riskier assets amid optimism over the global economy’s reopening. The latest US continuing claims report hints that the worst in the jobs market could be behind us, as more states allow businesses to reopen. Even though the recovery in the US employment landscape could take years, such greenshoots of optimism appears enough to dampen demand for the Greenback.
The DXY is threatening to break out to the weaker side of the 98.4-101 range that it’s been confined to over the past couple of months as the Federal Reserve stepped in to quell Dollar-funding pressures. With its 50-day moving average starting to turn south, coupled with the downward momentum technical indicator, a break below the psychologically-important 98 level could bring the 97.6 support level into play for the Dollar index.
However, should risk-off sentiment grip global investors once more by way of deteriorating US-China ties, that could jolt the Greenback back to its 98.4-101 range.
Bullion bulls await Trump’s unveil
Gold is finding no shortage of suitors amid these uncertain times, evidenced by the short-lived dip into sub-$1700 territory on Wednesday. Despite posting lower highs and lower lows since breaching the $1760 mark on May 18, Bullion is still set to register two consecutive months of gains.
Demand for safe haven assets could see a major boost going into the weekend should President Trump’s policy announcement puncture the optimism surrounding the global economic recovery. In such a scenario, Gold investors may be able to achieve what they couldn’t in 2012, that is to enable Bullion to claim the $1800 handle.
Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.
The firm’s project in Brazil has a contract price that is twice the natural gas price in the U.S.
Alvopetro Energy Ltd.’s (ALV:TSX.V; ALVOF:OTCQX) Caburé natural gas discovery in Brazil is ready to come online and the firm just amended its long-term sales agreement with Bahiagás, the distributor for the state of Bahia, to double its Firm deliveries.
Bahiagás, which is extending the pipeline 15 kilometers and constructing a new City Gategas receiving stationhas agreed to increase its natural gas deliveries from Alvopetro to 300,000 cubic meters per day (10.6 million cubic feet per day), reduce any potential supply failure penalties through 2020, and prepay Alvopetro for 120,000 cubic meters a day for the months of May and June, a figure roughly equivalent to US$1.1 million. Alvopetro agreed to provide a 15% discount on the prepaid natural gas in May and June.
“Once the Caburé field is on production we expect ALV to generate significant free cash flow to fund an extensive drilling program in 2021.” – Bill Newman, Mackie Research
Based on a floor price of US$5.20/million BTU (mmbtu), Alvopetro expects gross revenues in 2020 to total US$11.3 million, and expects EBITDA of approximately US$7.5 million for the second half of the year.
These actions were favorably viewed by analysts covering the company. Analyst Bill Newman of Mackie Research wrote on May 15, “We view these amendments as positive and we maintain our SPECULATIVE BUY recommendation and our $1.65 target price.” Alvopetro shares are currently trading at around CA$0.80/share.
Hannam&Partners research analyst Anish Kapadia wrote on May 15, the “Gas Sales Agreement amendment provides further security and reduces risk even further.” Concerning Alvopetro’s contracted price of US$5.20/mmbtu, Kapadia stated, “to put this price in context, global spot gas prices are currently trading at or below US$2/mmbtu. From August to December, ALV will likely receive the floor pricing in the contract, which remains a very attractive US$5.2/mmbtu, generating an operating netback of >US$4/mmbtu.” The firm calculates a risked net asset value of C$1.67/share, “which includes the value for development upside, potential tolling revenues and one exploration prospect. We estimate that Alvopetro is trading on 2x EV/EBITDA in 2021, with a ~30% FCF [free cash flow] yield.”
Trickle Research senior analyst and managing partner David L. Lavigne wrote on May 25, “. . .we think Alvopetro has arrived. In retrospect, management has delivered on the project and that should translate into growing cashflow and better corresponding valuations. . .As a result of the recent milestones, we are establishing a new (higher) 12-24 month price target of $1.25 per share.”
Alvopetro has been developing the Caburé gas field for several years, when it discovered that the deposit crossed a block boundary. “In Brazil, when that happens, you unitize the discovery with your neighbor, which we completed in April 2018,” Alvopetro CEO Corey Ruttan told Streetwise Reports. “Almost in parallel, we signed a gas sales agreement with Bahiagás to monetize the natural gas. As opposed to an oil project, where you basically bring the well on production and take it to a refinery, for a gas project, the lead times are much longer: you have to identify a market, build the infrastructure to connect your discovery to the market and then you sell the gas.”
The company has built a gas processing facility; Bahiagás is extending its pipeline and constructing the City Gate at Alvopetro’s physical plant to transport the gas from the field to the market, and expects to complete construction in June. “We’ll be starting production from our share of the unitized field at the end of this quarter,” Ruttan said.
“This project is really the first of its kind in Brazil,” Ruttan explained. “No independent company has built a gas processing facility and signed a gas sales agreement with a local state distribution company, to my knowledge. We’re leading the charge in Brazil on its initiatives to open up and expand the natural gas market in Brazil. So there’s certainly a lot of support for the project at the government and regulatory levels.”
The contract with Bahiagás blends three different international benchmark commodity prices to calculate the price of the natural gas: Brent oil, Henry Hub natural gas and the UK NBP, national balancing point gas price. “The contract has a floor and a ceiling, that insulates us from massive price shocks. Our price is much higher than what we are seeing in North America right now. Even at our floor pricing, which is just over US$5.20 per MMBTU, that’s roughly 2.5 times what producers in the United States are getting.” Ruttan said.
As far as doubling the firm delivery volume, Ruttan explained that when the contract was set up, “we had partly firm deliveries and partly flexible or interruptible volumes. Given that our price is more attractive for consumers than Petrobas’, our assertion was being able to deliver flexible volumes was a beneficial thing for us. Now with the pandemic, there has been a lot of demand destruction, hopefully just on a temporary basis, but we thought it prudent to lock in those volumes and make sure our supply has a firm commitment associated with it. The revised contract also allows us to significantly reduce our potential supply failure penalties, so we can do that on a relatively low risk basis.”
The amended agreement provides a guaranteed level of revenue. “When you combine that with the floor pricing, it allows us to be free cash flow positive at a time when most companies are shutting in production, realizing massive reductions in their share prices, and are looking at being free cash flow negative,” Ruttan said. “I think we’re uniquely positioned. At these production volumes, we can basically keep a flat production profile for 8 to 10 years with virtually no maintenance capital.”
In addition, there is room for Alvopetro to expand. “There’s a lot of excess capacity in that City Gate so that we can we can grow our business,” Ruttan said. “Our business plan is, step one, get first cash flow from this discovery, and that will get us close to 11 million cubic feet per day. The plant capacity that we have built is for 18 million cubic feet a day, so our second step will be to ramp that production up toward 18 million cubic feet a day because we can do that at virtually no incremental cost. It’s basically fixed costs for us so that next 7 million cubic feet per day is quite profitable.”
Bahiagás City Gate has a capacity of handling 70 million cubic feet a day. “We’d like to capture as much of that as possible and it would be relatively straightforward for us to double the size of our processing facility,” Ruttan said. “So we’d like to build the business into 36 million cubic feet a day as a medium- to longer-term step.”
Next up is an early-stage gas project, Gomo, that Alvopetro is working to prove up. “We have an inventory of exploration prospects. In our current portfolio we’ve got eight conventional prospects, mostly gas weighted,” Ruttan said.
“This is the only independently owned facility capable of delivering sales specified natural gas. We think there’s a lot of opportunities here from a business development perspective,” Ruttan concluded.
Mackie analyst Bill Newman notes that Alvopetro will be “self-funding once Caburé is on stream. ALV has reprocessed over 1,200 km2 of 3D seismic and has a current inventory of 8 conventional oil and natural gas exploration prospects. Once the Caburé field is on production we expect ALV to generate significant free cash flow to fund an extensive drilling program in 2021.”
Trickle Research’s David Lavigne stated on May 25, “…there is the potential for additional increases to Caburé reserves as well as perhaps the delineation of Gomo reserves and/or others that may emerge. Each of those opportunities could result in added reserves and associated value. Moreover, as we covered in the initial research, we believe the completed infrastructure could lead to additional midstream opportunities for Alvopetro as well. To translate, we expect other opportunities, perhaps on various fronts, to emerge as we move forward. In our opinion, those and other emerging opportunities coupled with management’s now proven ability to accomplish what they set out to do could provide a basis for additional valuation legs for the stock price.”
Alvopetro has approximately 88.4 million shares outstanding, and officers and directors own a little over 8%.
Disclosure: 1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. 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: Alvopetro Energy. Click here for important disclosures about sponsor fees. An affiliate of Streetwise Reports is conducting a digital media marketing campaign for this article on behalf of Alvopetro Energy. Please click here for more information.
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