Take off to the Great White North! Rick Moranis and Dave Thomas' seminal SCTV characters, Bob and Doug MacKenzie, have been dominating my YouTube playlists lately. My mind is focused on Toronto mainly because its stock exchange is home to an almost staggering number of resource plays. As I mentioned in my RM column yesterday, I am focusing on the resources sector now both in my investing and in my work for Sao Paulo-based research start-up, OHM Research.
There is somewhat of an Old World/New World aspect to prospecting for resources in 2021. One needs to have an open mind and the ability to process alternative modalities, a skill which few in today's market possess. The world is VERY short of oil right now, and I believe we will stay in a deficit position throughout this summer and into the fall, as COVID lockdowns ease across the Northern Hemisphere. Also, it is hot here in the Northern climes, driving demand for natural gas, which, like black oil, was "underproduced" during the COVID crisis.
The lights are flashing green for prices for any and all hydrocarbons, but the world -- or the Western world, anyway -- is hell-bent on decarbonization of its transportation system and energy production. One can't ignore the world's shift toward electric-vehicles and greater need for energy storage owing to the greater use of power sources like wind and solar that suffer from pronounced intermittency.
We can do both. We can play the boom in hydrocarbon pricing and protect our portfolios by investing in resources that are used to produce BEV batteries and mass-electricity storage units. Always good to hedge one's bets, anyway.
To find these companies, we can look to the majors -- my RM column yesterday was on Exxon (XOM) . Also, Vale (VALE) , out of Brazil, has strong positions in nickel, iron ore, copper and many other metals that are important given the varying chemistries of EV batteries.
Those two companies are on my OHM Coverage list, with other majors such as Petrobras (PBR) , VW (VLKAF) and Tesla (TSLA) , but the real fun -- and potential for above-market returns -- is found in identifying emerging names. We just don't have that many of those emerging energy plays here in the States, as the stock markets never really recovered from oil's crash in the second half of 2014.
Seven years later, there are still many highly prospective oil plays located outside the U.S. The most intriguing plays there are listed on Toronto's TSX-Venture board. Nasdaq doesn't have those names, although many management teams aspire to the greater sponsorship and liquidity afforded by that virtual exchange, and one of my companies, Largo Resources (LGO) , recently made the jump from TSX-V to Nasdaq.
See below for a full list of my OHM coverage. Largo's Brazilian vanadium mine produces the vanadium used in the VRFB storage batteries, which -- sorry, Elon -- are far superior to lithium-ion in terms of efficiency of energy storage. Other names that I have noted in prior RM columns are Exro Technologies (EXROF) and Nano One Materials (NNOMF) . These companies have proprietary IP, in different areas, that will make EVs more cost-effective and make EV batteries much better.
Oh, and don't forget the Black Oil, either. As Exxon and Hess (HES) get all the headlines for the amazing success of the Stabroek field offshore Guyana, there are other companies exploiting resources off the coast of Guyana and Suriname, as well. Directly and indirectly, Eco (Atlantic), CGX, Frontera (FECCF) , Touchstone Exploration and Africa Oil (AOIFF) (through its shareholding in Eco) are involved in the Guyana/Suriname play.
It's an incredible find, although becoming slightly picked-over by the majors, so one must cast the net even wider to find other attractive oil plays. Africa has attracted major investment from China owing to its resource base, and we shouldn't let Xi and friends have all the fun.
That includes Africa Oil and ReconAfrica. Yesterday I had a call with senior management at ReconAfrica -- CEO Scot Evans, founder Craig Steinke, and IR director Grayson Andersen. Namibia is one of the next frontiers for oil exploration, and Recon's Switzerland-sized prospect -- 8.5 million acres in Namibia and Botswana -- affords them a first-mover advantage in this emerging basin
It's a great big world out there. There is life beyond the 650 area code.
| New Energy | |
| Exro Technologies | TSX-V |
| Largo Resources | NASDAQ |
| Lomiko Metals | TSX-V |
| Nano One Materials | TSX |
| Westwater Resources | AMEX |
| Emerging Hydrocarbons | |
| Africa Oil | TSX-V |
| Canacol Energy | TSX-V |
| CGX Energy | TSX-V |
| Eco (Atlantic) Oil & Gas | TSX-V |
| Frontera Energy | TSX-V |
| New Stratus Energy | TSX-V |
| ReconAfrica | TSX-V |
| Touchstone Exploration | TSX-V |
| OEMs | |
| Tesla | NASDAQ |
| Vicinity Motor | TSX-V |
| Volkswagen | DB |
| Brazil Resources | |
| Cosan | BOVESPA |
| Petrobras | BOVESPA |
| Vale | BOVESPA |
