This Tuesday’s election in the US will have many dynamic impacts across a number of different industries. If the polls are only a little wrong at worst, then Joe Biden is set to win with the most votes in history and a decisive electoral college victory.
One implication of that shift would be a decisive turn in the emphasis of the oil industry toward cleaner, more rigidly environmentally conscious operations.
Because 2016 has had such a powerful undermining impact on trust in political polls, much of this shift may not yet be discounted by the market, suggesting investors may still have access to related opportunities.
With that in mind, we take a look at some energy sector plays that fit this theme in light of the potential shift ahead, including: Valero Energy (NYSE:VLO), Petroteq Energy Inc. (OTC:PQEFF), and Clean Energy Fuels (NASDAQ:CLNE).
Valero Energy Corporation (NYSE: VLO) is rapidly moving into the fast-growing renewable energy sector. Valero operates Diamond Green Diesel, a renewable diesel joint venture with Darling Ingredients (NYSE: DAR), in Louisiana. This renewable diesel segment grew revenue 80% in 2019.
In addition, the company manufactures and sells transportation fuels and petrochemical products in the United States, Canada, the United Kingdom, Ireland, and internationally. It operates through three segments: Refining, Ethanol, and Renewable Diesel. The company is involved in oil and gas refining, marketing, and bulk selling activities. It produces conventional and premium gasolines, gasoline meeting the specifications of the California Air Resources Board (CARB), diesel fuels, low-sulfur and ultra-low-sulfur diesel fuels, CARB diesel, other distillates, jet fuels, asphalts, petrochemicals, lubricants, and other refined petroleum products.
Valero Energy Corporation (NYSE: VLO) most recently declared a regular quarterly cash dividend on common stock of $0.98 per share.
According to the release, the dividend is payable on December 9, 2020, to holders of record at the close of business on November 18, 2020.
While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action VLO shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -8% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities.
Valero Energy Corporation (NYSE: VLO) pulled in sales of $15.8B in its last reported quarterly financials, representing top line growth of -42%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($4B against $8.1B, respectively).
Petroteq Energy Inc. (OTC: PQEFF) is an integrated oil company focused on the development and implementation of proprietary oil extraction technologies that represent a cleaner, more environmentally friendly version of fossil fuel production.
This is a clean technology company focused on the development, implementation and licensing of a patented, environmentally safe and sustainable technology for the extraction and reclamation of heavy oil and bitumen from oil sands and mineable oil deposits. Petroteq is currently focused on developing its oil sands resources at Asphalt Ridge and upgrading production capacity at its demonstration heavy oil extraction facility located near Vernal, Utah.
Petroteq Energy Inc. (OTC: PQEFF) most recently announced that work to upgrade the capacity and reliability of its oil sands plant at Asphalt Ridge continues on schedule with restart of the plant on track for late November 2020.
According to the release, a recent survey of Petroteq’s lease properties has identified three key areas where the oil sands ore appears to have higher oil saturations than what was previously mined. Samples were taken from each location and lab assays of the samples are in progress and are close to being completed. These areas are currently anticipated to be the focus of Petroteq’s mining efforts during the initial operation of the POSP following its pending restart. In addition, six corehole locations were staked and, subject to rig availability, will be drilled during November. This work would allow Petroteq’s mining consultant to develop a detailed mining plan which would direct future mining operations for extended plant operation.
George Stapleton, Petroteq COO, commented: “Despite some vendor delays, we were able to remain on schedule and are still on track to begin starting up the POSP in late November. I am very much looking forward to the results of our ore sample assays and, in particular, evaluating the results of our core drilling program. Although some critical pumps were delayed two weeks, all equipment needed for the upgrade has now been shipped to the site in Vernal with the final deliveries scheduled for next week. Installation and tie-in of the third mixing tank is complete. All control system components and instrumentation have been received at site and installation is underway.”
Petroteq Energy Inc (OTC: PQEFF) pulled in sales as of its last reported quarterly financials representing top line growth of 244.8%.
Clean Energy Fuels Corp (NASDAQ: CLNE) frames itself as a company that provides natural gas as an alternative fuel for vehicle fleets, primarily in the United States and Canada. The company supplies renewable natural gas (RNG), compressed natural gas (CNG), and liquefied natural gas (LNG) for light, medium, and heavy-duty vehicles; and offers operation and maintenance services for public and private vehicle fleet customer stations.
It also designs, builds, operates, and maintains fueling stations; sells and services natural gas fueling compressors and other equipment that are used in CNG and LNG stations; and provides assessment, design, and modification solutions to offer operators with code-compliant service and maintenance facilities for natural gas vehicle fleets.
Clean Energy Fuels Corp (NASDAQ: CLNE) recently announced new and extended contracts for more than 20 million gallons of Redeem™ renewable natural gas (RNG) to accommodate the continued demand across key business segments for the ultra-low carbon fuel produced from organic waste.
“From waste to transit to trucking, fleets are discovering that RNG is a proven solution that can significantly decrease the impact of harmful emissions and reduce greenhouse gases,” said Nate Jensen, Clean Energy’s Senior Vice President, Renewables Fuels. “RNG offers price stability, lowers maintenance costs, and can reduce carbon emissions 70 percent or more, providing a clean and cost-effective alternative to diesel fuel.”
The stock has suffered a bit of late, with shares of CLNE taking a hit in recent action, down about -6% over the past week.
Clean Energy Fuels Corp (NASDAQ: CLNE) managed to rope in revenues totaling $59.9M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -17.2%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($95.7M against $79.2M).
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