With Germany out yesterday professing its support for a gradual EU ban on Russian oil, the stage is set for another supply-driven rally in the price of oil and gas around the world.
Over the longer-term, the backdrop for the oil market continues to be defined by the prospect of shortages even without the war in Ukraine as we reap the consequences of chronic underinvestment in new fossil-fuel-based energy production capacity. As ESG policies and environmental concerns mount, this problem is only going to worsen in the years ahead.
The upshot could be the steady increase in the value of energy producers despite their bad reputation among green investors. It comes down, as always, to Econ 101: supply and demand set the price.
That shines a spotlight on stocks like EOG Resources Inc. (NYSE:EOG), Devon Energy Corp. (NYSE:DVN), PDC Energy Inc. (Nasdaq:PDCE), Exxon Mobil Corp. (NYSE:XOM), Patterson-UTI Energy Inc. (Nasdaq:PTEN), Matador Resources Co. (NYSE:MTDR), and Energy Select Sector SPDR ETF (NYSEArca:XLE).
But there’s one smaller cap name in the space that strikes an interesting balance, offering a vision of oil production through environmentally safe, and sustainable technology for the extraction and reclamation of heavy oil and bitumen from oil sands and mineable oil deposits: Petroteq Energy Inc. (OTC US:PQEFF).
According to its materials, the company is focused on the development, implementation, and licensing of patented, versatile technology that can be applied to both water-wet deposits and oil-wet deposits, outputting high-quality oil and clean sand.
PQEFF is particularly interesting right now because it has become an acquisition candidate through an all-cash takeover-offer from Viston Swiss United AG.
Given the backdrop in the energy market, it shouldn’t be surprising to see institutional deep-pocketed money interested in snapping it up lock, stock, and barrel while it’s still a small-cap.
The company recently put out an update on the takeover process, noting that the PQEFF Board “believes that the immediate cash value offered to Shareholders under the Viston Offer is more favorable to Shareholders than the potential value that might otherwise result from other alternatives reasonably available to Petroteq. The Petroteq Board of Directors unanimously recommended acceptance of Viston Offer on January 04, 2022 and voted unanimously on January 26, 2022 to tender its shares also."
In other words, it’s a viable solid offer. With the stock still flying under the radar, investors have the opportunity to step in front of that acquisition and potentially turn a quick buck in the process. That’s a rare setup.
But even if the bid falls through the cracks, the company is still positioned as potentially one of the most interesting names in the market’s hottest sector. Energy stocks are up over 32% so far in 2022. Utilities and Consumer Staples are each up just less than 2%. And all other sectors are down for the year.
So, it isn’t even close.
But there should be a premium for those companies able to unlock the extra value of environmentally safe energy production.
As noted in the company’s most recent release, “Petroteq has developed a proprietary technology to extract oil from its reserves in Utah, and has demonstrated in pilot projects the viability of its patented process to produce at an attractive economic level, comparable to conventional oil reservoir production, and to deliver a high quality product. The Company's facility has been designed to operate at 500 barrels per day and the Company has designed the next generation oil sands plant with 5,000 barrels capacity. All engineering aspects of the proposed 5,000 barrels plant have been confirmed by an independent third party as commercially viable and technically sufficient to achieve the desired plant performance within a budget. Petroteq management believes this design is solely unique to the patented Petroteq process, to achieve oil extraction from sands in an eco-friendly method, and can be seen as a true green energy technology.
Petroteq Energy Inc. (OTC US:PQEFF) CEO and CTO, Vladimir Podlipsky, PhD, commented, "Our management team is pleased that Petroteq has unlocked an economically feasible process that is eco-friendly, which I believe positions our company to contribute to solving the global energy crisis. Our intentions are to continue evolving toward future expansion and revenue growth, regardless of the on-going takeover-bid from Viston United Swiss AG. Management of Petroteq continues to manage the business of Petroteq, while making utmost effort to maximize shareholder value."
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