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The ALVOF story in Brazil keeps getting better!
Big bump in contract pricing for existing production thanks to high prices in the blended index. Gomo pipeline under construction, and two exploration wells planned for 2021 that could double reserves. Dividend to initiate in 2022 after share consolidation.
Zachs Research
The Senate couldn't even move on legislation to define a regulated Thorium fuel cycle after two attempts by Orin Hatch about 12 years ago. Died in committee both times.
LFTR reactors are inherently safe by design and waste has a half life measured in tens of years, not thousands.
The Gamma radiation exposure during part of the fuel cycle is the technical challenge that I believe could be overcome with robotics, etc.
But there is no political will to make a shift. And the reason Thorium didn't get the nod out of Oak Ridge in the 1950's was because we couldn't make bombs with the stuff.
Atoms for peace was a snow job...
Fusion is FINALLY becoming a commercial reality. Multiple commercial entities with prototypes on their way to test units in the next 4-5 years.
Necessary if we are to have the right mix of clean energy feeding the grid. Everyone ignores the waste and safety problems in fission based nukes. And then the Price Anderson Act shields operators from major financial liability.
I only wish the US got real about Thorium reactors too. No political will to go that direction. So many good reasons to get serious there.
Updated Zachs research on ALVOF. Rising prices, rising reserve base, and a PV 10 at almost 2.5x the current share price.
Gomo exploration wells got delayed. Two 40% chances to double their reserve base.
So much to like. Just wish it didn't have the taint of a low priced stock, and had better liquidity.
ALVOF Research
If you can reduce the time in the supply chain by growing locally, you can pick closer to peak ripeness. I have given a lot of thought to buying distressed inner city buildings and fitting them for agriculture. I have seen a number of really interesting technologies. But the economic value of the crops are a major hurdle when you are not relying on free sun and low price dirt. Also, growing indoors at scale is precarious from a pest perspective. You don't want to rely on pesticides.
And never mind the security challenges from gang activity.
Almost needs to be driven by charitable groups for employment, and community health initiatives.
Love to see indoor agriculture gaining traction. But they need to move the grow facilities into the inner cities to reduce transportation costs and help alleviate food deserts.
Who else missed the move in RGLD?
I was so close to buying in the low $100's...
Hindsight is 20/20
RGLD versus GLD
My favorite microcap Brazilian natty gas producer ALVOF is continuing to impress. They get a sales price re-determination in August that will capture the first half 2021 spike in reference prices (Henry Hub,Brent Crude).20% bump in prices expected.
Forex volatility hurt their eps in Q1, but FFO was ahead of plan. Gomo exploration wells on track to spud this summer.
This is a really good earnings webcast they put together. It includes a roadmap of the way forward.
Q1 earnings
ALVOF broke out to 5 year highs on volume! Major catalysts to come in the next few months.
ALVOF Chart
Our healthcare costs in America are obscene, yet we do not lead on some of the quality metrics tracked. I have no problem paying 3X more for agricultural products (heavily subsidized for political reasons)to compensate for subsidized insurance premiums and deductibles/copays as the nominal costs for all ag products combined are a fraction of healthcare costs. Nobody went bankrupt from a milk habit.
I am wishing I got on the farmland investment theme back in 2012. I knew of multiple PE funds that were active back then. The number only grew...
ALVOF is breaking out to five year highs!
chart
Violent crime in Brazil is high. I remember an old boss (very wealthy)who's son had married down there. All armed guards and high walls around the family compound.
I have known many Brazilians over the years. They are a fun loving, dynamic people. Work hard/play hard.
Take a look at the global population map on the header of this board. Large population + established rule of law = attractive market opportunity.
As I have said before, the currency risks are high. This country has gone through bouts of hyperinflation.
The government of that country never ceases to find new ways to rip the people off. Lula was as crooked as they come. Not sure if he is worse than Bolsenaro.
But ALVOF just posted a fantastic resource assessment for Gomo, and earnings tomorrow.
Gomo news
A close above $0.75 on volume would be a massive long term breakout.
The chart is looking really good.
A great article on what's happening down in Brazil.
Petrobras
No surprise. PV + Battery Storage hit grid parity last year without subsidies.
Mining rare earth minerals is messy stuff. But if we started getting serious about Thorium as a fuel source (co-located with most deposits), we could create the proper economics to safely mine deposit like Mountain Pass in California.
Technical solutions to existing problems always come if the economics work.
ALVOF massive volume increase (23X+) on a great news release yesterday. Large seller should be getting cleaned up soon. A strong close above $0.75 would be a signal of the next large advance.
chart
ALVOF just posted a fantastic update yesterday. Increased gas sales and prices, a successful Gomo well test triggering a go decision on a new pipeline to the gas plant, and two more Gomo exploration wells that could dramatically increase reserves. Plus they paid down $2.5 million of high coupon debt. The future's so bright, I gotta wear shades!
Alvopetro News
ALVOF has a great news release today. Increased gas volumes sold, higher prices, successful Gomo production test, and paydown of debt. The future's so bright I gotta wear shades!
Alvopetro News
ALVOF $0.70 is highest close in two years. Would like to see more volume but chart primed for the next leg higher. Catalysts pending.
The purpose of China's belt and road initiative was to gain access to and lock up natural resource deposits in emerging markets particularly Africa. There is now push back from those countries who readily took Chinese money not understanding the "strings" attached when you get in bed with an authoritarian regime...
Battery technology continues to evolve, so calling anything game over is a fools errand.But China made a national commitment to sustainable energy technologies while the United States spooned with the fossil fuel lobby and put coal executives in charge of the EPA. We are at a competitive disadvantage going into the next industrial paradigm shift. But the private sector is leading, and government policy is shifting to fill in the spaces where needed (mass charging stations, etc.)It's GAME ON for green tech companies.
ALVOF a cup and handle formed with recent volume spike. Talk about a loaded spring...
ALVOF Chart
Lithium has the chemical challenges noted in the other response. As battery technology advances, new materials without the risk of fire from rupture or overheating will emerge. Even Jeep may go there!
Daimler AG has solid state battery technology that could be a game changer...I am waiting for the alternative to Lithium Ion so cars don't catch fire in a battery rupture accident! The advances in battery tech should be stunning in the coming years.
Weaker dollar policy coming. Good for natural resource pricing and emerging markets exposure. Alvopetro has both! And multiple shots on goal to dramatically increase their reserve base. Current asset value per share is 3X the stock price...
ALVOF
Alvopetro is an emerging natural gas company in Brazil. They became operationally profitable last year and have numerous upcoming exploration/development catalysts including the potential to dramatically expand their reserve base. They have a great presentation on their website. Zachs did a good research piece recently as well
Zachs Research
Just increased profit guidance based on semi annual contract price adjustment for their gas.
Trading at 3.5X expected 2021 EBITDA. Huge volume spike today as they likely cleaned up a larger seller.
$1.87/share Net Asset Value right now. That's a 3 bagger!
Chart looks great. Just needs to find some investor mind share.
Company Website
ALVOF increased their EBITDA forecast on better gas contract pricing. Chart breaking out and lots of fundamental catalysts to come. Way too cheap...$1.87 net asset value/share!
Alvopetro operational update:
Alvopetro News Release
Semi annual price determination rose starting Feb 1. Increased projected EBITDA.
I find that when the facts support a media bias, the story should be told from that viewpoint. Opinion pieces are just that. Opinions. Bloomberg is privately owned, and Michael Bloomberg is doing his part to change the societal conversation to battling an existential threat.
Fossil fuels are beneficiaries of sunk infrastructure costs, favorable tax treatment, sweetheart federal leases (ending now), and a strong lobbying arm that squashes stronger regulation of air and water quality. While I understand that the pay is generally better in that industry than in renewables for the average worker, why should society bear the unrecovered costs of pollution and human accelerated climate change to the benefit of a small slice of the population?
Emerging industries of national/global importance deserve governmental subsidies and direct spending to propagate them in a market economy. Pharma research, DARPA projects, renewable energy, low income connectivity are all worthy examples.
You are right, it's all about the economics. Advances in battery technology will continue to drive solar/wind grid baseload power and EV adoption. Grid parity is here now without subsidies. And we have never internalized the full costs of fossil fuels.
The trend points to even lower costs for renewables.
Someone mentioned lifetime cost of EV and battery pack replacement, but ignored the lower lifetime maintenance because of fewer moving parts. Range will improve between charge, and charging infrastructure will get the appropriate governmental boost. I am waiting until the Lithium ion batteries are replaced with materials that won't catch fire in a rupture.
Someone is going to need to come up with a recycling solution for all the toxic solar panels hitting end of life in the coming years. Gallium-Arsenide doesn't sound like anything I'd like in my morning coffee...
What volumes and price would you expect to pay on a take or pay LNG commitment competing with Europe/Asia?
And the unloading/transportation infrastructure needs to be in place, right?
No clue. Firm price contracts? % of total business?
The point is volatility makes it less likely LNG would be a competitor in Bahia.
LNG is certainly volatile isn't it? And export capacity utilization looks tight these days.
We are talking about a $60 Million market cap company with minimum $17.5 Million EBITDA for the next 8-10 years and lots of upside.
ALVOF doesn't need a global LNG play to make money. They have proximate gas supply and delivery infrastructure to feed a Utility that has indicated their future desire for more gas. That may not come to pass, but I trust the track record of management in S America and have put my chips on the table betting it does.
I posted for valuable discussion around the investment merits, and appreciate your insights/critique!
I suggest that LNG will not be a competitive threat due to logistics and price volatility.
Take a closer look at the potential for Gomo reserve discovery from the two proposed new exploration wells later this year. $7.5 Million to drill those. Risk/reward is quite favorable. The current production test on the Gomo 183-1 well is dealing with a well bore that has had historical problems. May or may not be a great read. The seismic is highly prospective in the block and they hit expected pay zones on the two exploration wells to date.
So many ways to build on the current production platform and generate high returns. By owning the midstream asset, they have been marketing pipeline capacity to other producers in the area. Yet another way to monetize the asset base.
This is all upside to the current stable production that generates ~$18 Million of EBITDA at base prices on their contract.
These guys did well in Columbia and Ecuador, two countries with far more volatile governments.
I have been in the name for two years, and have watched management hit every milestone they laid out. Up a decent return on the position and added a bit more recently, but have been frustrated with the liquidity. I speak with management regularly and they are looking to address the issue. We will see. But fundamentals always drive investment profits in the long term. Just have to manage the risks and get paid for them.
There is a good shareholder presentation on the website that addresses the milestones hit.
Certainly some international risk in Brazil, but far less than so many other countries.
Rule of law generally holds up there. The currency less so.
But counter-party on the gas contracts is an investment grade, Japanese owned utility.
Any emerging market ETF is going to expose an investor to geopolitical risk. That's the arena you are playing in.
ALVOF
A deep value Brazilian natural gas producer with producing, long lived assets, near term catalysts, and clean balance sheet with low debt ready to be paid down or refinanced. Multiple opportunities to dramatically increase their $180 Million reserve base.
Management has two prior $1 Billion+ exits in S America, and the plan is to do it again.
Zachs Research
$18 Million minimum EBITDA expected in 2021. If energy benchmarks continue to rise, the base price on their gas contracts will reset, increasing cash flows.
Long Term Chart ready to break out in the next few weeks.
Some additional info if you got this far:
Alvopetro has all of the qualities I look for in a fundamental investment.
Proven management team who have operated and exited two prior South American energy companies at huge profits.
Positive earnings/EBITDA and low multiples to those earnings.
Proven long lived reserve base with near term opportunities to increase reserves substantially.
Low debt that will be refinanced/paid off now that the company is profitable.
A real plan to return profits to shareholders via future dividends and/or stock buybacks of ridiculously undervalued equity.
Investors are looking for emerging markets and energy companies for a post covid economic environment. As a Canadian domiciled company operating in Brazilian energy markets, ALVOF covers all bases.
ALVOF Undervalued Brazilian Natural Gas play
Zachs Research
I noticed a line in the redacted Susman billing for a correspondence to a lawyer regarding settlement discussions. Not sure if that was a slip in the redaction process. Some detective work pointed to the Citibank team. Whether that is an economic discussion or not remains to be seen, but as we press closer to an actual court appearance (next year?), it would make sense for one more of the banks to break from remaining defendants and decide to settle.
Anyone reading the tea leaves see a discussion with Citibank regarding a settlement? Would be an interesting development. The delays to depositions have created a difficult path forward in the case...