This week on HotCopper was tumultuous for one of the community’s most hotly watched stocks: now-Australian-based Elixir Energy.
The formerly Mongolia-based gas explorer pivoted to QLD’s Taroom Trough in recent history, not too far from where Shell recently wound up drilling. Its onshore Daydream-2 well has caused much hubbub, but early week, sentiment soured.
The culprit? Flow rates below expectations. While most hard rock miners only need to find deposits of their target mineral with grades that are feasible to mine (ideally in an easy-to-crush rock and not kilometres underground,) energy explorers don’t have it so easy. You can find oil or gas, but unfortunately, there’s a few more steps than that.
You then need to figure out if the pressure metrics are right to get that oil or gas to the surface in a manner that’s cost-effective. Energy sector engineers reading this are definitely putting my name on a do-not-hire list right now for overlooking thousands of other important things, but from the pub test point of view, that’s pretty much the whole story.
And unfortunately for Elixir – which had earlier reported more promising flow rates – the completed Daydream-2 well numbers weren’t quite as impressive.
“Back to Mongolia!,” one HotCopper user wrote; a sentiment this finance journalist found particularly amusing.
But perhaps that’s unfair to Elixir: it successfully flowed gas in the very-expensive-jurisdiction that is Australia in around two years, which is pretty impressive. (Let’s not forget I was recently embarrassed for being a long-time Melbana Energy skeptic.)
Outside of HotCopper land, the other big news this week was US inflation (or, CPI, if you will.)
It came in 0.1% higher than what analysts were expecting which gave Wall Street pause, but not enough pause to tank the market. By this time next week, we’ll have forgotten all about it – I’m more than confident to put that prediction down on (digital) paper right now. So, kind of a non-event.
Earlier this week I wrote a piece for HotCopper running through what the US inflation numbers mean for markets, and per my original thesis, I think that we’re still going to see a cracker of a Santa Rally this year. Wall Street keeps hitting new all-time-highs every few weeks (just like gold,) and a +0.1% higher than expected CPI read isn’t enough to threaten that, in my view.
Perhaps more interesting is that the world has no idea what to make of China right now.
Get this: nearly three weeks after announcing a stimulus push that excited everybody, the Hang Seng has been humbled but metals prices, broadly speaking in a general sense, are still riding the boost they saw once that stimulus announcement informed bets China would suddenly be demanding more of everything.
A secondary stimulus announcement on Tuesday was met with not insignificant disappointment, and as I wrote last week, many feel that China has basically tried to artificially boost the overall value of its share market(s) with no real measures to help the actual Chinese economy.
We’ll just have to wait and see. For now, though – iron ore prices over US$100/tn is a good thing for Australia.
But – based on vibes – it’s starting to feel like more and more people are questioning the fundamentals around that psychology.
What HotCopper was watching
- WA1 Resources’ shareholders bullish on latest niobium metwork
- “Back to Mongolia”: Elixir Energy shares demolished as Daydream-2 flows disappoint
Australian Equities
- Battered Arcadium Lithium shares boosted in Aus by Rio takeover bid
- West African Resources bounces back after Burkina Faso says mine permit safe
- ASX-listed Tigers Realm Coal’s asset sale to Kremlin-linked billionaire to go ahead
International Equities
International Economies
- US CPI comes in 0.1% higher than expected at 2.4% MoM for Sept
- South Korea cuts rates for the first time in 4 years
Commodities
- NAB predicts minerals and energy prices will continue falling thru Q4, China rally “irrational”
- SGX iron ore price drops US$10/tn in 24h following second Chinese stimmy meeting Tuesday
Geopolitics
- Majority of Taiwanese survey respondents don’t believe China will invade in next 5Y
- Russia and Burkina Faso officials meet in Moscow to discuss military cooperation