BlackRock Energy and Resources Income Trust plc (LON:BERI) has announced its latest portfolio update.
All information is at 31 October 2022 and unaudited.
For more information on BlackRock Energy and Resources Income Trust and how to access the opportunities presented by the energy and resources markets, please visit www.blackrock.com/uk/beri
Performance at month end with net income reinvested
| One | Three | Six | One | Three | Five | |
| Month | Months | Months | Year | Years | Years | |
| Net asset value | 7.2% | 7.6% | 5.5% | 32.2% | 105.7% | 117.1% |
| Share price | 8.1% | 12.3% | -0.6% | 32.3% | 118.0% | 121.2% |
Sources: Datastream, BlackRock
| At month end | |
| Net asset value – capital only: | 132.38p |
| Net asset value cum income1: | 133.66p |
| Share price: | 127.00p |
| Discount to NAV (cum income): | 5.0% |
| Net yield: | 3.5% |
| Gearing – cum income: | 7.9% |
| Total assets: | £179.6m |
| Ordinary shares in issue2: | 134,356,194 |
| Gearing range (as a % of net assets): | 0-20% |
| Ongoing charges3: | 1.21% |
1 Includes net revenue of 1.28p.
2 Excluding 0 ordinary shares held in treasury.
3 The Company’s ongoing charges are calculated as a percentage of average daily net assets and using the management fee and all other operating expenses excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain other non-recurring items for the year ended 30 November 2021. In addition, the Company’s Manager has also agreed to cap ongoing charges by rebating a portion of the management fee to the extent that the Company’s ongoing charges exceed 1.25% of average net assets.
| Sector Overview | |
| Mining | 43.7% |
| Traditional Energy | 35.0% |
| Energy Transition | 21.4% |
| Net Current Liabilities | -0.1% |
| —– | |
| 100.0% | |
| ===== |
| Sector Analysis | % Total Assets^ | Country Analysis | % Total Assets^ | |
| Mining: | ||||
| Diversified | 17.0 | Global | 55.2 | |
| Copper | 8.9 | USA | 20.8 | |
| Industrial Minerals | 8.6 | Canada | 11.0 | |
| Aluminium | 3.1 | Latin America | 5.3 | |
| Steel | 2.3 | Germany | 3.4 | |
| Gold | 1.1 | Australia | 3.1 | |
| Diamonds | 1.0 | Ireland | 0.5 | |
| Uranium | 0.8 | France | 0.4 | |
| Iron | 0.5 | India | 0.4 | |
| Nickel | 0.4 | Net Current Liabilities | -0.1 | |
| Subtotal Mining: | 43.7 | —– | ||
| 100.0 | ||||
| Traditional Energy: | ===== | |||
| E&P | 19.0 | |||
| Integrated | 11.4 | |||
| Oil Services | 2.2 | |||
| Refining & Marketing | 1.2 | |||
| Distribution | 1.2 | |||
| Subtotal Traditional Energy: | 35.0 | |||
Energy Transition: | ||||
| Energy Efficiency | 6.7 | |||
| Electrification | 6.3 | |||
| Transport | 4.5 | |||
| Renewables | 3.9 | |||
| Subtotal Energy Transition: | 21.4 | |||
| Net Current Liabilities | -0.1 | |||
| —- | ||||
| 100.0 | ||||
| ===== |
^ Total Assets for the purposes of these calculations exclude bank overdrafts, and the net current liabilities figure shown in the tables above therefore exclude bank overdrafts equivalent to 7.8% of the Company’s net asset value.
| Ten Largest Investments | ||
| Company | Region of Risk | % Total Assets |
| Glencore | Global | 6.9 |
| Shell | Global | 3.8 |
| First Quantum Minerals | Global | |
| Equity | 2.2 | |
| Bond | 1.5 | |
| ConocoPhillips | Global | 3.4 |
| Vale | Latin America | |
| Equity | 2.2 | |
| Bond | 1.1 | |
| Albemarle | Global | 3.2 |
| Samsung SDI | Global | 3.0 |
| BP | Global | 3.0 |
| Teck Resources | Global | 2.9 |
| Canadian Natural Resources | Canada | 2.8 |
Commenting on the markets, Tom Holl and Mark Hume, representing the Investment Manager noted:
The Company’s Net Asset Value (NAV) per share increased by +7.2% during the month of September (in Sterling terms with dividends reinvested).
After a volatile start to the month, equity markets ended October higher, with the MSCI All Country World Index returning +6.0%. Despite the positive move in markets, geopolitical risks remain at the forefront with tensions between Russia and Ukraine continuing to escalate. Elsewhere, global supply chains have been easing and European governments have stepped in to reduce the impact of the energy crisis and mitigate the risks of a harsh recession. High inflation and solid labour markets continued to support hawkish action from central banks.
Within the traditional energy space, the US administration announced that they would refill the Strategic Petroleum Reserve should oil prices fall below $72, whilst OPEC announced a cut of 2 million barrels per day from its production target, in a clear positive statement of intent to step into the market and defend the oil price. Third quarter energy company results have continued the trend of companies remaining capital disciplined, with high free cash flow generation returned to shareholders via dividends and share buybacks. With European natural gas storage levels full and continued warmer weather, it was notable that gas and power prices moved lower, however December and longer-term gas prices remained elevated. Brent and WTI (West Texas Intermediate) oil prices rose by +6.5% and +8.2%, ending the month at $95/bbl and $88/bbl respectively.
The mining sector posted positive returns, albeit underperforming broader equity markets. This came despite deteriorating global economic growth data with, for example, manufacturing PMI (Purchase Managers’ Index) statistics for Europe and the US showing steep declines. For reference, consensus 12-month forward GDP growth estimates have fallen from ~5% in mid-2021 to 0.8% at the time of writing. China’s Communist Party Congress meeting occurred during the month, which further strengthened President Xi Jinping’s leadership position and provided no real update on their zero-covid policy. Most mined commodity prices were weak, with copper and iron ore (62% fe) prices falling -2.1% and -16.5% respectively. Production results were released this month, which highlighted the ongoing theme of production challenges, particularly noticeable with copper. Given declines in most mined commodity prices and cost inflation, we are seeing pressure on margins generally across the space.
Within the energy transition theme, the International Energy Agency (IEA) released their World Energy Outlook, which highlighted the need for an acceleration in investment in renewables required for a net zero transition, well beyond the 50% increase to $2tn/year by 2030 already suggested by energy transition policies. Higher oil and gas prices are supportive for accelerating the energy transition in our view, as they make renewables prices relatively more attractive and therefore announcements from OPEC that it would cut target oil production to support oil prices and also from the US administration that it would refill the Strategic Petroleum Reserve should prices fall below $72, may be supportive for the theme.
For more information on BlackRock Energy and Resources Income Trust and how to access the opportunities presented by the energy and resources markets, please visit www.blackrock.com/uk/beri
