BlackRock Energy and Resources Income Trust plc (LON:BERI) has announced its latest portfolio update.
All information is at 31 October 2021 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 Month | Three Months | Six Months | One Year | Three Years | Five Years | |
| Net asset value | 6.1% | 6.8% | 9.4% | 59.1% | 53.8% | 66.8% |
| Share price | 8.5% | 11.9% | 4.5% | 71.0% | 60.8% | 60.1% |
Sources: Datastream, BlackRock
| At month end | |
| Net asset value – capital only: | 103.12p |
| Net asset value cum income1: | 104.87p |
| Share price: | 99.60p |
| Discount to NAV (cum income): | 5.0% |
| Net yield: | 4.0% |
| Gearing – cum income: | 5.9% |
| Total assets: | £121.9m |
| Ordinary shares in issue2: | 116,218,357 |
| Gearing range (as a % of net assets): | 0-20% |
| Ongoing charges3: | 1.25% |
1 Includes net revenue of 1.75p.
2 Excluding 2,747,643 ordinary shares held in treasury.
3 Calculated as a percentage of average net assets and using expenses, excluding any interest costs and excluding taxation for the year ended 30 November 2020. The Manager has also undertaken to cap the Company’s ongoing charges by way of a management fee rebate to ensure that these do not exceed 1.25% of net asset value per annum.
| Sector Overview | |
| Mining | 40.9% |
| Traditional Energy | 33.9% |
| Energy Transition | 24.5% |
| Net Current Assets | 0.7% |
| —– | |
| 100.0% | |
| ===== |
| Sector Analysis | % Total Assets^ | Country Analysis | % Total Assets^ |
| Mining: | |||
| Diversified | 22.6 | Global | 56.9 |
| Industrial Minerals | 4.1 | USA | 18.0 |
| Gold | 4.1 | Canada | 10.8 |
| Copper | 3.6 | Latin America | 5.9 |
| Steel | 2.7 | Australia | 2.4 |
| Diamonds | 1.3 | Germany | 1.9 |
| Iron | 1.0 | South Africa | 1.4 |
| Platinum | 0.9 | France | 1.0 |
| Nickel | 0.6 | Ireland | 0.8 |
| Subtotal Mining: | 40.9 | Africa | 0.2 |
| Net Current Assets | 0.7 | ||
| Traditional Energy: | |||
| Integrated | 14.6 | —– | |
| E&P | 13.5 | 100.00 | |
| Refining & Marketing | 4.1 | ===== | |
| Distribution | 1.2 | ||
| Oil Services | 0.5 | ||
| Subtotal Traditional Energy: | 33.9 | ||
| Energy Transition: | |||
| Energy Efficiency | 9.1 | ||
| Electrification | 7.3 | ||
| Renewables | 5.5 | ||
| Transport | 2.6 | ||
| Subtotal Energy Transition: | 24.5 | ||
| Net Current Assets | 0.7 | ||
| —- | |||
| 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 6.6% of the Company’s net asset value.
Ten Largest Investments
| Company | Region of Risk | % Total Assets |
Glencore | Global | 6.7 |
| Vale | Latin America | |
| Equity | 3.7 | |
| Bond | 2.2 | |
| BHP | Global | 3.5 |
| Anglo American | Global | 3.4 |
| Exxon Mobil | Global | 3.2 |
| Chevron | Global | 3.2 |
| Total | Global | 2.8 |
| ConocoPhillips | Global | 2.7 |
| EDP Renovaveis | Global | 2.4 |
| Enel | Global | 2.2 |
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 6.1% during the month of October (in Sterling terms with dividends reinvested).
After a weak start to the month, global equities posted positive returns in October, with the MSCI ACWI index returning +5.0%. Economic data remained positive with PMIs improving in the majority of developed countries and continued progress with vaccination rollouts.
Traditional energy equities continued to move higher in October, supported by stronger oil prices. The relative tightness in supply and demand appears to be the result of a continuation of the COVID global economic recovery and reduced investment in new oil supply. Spot gas prices pulled back slightly from the highs in recent months, but remained far above levels of just a few months ago. Despite the pull back in spot gas prices, the futures prices for the 2022-2024 period moved higher. Natural gas prices fell by 6.8% over the month but remain over 103% higher than at the start of the year. The scope for additional gas supply into European and Asian markets remains limited following the sustained capital discipline and lack of investment in new supply within the energy sector in recent years. Against this backdrop, the Brent and WTI (West Texas Intermediate) rose by 6.8% and 11.2%, ending the month at $85/bbl and $84/bbl respectively.
Within the mining sector, thermal coal supply shortages in China saw prices remain at record highs. China also curbed production of energy intensive commodities, aluminium and steel, due to higher energy prices and as part of its efforts to combat emissions and pollution. Iron ore, a key input in steel production, came under further pressure as a result, with 62% fe(iron) prices falling by 4.6%. Elsewhere, platinum group metals (PGMs) prices rose over the month on signs of greater semiconductor chip availability, improving the outlook for automobile supply (PGMs are used in the catalytic converters for petrol and diesel cars).
Within the energy transition space, in the lead up to the climate conference COP26, a number of countries including China, the UK and Australia made supportive statements. The UK Prime Minister announced that all UK electricity would be generated from clean sources by 2035. The International Energy Agency (IEA) released its World Energy Outlook 2021, which highlighted just how far the energy transition still has to go, despite record installations of wind and solar power in 2020. Outlining the scale of the challenge they noted that “every data point showing the speed of change in energy can be countered by another showing the stubbornness of the status quo”. The IEA report showed that a sustainable energy economy was emerging, but despite the rapid growth of recent years, this was not yet growing quickly enough to reach net zero by 2050.
All data points in US dollar terms unless otherwise specified. Commodity price moves sourced from Thomson Reuters Datastream.
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
