(DRX) Drax Group plc share chat

Yorkshire Post 10/6/2021

 

1 July 2021


Drax Group plc

("Drax", "the Group", "Drax Group", "the Company"; Symbol: DRX)


Acquisition of Joint Venture Interest from Westervelt


Drax is pleased to announce that it has agreed to acquire a 20% minority interest in Alabama Pellets, LLC ("Alabama Pellets") - the joint venture which owns the Demopolis and Aliceville pellet plants - from The Westervelt Company ("Westervelt") for $29.7 million cash consideration. The acquisition will increase the Group's interest in Alabama Pellets to 90% and provide Drax with economic control over a further c.130,000 tonnes of biomass production capacity per annum. Completion is expected to take place in July 2021.

Westervelt is considered to be a Related Party under the UK Listing Rules with the proposed transaction constituting a Smaller Related Party Transaction under Listing Rule 11.1.10.

The acquisition of Pinnacle Renewable Energy Inc. included a change of control provision over Alabama Pellets. Drax has been in discussions with Alabama Pellets joint venture partners regarding future working relationships, including their minority interests. The remaining joint venture partner, Two Rivers Lumber Co., LLC, holds a 10% economic interest.

Demopolis and Aliceville are located in Alabama, in the US southeast, close to the Group's existing US operations and have a combined nameplate production capacity of 660,000 tonnes per annum. Aliceville was commissioned in 2018 and Demopolis is expected to be commissioned in 2021.

Drax Group has 13 operational pellet plants (including Aliceville) plus satellite plant developments and Demopolis, with total nameplate production capacity of 4.9 million tonnes per annum once commissioned. These plants are geographically diverse and sited in three major fibre baskets (British Columbia, Alberta and the US southeast) with access to four deep water ports providing routes to markets in Asia, Europe and the UK.

 

13 July 2021

Drax Group plc

("Drax", the "Group" or the "Company"; Symbol: DRX)



Refinancing of Pinnacle Debt with Lower Cost ESG Facility


Drax is pleased to announce that it has completed the refinancing of the Canadian dollar facilities it acquired as part of the Group's acquisition of Pinnacle Renewable Energy Inc. (Pinnacle) in April 2021.


The new C$300 million term facility ("the Facility") matures in 2024, with an option to extend by two years(1), and has a customary margin grid referenced over CDOR(2).

The Facility reduces further the Group's all-in cost of debt to below 3.5% and includes an embedded ESG component which adjusts the margin payable based on Drax's carbon intensity measured against an annual benchmark.

The Facility, along with surplus cash, replaces Pinnacle's approximately C$435 million facilities which had a cost of over 5.5%.

 

LSE - Waiting for Lift Off

Barclays Broker Note...Could explain the nice rise???

On the Runway Waiting for Lift Off

Stock Rating: Overweight
Industry View: Positive
Price Target: GBp 960 (from GBp 550)
Price (14-Sep-2021): GBp 436
Potential Upside/Downside: +120.2%
Tickers: DRX LN / DRX.L

We believe Drax contains significant share price upside potential. We increase our PT by 75% to 960p, implying 120% upside potential: Since our last update (May 2020) we see notable improvements to the Drax investment story but little change to the share price. We believe the current price is an attractive entry point.

The next Orsted? We now value the NPV of BECCS, pellet and pumped hydro expansion at £575mn (145p/share), which was previously £50mn. BECCS to us has the feel of offshore wind in 2005 – marginal current economics and a large niche area but with significant potential. We see Drax becoming a global leader in developing and operating these complex BECCS projects both in the UK and globally, and we estimate a long-term upside scenario valuation of 3800p, or 8.8x the current share price.

Option 1: Power price 'bubble' will increasingly lead to material earnings and cash upgrades. Drax is c.30TWh hedged over the next three years, but there is 3TWh of unhedged output in 2022 (20% of total output) and 6TWh in 2023 (40%). The correlation between power prices, bark spread and the Drax share price has broken since Drax joined the S&P global clean index (May 2021), and we believe it should reconnect. Every £5/MWh power price change is c.£500mn NPV to Drax, in our view.

Option 2: Pellets. Drax's ambition is to self-supply 5mn tonnes, and we estimate further export is possible. 3mn tonnes expansion would equal an NPV of £800mn, all else equal.

Option 3: BECCS. A global emissions technology game changer. We estimate that BECCS could have a value of up to £10bn NPV. The first unit may be operational by 2027, but we see significant potential for further UK and global expansion.

Option 4: Pumped hydro. Drax is planning to invest £500mn to increase capacity by 600MW. We estimate this would provide a further c.£70mn EBITDA and £320mn NPV.

Increase PT to 960p, retain OW.

 

Evening Standard 16/09/2021

 

Drax has been booted from an investment index of clean energy companies as doubts over the sustainability of its wood-burning power plant begin to mount within the financial sector.

The FTSE 100 energy giant, which has received billions in renewable energy subsidies for its biomass electricity, was axed from the index of the world’s greenest energy companies after S&P Global Dow Jones changed its methodology.

The exit from the S&P Global Clean Energy Index is a blow to Drax, which has vowed to become the world’s first “carbon-negative” energy company by the end of the decade.

It comes amid growing scepticism about its green credentials after the financial services firm Jefferies told its clients this week that bioenergy was “unlikely to make a positive contribution” towards tackling the climate crisis.

Drax was once one of the largest coal power generators in Europe before it converted four of the generating units at its North Yorkshire site to burn biomass instead. It received more than £800m in government subsidies and tax breaks to support the conversion last year, and could expect billions more in the future.

The company claims that burning biomass to generate electricity is “carbon neutral” because the emissions from incinerating wood pellets are offset by the carbon dioxide absorbed when the trees they are made from grow.

By using new technology to capture the carbon emissions from the biomass power plant, the company could effectively create “negative carbon emissions”, according to Drax.

However, the Jefferies equity analyst Luke Sussams said bioenergy was unlikely to make a positive contribution to climate action because of “uncertainties and poor practices” in some parts of the timber industry regarding the sources of wood, forest management practices, supply chain emissions and high combustion emissions.

“We argue that bioenergy production is not carbon neutral, in almost all instances. This casts doubt on whether bioenergy with carbon capture and storage (BECCS) is a net-negative emissions technology. The widespread deployment of BECCS looks challenging,” he said.

The interventions by S&P Global Dow Jones and Jefferies are some of the first blows struck by a financial sector against the bioenergy sector, which has long been criticised by green groups. The S&P Global Clean EnergyIndex also dropped a French biomass generator, Albioma, which, like Drax, has used wood chips to replace coal in its power plants.

Despite the growing concerns, Susamms expects the UK government to continue allowing Drax to rake in billions in subsidies to support its plans. Drax’s share price has climbed by more than 4.5% to 540p a share this week.

Its BECCS plans could cost British energy bill payers £31.7bn over 25 years and would “not deliver negative emissions” after accounting for the full carbon footprint of biomass in the power sector, according to the climate thinktank Ember.

Phil MacDonald, Ember’s chief operating officer, said: “Scientists are increasingly raising concerns that it cannot be relied upon to reduce emissions – and financial institutions are starting to signal that they don’t think it’s clean or green either.”

Drax sources about two-thirds of its biomass from the south-eastern states of the US via ocean tankers, which are major emitters, and recently struck a £420m deal to triple its biomass capacity by acquiring the Canadian wood pellet manufacturer Pinnacle Renewable Energy.

“It’s time for the UK government position on biomass to catch up with the evidence – so that investors are encouraged to instead invest in technologies which have been scientifically proven to reduce carbon emissions,” MacDonald said.

A government spokesperson declined to comment.

A Drax spokesperson said its biomass “meets the highest sustainability standards” and that the “science underpinning carbon accounting for bioenergy” was “crystal clear”.

The spokesperson added: “The world’s leading authority on climate science, the UN’s IPCC, is absolutely clear that sustainable biomass is crucial to achieving global climate targets, both as a provider of renewable power and through its potential to deliver negative emissions with BECCS.”

https://www.theguardian.com/busines...ource=esp&utm_medium=Email&CMP=bustoday_email

 

Drax Group Plc - Half-year Report #DRX @Draxnews https://www.voxmarkets.co.uk/rns/announcement/e68cad7c-4018-4ef5-8e9d-144c01b73402

 

3 August 2022

Drax Group plc

("Drax", "the Group", "Drax Group", "the Company"; Symbol: DRX)


Acquisition of 90,000 tonnes Canadian pellet plant


Drax Group has signed an agreement with Princeton Standard Pellet Corporation (PSPC) to acquire its pellet plant in Princeton, British Columbia, Canada.

The plant, which has been operating since 1995, has the capacity to produce 90,000 tonnes of wood pellets a year, primarily from sawmill residues. Around half of the output from the plant is currently contracted to Drax.

The plant is located close to the Group's Armstrong and Lavington plants and the port of Vancouver, and has 32 employees, who are expected to join Drax.

Following completion of the acquisition the plant is expected to contribute to the Group's strategy to increase pellet production to 8 million tonnes a year by 2030.

The acquisition is expected to complete in Q3 2022.


Will Gardiner, Drax Group CEO said: "We look forward to welcoming the Princeton pellet plant team to Drax Group as we continue to build our global pellet production and sales business, supporting UK security of supply and increasing pellet sales to third parties in Asia and Europe as they displace fossil fuels from energy systems. Drax's strategy to become a world leader in sustainable biomass, supports international decarbonisation goals and puts Drax at the heart of the global, green energy transition."