BLACKROCK ENERGY AND RESOURCES INCOME TRUST plc
(LEI:54930040ALEAVPMMDC31)
All information is at 31 May 2024 and unaudited.
Performance at month end with net income reinvested
One Three Six One Three Five
Month Months Months Year Years Years
Net asset 2.9% 15.8% 13.9% 16.6% 53.0% 123.8%
value
Share price -0.8% 16.9% 12.3% 13.2% 32.9% 119.5%
Sources: Datastream, BlackRock
At month end
Net asset value – capital only: 137.55p
Net asset value cum income1: 138.32p
Share price: 121.50p
Discount to NAV (cum income): 12.2%
Net yield: 3.7%
Gearing - cum income: 9.5%
Total assets: £172.3m
Ordinary shares in issue2: 124,586,194
Gearing range (as a % of net assets): 0-20%
Ongoing charges3: 1.19%
1 Includes net revenue of 0.77p.
2 Excluding 11,000,000 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 2023. 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 45.8%
Traditional Energy 28.5%
Energy Transition 26.4%
Net Current Liabilities -0.7%
-----
100.0%
=====
Sector Analysis % Total Assets^ Country Analysis % Total
Assets^
Mining:
Diversified 23.6 Global 52.4
Copper 7.9 USA 20.7
Steel 3.8 Canada 9.5
Industrial Minerals 2.9 Latin America 4.1
Gold 2.5 Other Africa 2.8
Aluminium 1.8 Germany 2.6
Metals & Mining 1.8 United Kingdom 2.5
Nickel 1.5 Australia 2.4
Subtotal Mining: 45.8 France 1.8
Italy 1.3
Ireland 0.6
Net Current Liabilities -0.7
Traditional Energy: -----
E&P 12.3 100.0
Integrated 8.5
Distribution 3.3
Oil Services 2.2
Oil, Gas & Consumable 1.4
Fuels
Refining & Marketing 0.8
Subtotal Traditional 28.5
Energy:
Energy Transition:
Energy Efficiency 9.5
Electrification 7.1
Renewables 5.5
Transport 3.0
Storage 1.3
Subtotal Energy 26.4
Transition:
Net Current Liabilities -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 8.7% of the
Company’s net asset value.
Ten Largest Investments
Company Region of Risk % Total Assets
Anglo American Global 4.7
Rio Tinto Global 4.7
Teck Resources Global 4.2
Glencore Global 3.4
Shell Global 3.3
Filo Corp Latin America 2.6
NextEra Energy United States 2.5
BHP Global 2.3
Schneider Electric Global 2.2
Hess Global 2.1
Commenting on the markets, Tom Holl and Mark Hume, representing the
Investment Manager noted:
The Company’s Net Asset Value (NAV) returned by 2.9% during the month of
May (in GBP terms).
In 2024, US inflation and growth have been higher than expected resulting
in bond yields rising, to price in one or two interest rate cuts by year
end, having previously indicated up to six cuts. In May, however, US core
PCE inflation eased, and payroll growth was less than expected. US Tech
and AI-related Q1 earnings growth was strong, with evidence of a
broadening of earnings growth beyond these areas supporting global equity
markets. Mining equities outperformed broader equity markets in May,
however, helped by improving sentiment around China, mined commodity
prices remained at strong levels. Economic activity in China showed signs
of improvement and support measures for its struggling property market
were announced, with its central bank setting up a CN¥ 300 billion (US$42
billion) facility for local state-owned enterprises to buy unsold homes.
After a strong run in April, most mined commodity prices were relatively
flat through May. The copper price reached a new all-time high of
US$5.20/lb during the month but pulled back to end the period up just by
0.2%, whilst the silver price rose by 14.8% on strong physical demand in
Asia. In company news, after a month of negotiations, BHP withdrew its
proposed takeover of Anglo American after the companies failed to reach an
agreement.
Within energy, economic data that was lower-than-expected and a
normalisation of refining margins during the month from higher levels,
created uncertainty around oil demand growth and relative weakness in
energy equities. M&A activity within energy remained a feature:
Conocophillips announced plans to acquire Marathon Oil at a relatively low
premium, in a further sign of US shale consolidation and indicative of
industry capital discipline. The Brent oil price fell by 10.0%, whilst WTI
fell by 6.6%, ending the month at $79/bbl and $78/bbl respectively. The US
Henry Hub natural gas price rose by 32% during the month to end at
$2.58/mmbtu.
Within the energy transition theme, recent analysis forecast rapid
increases in electricity demand from the build out of AI data centres
(Thunder Said Energy estimate +1000TWh in in the US by 2030). Not only
does the expected increase in power demand require huge investment in new
electricity generation, but it will also necessitate investment in the
electricity grid and related infrastructure. The hyperscalers building the
AI data centres have previously announced decarbonisation targets and
therefore these may further accelerate investment in renewable power.
Microsoft recently announced a global framework with Brookfield to supply
10.5GW of new renewable projects between 2026-2030. Clean power utility
RWE announced two power purchase agreements with Microsoft for onshore
wind projects in Texas. Private equity groups appear to be recognising the
valuation opportunity in the publicly listed sector with a number of
acquisitions of renewable energy developers announced at significant bid
premiums to where the stocks were trading. KKR bid for Encavis at a 60%
premium, EQT bid for OX2 at a 43% premium and BNN Bloomberg reported that
Brookfield was in negotiations to purchase a majority stake in Neoen.
All data points in US dollar terms unless otherwise specified. Commodity
price moves sourced from Thomson Reuters Datastream.
02 July 2024
ENDS
Latest information is available by typing www.blackrock.com/uk/beri on the
internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3
(ICV terminal). Neither the contents of the Manager’s website nor the
contents of any website accessible from hyperlinks on the Manager’s
website (or any other website) is incorporated into, or forms part of,
this announcement.
