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MIDAS SHARE TIPS: Look for oil with Advance or go green with Harmony

Climate change activists may be causing havoc across the country but a simple fact remains: the world depends on oil and gas and will almost certainly continue to do so for some time. 

Boris Johnson is set on pursuing a green agenda but as recent spikes in oil and gas prices show, demand for these hydrocarbons persists and is expected only to increase over the coming years. 

Advance Energy hopes to take advantage of the global reliance on oil. Founded in February 2020, the business targets oil fields that have already been discovered but are currently underdeveloped or underfunded. 

Simple fact: The world depends on oil and gas and will almost certainly continue to do so for some time

Chief executive Leslie Peterkin then strives to use his experience and industry contacts to unlock the full potential of these assets and deliver substantial rewards to shareholders. 

Peterkin, 67, has spent 40 years in the oil industry, including a decade at Shell, followed by senior positions at Australian majors Woodside and Santos. He has also acted as a consultant for independent energy firms, each time charged with turning neglected assets into valuable and highly productive oil fields. 

Now, he is determined to prove his mettle at Advance, supported by chairman Mark Rollins, another oil veteran. 

Their first project is Buffalo-10, formerly owned by commodities giant BHP but lying fallow for more than 15 years. 

Situated between Australia and East Timor, the Buffalo site produced oil for several years but no technology was available to assess and exploit its full potential. 

Techniques have advanced significantly since then and independent analysis suggests that up to 34million barrels of oil are lying below the sea on the Buffalo site. A drilling programme starts next month and, should the analysis prove correct, it will be a game-changer for Advance. 

Confidence is high, so much so that discussions are under way with lenders and contractors to take this site to production by the end of 2023, producing around 30,000 barrels a day in year one and 40,000 thereafter. 

From the start, Peterkin felt the company could best deliver shareholder rewards if it adopted a joint venture approach to each asset, where Advance provides expertise, industry contacts and funding, while the other party focuses on day-to-day operations. Australian-listed Carnarvon is Peterkin's partner on Buffalo and revenues will be shared equally, but forecasters believe Advance will swiftly be able to recoup the expense of bringing the site to production and become highly cash generative thereafter. 

In the meantime, Peterkin is in advanced talks on two more ventures, which should add to the Advance roster and create long-term value. There is even talk of dividends in the years to come. 

Midas verdict: Investing in pre-revenue energy businesses is never risk-free but Peterkin's experience opens doors across the industry, while his focus on sites that have already been developed increases the chance of success. Advance is an extremely low-cost business too and sector watchers believe Buffalo will prove a winner. At 3.3p, the company is definitely worth a punt for the adventurous oil lover. 

Traded on: AIM Ticker: ADV Contact: advanceplc.com or 01624 681250 

... or get a stake in green battery bounty

For investors who are in a more ecological frame of mind or want to hedge their bets in a climate-conscious world, Harmony Energy Income Trust might prove just the ticket. 

Harmony specialises in battery storage plants, which allow electricity to be released on to the grid and sent to homes and businesses when it is most needed. 

The company, based in Knaresborough, North Yorkshire, expects to list on the stock market in early November and is hoping to raise £230million. 

Shares will go on sale this week at £1 each, available on Primary Bid or via intermediaries such as AJ Bell and Hargreaves Lansdown. 

With an eye on income-seekers, Harmony boss Paul Mason is targeting an 8 per cent dividend yield from 2023, payable quarterly and rising from 2 per cent next year. 

The group will make its money from buying electricity on the wholesale markets when it is cheap, usually overnight from renewable sources, and selling it when it is most in demand, mostly between 5pm and 7pm. 

Harmony can do this by storing the energy in huge batteries, strategically located near local electricity distribution points. 

Battery storage has only been around for a few years in the UK but Harmony was there from the start so it gains access to good projects early and at attractive prices. 

As such, Mason will use the flotation proceeds to buy six projects, capable of storing 312.5MW of electricity, which will be enough to power 95,000 homes a year. 

Harmony has exclusive rights to acquire further sites over the next five years, capable of storing another 687.5MW of power. 

There is also a longstanding relationship with Tesla and the US giant has agreed to provide state-of-the-art battery systems for Harmony's initial portfolio of sites. 

Midas verdict: The past few weeks have shown that when the wind does not blow and the sun does not shine, Britain’s entire electricity system buckles under the strain. Battery storage makes the transition to renewable energy much more viable and Harmony is an expert in the field. The dividend yield is appealing too. When the shares go on sale at £1, they are worth a close look.

To be traded on: Main market Ticker: HEIT Contact: harmonyenergy.co.uk or 01423 799109