On Tuesday, October 15, a Liberian-flagged oil tanker had just filled up at an Oman oil terminal. The oil carried by the tanker, the Pacific Zircon, was headed for Buenos Aires, Argentina. The tanker was only 150 miles into its journey when a bomb-carrying drone slammed into its hull and exploded.
There were no injuries from the attack. The Pacific Zircon didn’t sustain any significant damage. The hull wasn’t breached. There’s no oil spilling into the sea.
The drone that hit the tanker has been identified as a Shahed-136 drone – the same type of drone that Iran has been sending to the Russians for their attacks on Ukraine civilians. They look like this:
Behind the Drone Attack
The armed Shahed-136 has a wingspan of about two meters. This drone can either be pre-programmed for a target or be guided by a remote operator using a radio signal. In the case of a remote operator, the range of this drone is limited to 90-95 miles. But in pre-programmed mode, the Shahed-136 has an estimated range between 1,100 and 1,500 miles.
Because of the range limitations, it seems pretty clear that the Shahed-136 that hit the Pacific Zircon 150 miles off the Oman coast was pre-programmed for its target.
It is also clear that no matter how well-armed, one Shahed-136 will not sink a tanker the size of the Pacific Zircon. The point of impact would have to be pretty much perfect even to disable such a ship. And that level of precision cannot be pre-programmed with any degree of certainty.
To really do damage, a swarm of these drones would be necessary. And that brings up the uncomfortable possibility that the attack on the Pacific Zircon may have been a test of some kind.
But test or not, why would an Iranian drone attack a tanker from Liberia?
Well, it’s because even though the Pacific Zircon sails under the flag of Liberia, it is owned by an Israeli billionaire named Idan Ofer.
The Plot Thickens…
I can’t get inside the minds of the Iranian leadership and tell you their ultimate plans and goals.
But I can tell you that over 20 million barrels of oil and oil equivalent pass through the Persian Gulf, the Strait of Hormuz, and around Oman into open waters.
And every drop of it is within range of Iranian drones.
Maybe Iran’s goal is to actively disable oil tankers. Or maybe it simply wants to create a more tense environment that will result in higher shipping costs and thereby exact a kind of retaliatory tax on countries that support sanctions on Iran.
I would suspect it’s the latter. But shipping companies will have to assume it’s the former, and so insurance, hazard pay, lease rates, etc., will go up. Oil shippers may have to add armed guards to the payroll. They may be asked to help subsidize military escorts…
Or maybe the shipping companies will look to implement the kind of automated attack drone defense system I told you about in a recent article, The Best Drone Stocks to Buy.
Ondas Systems (NASDAQ: ONDS)
Here’s the relevant part of that article:
Here’s a microcap that caught my eye recently. $180 million market valuation and $3.80 a share, Ondas Systems (NASDAQ: ONDS).
Ondas makes private wireless networks for use with drones and surveillance equipment. The company’s base station radios connect with devices in the field, and are loaded with proprietary data processing software, cloud connection (for uploading and transferring data), as well as an AI driven drone to complete the system.
Ondas’ systems can be used by utilities companies to inspect long electrical lines, especially in remote regions. It can be used by railroads to inspect lengths of track, and, in partnership with Siemens, for running automated trains.
Plus, Ondas’ American Robotics division has won FAA approval for automated industrial drones, which is a potentially significant opportunity. Iron Drone is an automated system that can be integrated into radar systems and will automatically deploy counter-drones when a drone threat is detected. It looks like Iron Drone would be a pretty good solution for the kamikaze drones that are harassing Ukraine right now.
But what really caught my eye was a recent acquisition. Ondas is buying a company called Airobiotics (TASE: AIRO), who, in turn, is buying an Israeli-based company that specializes in automated counter-drone systems called Iron Drone.
Here’s a pretty cool video of the system in action.
A Solid, Speculative Buy
Ondas has only been a public company for 2 years. It’s essentially a start-up, so the company is just starting to make sales. But its tech looks promising.
Now, Ondas is trading lower than the $3.80 a share I cited above. It’s currently around $2.80. It has also completed a convertible bond offering that gives Ondas around $28 million in cash to fund the development of its tech.
The company just reported earnings, which isn’t good. Revenue missed by 54% earnings per share missed by 33%. However, Ondas is still expected to put up 62% revenue growth in each of the next three years.
But, with a recent cash raise, and bad earnings news out of the way, I consider Ondas a solid speculative buy under $3.
Until next time,
The Profit Sector