Auctus on Friday - 03/03/2023

AUCTUS PUBLICATIONS
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Arrow Exploration (AXL LN/CN) C; Target price of A$0.50 per share: Good well results in Colombia – The RCE-3 well flowed naturally at rates equivalent to 2,000 bbl/d gross for four hours after unloading kill fluid. Over the last 24 hours, the well has produced at a rate of 968 bbl/d with 0% water cut. This is a very good result and compares with expectations of 600-800 bbl/d. The fact there is no water being produced at that the well is chocked back on a very small choke is also very encouraging.

Calima Energy (CE1 AU)C; Target price of A$0.50 per share: High condensate yield in the Montney and lower costs – The Calima #2’s peak 24 hour condensate rate was 396 bbl/d at a rate of 3.4 mmcf/d gas. This is higher than the average yield reported previously (102 bbl/mmcf on 3.65 mmcf/d production over the duration of the test). Calima #3’s peak 24 hour condensate rate was 21.7 bbl/d at a rate of 4.9 mmcf/d gas. This is also much higher than what had been reported previously (3 bbl/mmcf on 4.2 mmcf/d production over the duration of the test). The 24 hour peak rates and condensate yields are also representative of what could be achieved once the wells are in production. The total costs are estimated at A$2.0 mm; the net costs after the offset of the sale of ~5,900 bbl of condensate are expected to be ~A$1.4 – A$1.5 mm. This compares with an initial budget of A$2.8 mm. Clean condensate was sold on average at WTI plus US$4/bbl.
See website for full report

Longboat Energy (LBE LN LN)C; Target price of £1.30 per share: Operating update – The Egyptian Vulture discovery has been estimated to hold 4-68 mmboe recoverable resources (1C-3C). An appraisal well would need to encounter better reservoir quality than that penetrated by the discovery well. The Joint Venture participants, following extensive technical work, have been unable to form an aligned view regarding an appraisal well and the licence is being relinquished. Longboat is looking to form a new group to take the asset forward and rather than take over the existing licence, which would involve escalating license fees, will seek to re-apply for the acreage in the forthcoming licence round with awards due in January 2024. We currently value Longboat’s stake in Egyptian Vulture at £0.18-0.22 per share (US$13-16 mm).

SDX Energy (SDX LN)C: Operating update – FY22 gross production at South Disouq was 38.5 mmcf/d. The SD-5X well is exceeding the immediate post-drill volume expectations. It is expected in place volumes will be increased for this well. Following evaluation of the MA-1X well, SDX is moving forward on applying for a development lease for the Mohsen discovery. FY22 gross production at West Gharib was 2,033 bbl/d. FY22 gross production in Morocco was 4.9 mmcf/d.

IN OTHER NEWS
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AMERICAS

Alvopetro Energy (ALV CN): Reserves update in Brazil – YE22 2P reserves have been estimated at 9 mmboe, up from 8.9 mmboe at YE21. The Murucututu natural gas structure is estimated to hold risked (best estimate) contingent resources of 2.9 mmboe and risked best estimate prospective resources of 12.5 mmboe.

Brazil: Introducing a new tax – The Brazilian Government has announced that a 9.2% tax will be levied on oil export sales volumes for a term of four months, from March 1 to June 30.

BW Energy (BWE NO): Acquisition in Brazil on hold - BW Energy has been informed by Petrobras of a review of the Golfinho and Camarupim Clusters transactions as part of a wider analysis of Petrobras’ ongoing divestment program initiated by the Ministry of Mines and Energy in Brazil. The Ministry has requested a suspension of ongoing sales of assets for 90 days.

Canacol Energy (CVNE CN): Operating update in Colombia – Gas sales in February averaged 191 mmcf/d.

Canadian Overseas (COPL LN/XOP XN): Operating update in the USA – Operations have been impacted by extreme weather until late February. Current production stands at 1,400 bbl/d.

Frontera Energy (FEC CN): 4Q22 results – FY22 production in Colombia and Ecuador was 41,382 boe/d. The company anticipates producing 40-43 mboe/d in 2023. YE22 net debt (excluding unrestricted subsidiaries) stood at US$179 mm.

i3 Energy (I3E LN): Trading update in Canada – 4Q22 WI production was 22,757 boe/d, with current production of approximately 23,440 boe/d. The South Simonette Lower Montney well has delivered initial production rates of over 1,000 boe/d. The single well targeting the Middle Montney formation in North Simonette continues to produce lower water cuts and higher gas oil ratios as load fluid recovery progresses.

Maha Anergy (MAHA-A SS): 4Q22 results – 4Q22 production in Brazil was 2,621 boe/d. YE22 net debt was US$26.6 mm.

Touchstone Exploration (TXP LN/CN): Drilling update in Trinidad – The Royston-1X exploration well encountered a total Herrera turbidite thickness of 1,664 feet with an estimated 765 feet of net sand penetrated. The Herrera turbidite section was encountered ~330 feet structurally higher than in the original Royston-1 well and penetrated ~310 feet of Herrera section below what was observed in Royston-1. Mud logging and wireline logs indicate hydrocarbon accumulations in the targeted Herrera sections.

ASIA AND AUSTRALASIA

Baron Oil (BOIL LN): Resources update in Timor Leste – The Chuditch-1 discovery is estimated to contain 1,084 bcf gross Pmean contingent gas resources. The Chuditch SW prospect is also estimated to contain 675 bcf gross Pmean prospective gas resources across two segments, Alpha and Beta, with respective Geological Chances of Success of 52% and 45%. The Chuditch NE and Quokka prospects are estimated to contain respectively 744 bcf and 143 bcf gross Pmean prospective gas resources with a GCOS of 30% and 26%.

CNOOC: Large discovery in China – According to media reports, ~800 mmboe of hydrocarbons have been encountered at the Bozhong discovery in the Bohai Sea.

Jadestone Energy (GTE CN/LN): Delays in Australia – Several days have been lost to weather-related delays so production restart at Montara, which was previously expected by the end of February, has been impacted accordingly.

OMV (OMV AG): Looking to see South East Asia - OMV is initiating a sales process for the potential divestment of its 50% stake in the issued share capital of SapuraOMV Upstream in Malaysia and 100% of the shares in OMV New Zealand.

Woodside Energy (WDS LN/AU): FY22 results – FY22 adjusted net profit was US$5.2 bn. YE22 net debt was US$571 mm.

EUROPE

Aker BP (AKERBP NO): Dry hole in Norway – Well 16/1-35 S on production licence PL 1141 was dry.

Equinor (EQNR NO): Acquiring assets in Norway and the UK – Equinor is acquiring Suncor Energy UK for US$850 mm. The transaction includes a non-operated interest in the producing Buzzard oil field (29.89%), an additional operated interest in the Rosebank development (40%) and adds 15 mbbl/d production. In a separate transaction, Equinor is also acquiring equity interests in five discoveries in the Troll, Fram and Kvitebjørn area in the North Sea on the Norwegian continental shelf from Wellesley Petroleum. The transaction gives Equinor an additional 18.8% in Grosbeak, 45% in Toppand, 40% in Atlantis and 20% in Røver Nord and Røver Sør.

Var Energi (VAR NO): Discovery in Norway – The 7122/8-1S Countach well in production licence PL229 (Goliat) has encountered 3-13 mmbbl recoverable resources in the tested segment. The potential of the Countach prospect, in the undrilled segments, is estimated at up to 23 mmboe.

FORMER SOVIET UNION

Block Energy (BOE LN): Drilling problems in Georgia – Total Depth at the WR-B01Za well was called at 2,372 m MD, instead of the intended 2,682 m MD, due to unstable wellbore conditions across a suspected fault at approximately 2,275 m MD which caused escalating tool failure and lost-in-hole risk. Significant drilling fluid losses and gas and oil shows were observed while drilling beyond the problem zone, indicating a potentially productive well, but currently constrained due to the wellbore failure. Intermittent testing has produced some dry oil with zero water cut and high gas volumes, despite the wellbore issue.

MIDDLE EAST AND NORTH AFRICA

Capricorn Energy (CNE LN): Trading update in Egypt – FY22 WI production averaged ~34,200 boe/d, within the revised FY22 guidance of 33,000-36,000 boe/d. The Joint Venture drilled fewer development wells than originally planned and targeted oil versus higher rate, lower value gas. The Teen gas condensate project start-up was also delayed from 2022 to 2023 and some gas wells performed below expectations. YE22 net cash was US$597 mm.

Tag Oil (TAO CN): Operating update in Egypt - Tag held C$21.4 mm in cash at the end of September. The flow-back and initial production cycle for well BED 1-7 in the Badr Oil Field is projected in March.

TotalEnergies (TTE FP): Acquiring upstream assets in Abu Dhabi - TotalEnergies is acquiring a 20% WI in the Satah Al Razboot , Umm Lulu, Bin Nasher and Al Bateel offshore concession and a 12.88% indirect interest in the Mubarraz concession from CEPSA.

SUB-SAHARAN AFRICA

Africa Oil (AOI SS/CN): 4Q22 results and reserves update in Nigeria – 4Q22 WI production was 21.3 mboe/d. YE22 net debt was US$225 mm. YE22 2P reserves were 55.6 mmboe (YE21: 72.8 mmboe). FY23 production is expected to stand at 18.5-21.5 mboe/d. Net to the Company's 50% shareholding, Prime's 2023 capital investment is expected to be in the range of US$80-$100 mm. Africa Oil Company has recognized an impairment to its carrying value for Project Oil Kenya.

Aminex (AEX LN): Accelerating production in Tanzania – First gas at Ruvuma is now expected in October.

BW Energy (BEW NO): 4Q22 results – First oil at Hibiscus/Ruche in Gabon continues to be expected in late 1Q23. BW was estimated to hold 2P+2C reserves and resources of 428 mmboe at YE22. This includes 99.1 mmbbl in the in the Dussafu license, 138.8 mmbbl in the Maromba license, and 190.3 mmboe contingent resources in the Kudu license. First oil at Maromba in Brazil is expected in 2H26.The company held ~US$45 mm of net cash at YE22.

Kosmos Energy (KOS LN): 4Q22 results – 4Q22 production was 58.7 mboe/d including 34.3 mbbl/d in Ghana, 15.7 mboe/d in the USA and the balance in EG. YE22 2P reserves were 550 mmboe. YE22 net debt was US$2.1 bn. At the Jubilee Southeast development, the results of three wells drilled in December and January were above expectations with additional reservoirs penetrated, and the primary horizons indicating connectivity to the main Jubilee field, which should support higher recovery from the field in the future. First gas in Mauritania and Senega is expected in 4Q23. Kosmos expects to spend US$700-750 mm in 2023.

Orca Energy (ORC.A/B CN): Reserves update in Tanzania – YE22 2P reserves have been estimated at 167 bcf (YE21: 188 bcf).

San Leon Energy (SLE LN): Licence uncertainty – Press reports in Nigeria allege that NNPC has taken over the operatorship of OML18. Eroton E&P denes the report.

Seplat Energy (SEPL LN): 4Q22 results. Special dividend – 4Q22 production in Nigeria was 46.4 mboe/d. YE22 production was 53 mboe/d with 90% of oil production evacuated through the Amukpe to Escravos pipeline rather than the Trans Forcados. 4Q22 pduction at OML 40 was impacted by a 39-day outage of the Forcados Oil Terminal and Trans Escravos Pipeline. YE22 net debt was US$36 mm. YE22 reserves were estimated at 438 mmboe (YE21: 457 mmboe) with 2C resources of 70 mmboe. FY23 production is expected to be 45-55 mboe/d with US$160 mm capex. The ANOH gas processing plant is now expected to be onstream in 4Q23. The company has announced a US$0.05 per share special dividend in addition to the final dividend of US$0.025 per share.

EVENTS TO WATCH NEXT WEEK
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07/03/2023 – GeoPark (GPRK US): FY22 results