AUCTUS ON FRIDAY - 17/01/2025
AUCTUS PUBLICATIONS________________________________________
Corcel (CRCL LN)C; Target price of 1.00p per share: Initiating Coverage - Corcel is a ~£6 mm market cap AIM-listed E&P company focused on Portuguese-speaking Angola and Brazil. It offers a unique exposure to the prolific Kwanza onshore basin in Angola which reopened to international companies in 2021. Corcel is also building a portfolio of mature onshore producing assets in Brazil. The key asset in Angola is the KON-16 licence, which Corcel operates. The last drilling in this area was in the 1960s. Multiple large shallow and deep prospects have been mapped, and offshore drilling success has validated the pre-salt play expected to continue onshore. An independent resources report could be published in 2025 and Corcel is already looking for farm-in partners. Drilling is anticipated to start in 2H26. Additionally, Corcel holds interests in rare earth metals exploration assets in Australia. Our 1.00p/sh target price reflects our ReNAV. It implies >6.5x the current s/p.
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GeoPark (GPRK US)C; Target price of US$26 per share: Acquisition in Colombia pre-empted - Repsol’s partner in SierraCol Energy Arauca has exercised its preemptive rights to acquire 25% of Repsol’s interest in Llanos Norte.
As a result of the exercise of these preemptive rights, GeoPark will not be able to acquire this asset. We did not carry any value for these assets in our valuation for the company.
PetroTal (PTAL LN/TAL CN)C; Target price of £1.30 per share: High FY25 production driven by high uptime during the dry season and investment – PetroTal expects to produce 21-23 mbbl/d in 2025, with the midpoint of this guidance exceeding our expectations of 21.2 mbbl/d. Although only four new wells are expected to come online in 2025 (including the 23H well but excluding the final well of the FY25 four-well drilling program), average production is expected to grow by ~4.2 mbbl/d from 2024 to 2025. In comparison, six new producers were brought online in 2024 (excluding the 23H well but including the 16H well), but production increased by only ~3.4 mbbl/d from 2023 to 2024. Production is projected to average 20 mbbl/d in 3Q25 and 24.5 mbbl/d in 4Q25, significantly higher than 15.2 mbbl/d in 3Q24 and 19.2 mbbl/d in 4Q24. While FY25 production will include a contribution from the Los Angeles field (we estimate ~1.2 mbbl/d over FY25), the anticipated high production in 3Q25 and 4Q25 suggests effective management of the constraints associated with low river levels during these quarters. This is crucial for future production, as river-related issues have been the main constraints to production increases. The FY25 capex program is set at only US$140 mm, well below our expectations of US$180 mm, which assumed one additional well and more erosion capex. The FY25 capex budget includes the completion of a fourth train at the Bretaña processing facility, adding 8 mbbl/d of oil production capacity to reach 32 mbbl/d. This suggests that production at Bretaña could exceed our estimate of peak production for the field (approximately 25 mbbl/d). Drilling at the Los Angeles field is expected to start around mid-2025, ahead of the rig moving to the Bretaña field. We have increased our valuation for the company based on its 2P reserves alone from £0.93 per share to £1.08 per share. At the current share price, the expected FY25 dividend yield is >12%.
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Pulsar Helium (PLSR LN/CN)C; Target price of £0.80 per share: Better than expected results at Jetstream #1 - The Jetstream #1 well has been deepened by 2,900 feet to 5,100 feet. This is significantly more than the expected ~1,650 feet as the company encountered consistent and regular helium shows while drilling that continued beyond the original expected depth. The mud log gas contained up to 7.2% helium. These samples were diluted by atmospheric air due to the rotary air drilling method used. The helium measurement therefore is likely to understate the real helium concentration. Unaffected samples for laboratory analysis will be acquired. The greater-than-expected thickness of the helium-rich formation could have a positive impact on the scale of the resource. The company will now drill the Jetstream #2 appraisal well ahead of further testing Jetstream #1.
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Sintana Energy (SEI.V CN)C; Target price of C$1.85 per share: Kapana-1X uncommercial but Chevron expects to continue exploration activities – The Kapana 1-X well on PEL-90 did not encounter commercial hydrocarbons.
The rig is likely to be demobilized, but the well’s results have increased confidence in the block. Chevron has indicated that it anticipates further exploration in Namibia. Sintana was carried for this well, but the company will fund its share of future capex on PEL-90. Assuming drilling costs of US$100-150 mm for a new well, this suggests a net capex exposure of approximately US$5-7 mm per well, net to Sintana’s 4.9% share. The company held C$20 mm in cash (with no debt) at the end of September 2024. We have not changed our valuation for PEL-90, where we assume additional wells will be drilled. However, we have deducted the net drilling costs of the next well on the licence that Sintana will have to fund. The results of the Mopane-3X exploration well are expected in early February. This is an exploration well that is targeting two large stacked prospects, AVO-10 and AVO-13, in the south east of PEL-83. Woodside is expected to make a decision about farming-into PEL -87 in early April. Sintana holds a 7.3% net interest in the licence and is carried to FID. The total prize remains unchanged and we view the share price weakness as an opportunity.
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IN OTHER NEWS
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AMERICAS
Parex Resources (PXT CN): Production update in Colombia and FY25 guidance – 4Q24 production was 45,297 boe/d. FY25 production is expected to be 43-47 mboe/d with US$285-315 mm capex.
Seacrest Petroleo (SEAPT NO): Lenders take control of the company’s primary assets in Brazil – The lenders under the US$300 mm Kraken Credit Agreement delivered a notice of acceleration of all indebtedness and took control of the company’s principal assets. The CEO of Seacrest Petroleo has resigned.
ASIA AND AUSTRALASIA
Mosman Oil & Gas (MSMN LN): Selling helium asset in Australia – Mosman is selling its 100% interest in the EP-145 helium licence to Echelon Resources for A$0.4 mm. Mosman will also retain a 5% helium and hydrogen royalty.
EUROPE
Aker BP (AKERBP NO): 4Q24 update. Dry hole in Norway – 4Q24 production in Norway was 449.2 mboe/d. The Rumpetroll South well on PL 869 was dry.
Angus Energy (ANGS LN): 4Q24 update in the UK – 4Q24 production was 5.62 mmcf/ of natural gas plus 125 bbl/d of liquids.
Licence award in Norway – Aker BP (AKERBP NO) has been offered interests in 19 exploration licenses on the Norwegian continental shelf in the APA 2024 licensing round. Var Energi (VAR NO) has been offered interests in 16 licenses, DNO (DNO NO) in 13 licenses, OKEA Energy (OKEA NO) in 8 licenses, and Equinor (EQNR NO) in 27 licenses.
OMV (OMV AG): 4Q24 trading update – 4Q24 production was 337 mboe/d.
Repsol (REP SM): 4Q24 update – 4Q24 production was 554 mboe/d.
FORMER SOVIET UNION
Petro Matad (MATD LN): Operating update in Mongolia – Oil production from Heron-1 is stable at over 200 bbl/d on natural flow. At higher rates, reservoir sands are produced along with the oil. The company is planning to install sand screens.
MIDDLE EAST AND NORTH AFRICA
DNO (DNO NO): 4Q24 trading update – 4Q24 net entitlement production in Kurdistan and Norway was 33,455 boe/d (including 17,424 bbl/d in Kurdistan). WI production in Cote d’Ivoire was 2,988 bbl/d.
ExxonMobil (XOM US): Discovery in Egypt – Media reports highlighted that ExxonMobil has made a large discovery at Nefertari in the Herodotus basin. The prospect was estimated to hold up o 5 tcf (pre-drill).
SUB-SAHARAN AFRICA
BW Energy (BWE NO): 4Q24 trading update – 4Q24 production was 33.7 mboe/d including 27.2 mbbl/d at Dussafu in Gabon and the balance in Brazil. The ESP replacement programme at Dussafu has been completed and gross production in Gabon has reached 40 mbbl/d on 02 January. YE24 net debt was US$342 mm.
TotalEnergies (TTE FP): Discovery in Namibia? – Media reports indicated that the Tamboti-1X exploration well has been successful and encountered hydrocarbons.
EVENTS TO WATCH NEXT WEEK
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20/01/2025 – Criterium Energy (CEQ CN): Trading update
21/01/2025 – Serica Energy (SQZ LN): FY25 budget
23/01/2025 – Pharos Energy (PHAR): Trading update
23/01/2024 – Energean (ENOG LN): Trading update
Aker BP ASA engages in the exploration, development, and production of petroleum resources on the Norwegian Shelf. In addition, Co. has a separate Johan Sverdrup business unit to manage its interest.
Angus Energy is engaged in the on-shore, conventional production and development of hydrocarbons in the U.K.
BW Energy Ltd. BW Energy Limited is a Bermuda-based oil and gas company engaged in oil and gas exploration and production activities. The Company is involved in the acquisition, development and production of oil and natural gas fields. It has a diversified portfolio of production and development assets offshore West Africa and Brazil, and holds interests in three hydrocarbon licenses in Gabon, Brazil and Namibia. Its Dussafu Marin Permit and the associated Ruche Exclusive Exploitation Area (EEA) production license are located approximately 50 kilometers (km) off the coast of Gabon. The Ruche EEA covers an area of approximately 850 square kilometers. The Maromba discovery is located approximately 100 kilometers offshore in the southern part of the Campos Basin. The Kudu gas field is some 130 km offshore and covers an area approximately 4,500 square kilometers. The Company's subsidiaries include BW Energy Dussafu B.V., BW Energy Gabon Pte Ltd, BW Energy Gabon SA and BW Energy Holdings Pte Ltd.
Regency Mines is engaged as a natural resource exploration and development company. Co. manages a balanced portfolio of mineral and oil and gas projects and investments at different stages of development. Co. is active in multiple international locations including the U.K., Papua New Guinea, the U.S. and Greenland.
DNO is a Norwegian exploration and production company focused on the Middle East and North Africa. Co. holds stakes in oil and gas blocks in various stages of exploration, development and production, both onshore and offshore, in the Kurdistan region of Iraq, Yemen, Oman, the United Arab Emirates, Tunisia and Somaliland.
Equinor is engaged in oil and gas exploration and production activities. Co. is primarily focused on exploration, development and production of oil and gas on the Norwegian continental shelf (NCS). Co.'s operations are organized into four segments. The Development and Production Norway and Development and Production International segments explore, develop, produce and extract crude oil, natural gas and natural gas liquids. The Marketing, Processing and Renewable Energy segment markets, trades, transports and processes oil and natural gas and renewable energy. The Other segment consists of global well and project delivery, research and develpoment, and business development.
Exxon Mobil operates or markets products in United States and other countries through its divisions and affiliated companies. The company's business involves exploration for, and production of, crude oil and natural gas and manufacture, trade, transport and sale of crude oil, natural gas, petroleum products, petrochemicals and other products. In United States, the company's development activities are focused on the onshore United States, in the Permian Basin of West Texas and New Mexico and the Bakken oil play in North Dakota. Gas development activities are also focused on the Marcellus Shale of Pennsylvania and West Virginia, the Utica Shale of Ohio and the Haynesville Shale of East Texas and Louisiana.
Mosman Oil and Gas is a New Zealand and Australia oil exploration and development company. Co. is engaged in examining resource opportunities in overlooked and emerging resource areas. Co. objective is to discover economic oil and gas reserves and realize value through the development, joint venture or sale of its oil and gas interests.
Okea ASA is a Norway-based oil company engaged in the oil and gas exploration and production industry. The Company contributes to the value creation on the Norwegian continental shelf with development and operation systems through the utilization of the result of previous and ongoing exploration activities in order to bring undeveloped oil on stream in strategic cooperation with service companies. Its services do not involve the exploration for petroleum. The Company operates an office in Trondheim, Norway.
OMV is an international energy company with activities in Exploration and Production (E&P), Refining and Marketing including petrochemicals (R&M), and Gas and Power (G&P). Co. explores and develops oil and gas resources and supply energy to over 100 million people. OMV has three operating segments: Exploration and Production (E&P), Refining and Marketing, including petrochemicals (R&M), and Gas and Power (G&P), as well as the segment Corporate and Other (Co&O).
Parex Resources is engaged in oil and natural gas exploration, development and production in South America and the Caribbean region. As of Dec 31 2010, Co. had gross proved light and medium oil reserve of 1,066 thousand barrels (net: 980 thousand barrels).
Petro Matad's principal activity consists of oil exploration in Mongolia. Co. is focused on its exploration activities on its Production Sharing Contracts with the Mineral Resources and Petroleum Authority of Mongolia on Blocks IV, V and XX in Mongolia.
Repsol is an oil and gas company. Co. is engaged in all the activities relating to the oil and gas industry, including exploration, development and production of crude oil and natural gas, transportation of oil products, liquefied petroleum gas (LPG) and natural gas, refining, the production of a wide range of oil products and the retailing of oil products, oil derivatives, petrochemicals, LPG and natural gas, as well as the generation, transportation, distribution and supply of electricity. Co. operates in more than 40 countries. Co.'s operations are divided into four segments: Upstream, Downstream, LNG and Gas Natural Fenosa.
Sintana Energy is a development stage company engaged in oil and gas exploration and development activities in the United States.
Total is an international integrated oil and gas company also active in solar and biomass energy sources. Co. engages all aspects of the petroleum industry, including Upstream operations (oil and gas exploration, development and production, and LNG (Liquefied Natural Gas)) and Downstream operations (refining, petrochemicals, specialty chemicals, marketing and marketing and trading and shipping of crude oil and petroleum products). In addition, Co. is engaged in the coal mining and power generation sectors. Co.'s worldwide operations are conducted through three business segments: Upstream, Refining & Chemicals, and Marketing & Services.
Auctus Advisors is a specialist Equity Capital Markets and Advisory business with a focus in the Energy Sector.
The partners have complementary skill sets, with decades of experience across Equity Capital Markets, Investment Banking and the Energy industry. We have worked at Société Générale, Canaccord Capital, BMO Capital Markets and Schlumberger. Most recently we have worked together for many years at GMP FirstEnergy.
Auctus has been set up at the beginning of a new decade in which we see significant opportunities in the Energy space. Globally, demand for energy is at record levels and continues to grow. Conversely, investment in traditional energy sources has been severely constrained. We believe this imbalance creates opportunities for both companies and investors.
Auctus provides Corporate Broking, Equity Research and Investment Banking services.
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