AUCTUS ON FRIDAY - 10/01/2025

AUCTUS PUBLICATIONS
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Arrow Exploration (AXL LN/ CN)C; Target price of £0.80 per share: Flow rate in line with expectations at AB-1. Two more appraisal wells in January - The AB-1 (Alberta Llanos) exploration well is now on production at an oil rate of 658 bbl/d gross (329 bbl/d net) with 49% water cut from 62 feet of net pay in the Ubaque. The IP rate is in line with the expectations set out in the company’s September corporate presentation (321 bbl/d net). The AB-2 well has reached TD and the logs are being evaluated. The AB-3 well will be drilled immediately upon completion of the AB-2 well. The Guadalupe formation encountered at AB-1 is expected to be tested in the AB-2 or AB-3 wells. Total production in December was 4,899 boe/d with a peak rate of 5,175 boe/d. Our production forecasts are unchanged. Arrow held US$19.1 mm on 1 January 2025, in line with the cash position reported for 1 November 2024.
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New Zealand Energy (NZ CN)C; Target price of C$3.50 per share: Tariki-5A well test performance towards the upper end of expectations - Tariki-5A has been perforated over the top 8 m of the 20 m of gas bearing sands intersected. Gas sales have commenced. The well initially flowed at estimated rates increasing from 2 to 5.5 mmcf/d during clean-up. The full well testing program has only just commenced. While a maximum flow rate test has not yet been carried out, the Tariki-5A well is estimated to be able to deliver ~12 mmcf/d of gas and associated condensate to market through the existing Cheal infrastructure based on wellhead data. This compares with previous indications of “at least 9 mmcf/d” and our conservative forecasts of 8 mmcf/d until the end of June. Gas sales above 6.5 mmcf/d can be sold at spot prices.
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PetroTal (PTAL LN/TAL CN)C; Target price of £1.30 per share: Higher production and cash balance than expected. Adding exploration assets - 3Q24 production was 19,150 bbl/d including 18,938 bbl/d from Bretana and the remainder at Block 131. This performance exceeded expectations, as we had anticipated 17,900 bbl/d for Bretana. FY24 production at Bretana was 17,733 bbl/d, which is above the guidance of 16.5-17.5 mbbl/d. PetroTal held US$115 mm of cash (including US$103 mm of unrestricted cash) at YE24. Including payables and receivables, YE24 working capital was US$112 mm, higher than our forecast of US$107 mm. Well 22H is in production, and Well 23H has been spudded. The drilling programme will be paused in 1H25 as the company focuses on the erosion remediation project. As expected, the acquisition of Block 131 had no material impact on the company’s balance sheet.
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Pulsar Helium (PLSR LN/CN)C; Target price of £0.80 per share: Raising new equity at a premium. Imminent high impact drilling newsflow - Pulsar is raising up to US$7.5 mm of new equity at a price of U$0.38 (£0.30 equivalent) per share which is higher than the closing price of £0.26 per share the day prior to the announcement. University Bank from Michigan will also provide a line of credit of up to US$4.0 mm to Pulsar’s major shareholder ABCrescent enabling ABC to exercise its 15.5 mm share purchase warrants at an exercise price of C$0.36 per share. Overall, Pulsar could receive a total of up to US$11.5 mm in new equity. This funding is anticipated to provide Pulsar with enough capital to fund all activities required to reach FID at Topaz, including (i) the deepening of Jetstream #1 well, (ii) a step out well, (iii) further appraisal wells, (iv) 2D and 3D seismic, (iv) further lease acquisition and (v) reserves and resources certification. With funding now in place, there is no risk of further dilution immediately following the drilling result of the deepening (approx. 500 m) of Jetstream #1. This is a high-impact well that could de-risk some of Pulsar's prospective resources. Our unrisked NAV for the contingent plus prospective helium is £1.64 per share plus £0.74 for the CO2 resources (Pmean in both cases). We have changed our target price to £0.80 per share in line with our ReNAV that incorporates the impact of the placing and warrant exercise.
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Serica Energy (SQZ LN)C; Target price of £3.00 per share: Triton back on stream. Compressor vulnerability to be fixed in 1Q25 – Triton production resumed on 27 December 2024 following a shut-down of about three weeks, within the guidance of two to four weeks. There was brief period of unscheduled downtime at Bruce due to a subsea intervention associated with the Rhum field. Production at Bruce has now resumed. Total FY24 production was 34.6 mboe/d including 25.1 mboe/d in 4Q24. 4Q24 production of 7.3 mboe/d at the “other assets” was particularly high given the contribution from Erskine that restarted production at the end of August. Current total net production stands at 46.4 mboe/d and is expected to increase further with the phased production ramp-up at Triton, including new output from the Gannet GE-05 well (Serica WI: 100%). Back in early October 2024, overall production had already reached 50 mboe/d, excluding the GE-05 well. We currently estimate additional net production of 3 mboe/d from the GE-05 well, though this may be conservative. The recent B6 well had a net IP rate of over 5 mboe/d (~8 mboe/d gross) when brought online. Drilling at the EC1 well on the Guillemot North West field (Serica WI: 10%) has been completed, with production expected to commence in 1Q25. We anticipate it will add 300 boe/d net to Serica. The second compressor at Triton continues to be expected to be repaired in 1Q25. This is crucial as it will provide redundancy and address operational vulnerabilities at Triton.
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Sintana Energy (SEI.V CN)C; Target price of C$1.85 per share: Mopane-2A encounters gas condensate in the sweet spot plus a new light oil reservoir – The Mopane-2A well at PEL-83 found a hydrocarbon column of gas-condensate in AVO-3 with a thin net pay in the reservoir sweet spot. Encountering AVO-3 at Mopane-2A confirms the lateral extent of the reservoir. The thin net pay is in line with the geological model. The presence of condensate in high quality reservoir with minimal CO2 and no H2S is another positive. The well also discovered a hydrocarbon column of light oil in a smaller high quality reservoir, AVO-4. While AVO-4 had been mapped at Mopane-2A, its presence was unconfirmed. This is a positive outcome. There is minimal CO2 and no H2S. The presence of liquids in this reservoir boosts the value of the block for potential farm-in partners. The successes at Mopane-1A and Mopane-2A reduce the uncertainty associated with the development. This is important for Galp’s ongoing farm-out process. We value Sintana’s interest in Mopane at C$1.08 per share. The rig will now drill the Mopane-3X well. This is an exploration well that will target two large stacked prospects, AVO-10 and AVO-13, in the south east of PEL-83. Results are expected in early February. Chevron has spud the Kapana-1X exploration well on PEL 90. We estimate the additional unrisked value of the upcoming drilling at PEL 83 (Galp), PEL 90 (Chevron), and PEL 87 at C$2.80 per share.
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Valeura Energy (VLE CN)C; Target price of C$11 per share: >US$100 mm cash build during 4Q24. All eyes on the reserves update in February - Record 4Q24 production was 26.1 mbbl/d, which is in line with our expectations. Net cash at YE24 was US$259 mm, exceeding our forecasts by US$34 mm. This reflects a 0.56 mmbbl reduction in oil inventory during 4Q24 (1.2 mmbbl at the end of September versus 0.64 mmbbl at the end of December). Valeura’s net cash balance increased by ~US$100 mm during 4Q24, representing over 18% of the company’s market cap. This highlights the company’s business model and the cash flow generating potential of its assets.The FY25 production guidance is set at 23-25.5 mbbl/d with US$125-150 mm in capex, plus US$11 mm for exploration drilling. This compares with 22.8 mbbl/d production in 2024. This excludes the capex for the redevelopment of Wassana (FID expected in early 2Q25). The production and development guidance is in line with our expectations (~24.5 mbbl/d and US$130 mm). Incorporating the YE24 net cash balance and the FY25 guidance, we have increased our target price from C$10.00/sh to C$11.00/sh. The YE24 net cash position represents over 45% of the current market cap.
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Zephyr Energy (ZPHR LN)C; Target price of £0.13 per share: Rig mobilised for US well – A rig is being mobilised to site to drill an extended lateral on the State 36-2 LNW-CC-R well. Drilling operations are expected to commence in mid-January. The well will be extended by 5,500 feet. Drilling will take around 30 days.

IN OTHER NEWS
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AMERICAS

Alvopetro Energy (ALV CN): Production update in Brazil – December sales volumes averaged 1,828 boe/d including 10.3 mmcf/d of natural gas.

Diversified Energy (DEC LN/US): Acquisition of US assets – Diversified is acquiring 11 mmboe of PDP reserves and 12 mmcfe/d of Coal Mine Methane production in Virginia, West Virginia and Alabama from Summit Natural Resources for US$45 mm.

Petro-Victory Energy (VRY CN): Partnership with Blue Oak – Petro-Victory and Blue Oak are forming a new Special Purpose Vehicle aimed at acquiring E&P assets and companies in Brazil and Latin America..

ASIA PACIFIC

Coro Energy (CORO LN): Raising new equity and debt restructuring for South East Asia – Coro is raising £1.9-2.0 mm of new equity priced at 1.5 p per share. The proceeds of the raise will provide Coro with sufficient funds to repay its existing convertible loan, continue to develop its pipeline of renewable energy projects in Vietnam and to meet ongoing Duyung PSC (Indonesia) general and administrative expenses. 25% of the existing EUR22.5 mm bond will be converted into equity at a price of 1.5 p per share.

Murphy Oil (MUR US): Discovery in Vietnam – Murphy has made an oil discovery with 370 ft of net oil pay at the Hai Su Vang-1X exploration well in Block 15-2/17 in the Cuu Long Basin, located 40 miles offshore Vietnam. The pre-drill estimates are 170-430 mmboe.

EUROPE

BlueNord (BNOR NO): Operational delays in Denmark – December production was 28.9 mboe/d net to BlueNord including 6.7 mboe/d from the Tyra hub. YE24 production rate at the Tyra hub was 15.0 mboe/d net to BlueNord.

CanCambria Energy (CCEC CN): Raising new equity for Hungary – CanCambria is raising C$3.5 mm of new equity priced at C$0.50 per share. The net proceeds from the offering will further advance the Kiskunhalas Project in southern Hungary. Participants to the offering will also receive one warrant per new share with a strike price of C$0.75 per share.

Kistos (KIST LN): Trading statement in the Netherlands and Norway – FY24 production was 8,050 boe/d. The company held 24.6 mmboe 2P reserves at YE24. FY25 production is expected to be 8-9 mboe/d. The proforma net debt is ~US$45 mm. The Jotun field is now expected to start mid 2025.

Shell (SHEL LN): 4Q24 update – 4Q24 production is expected to be 2,670 – 2,810 mboe/d.

SUB-SAHARAN AFRICA

PetroNor E&P (PNOR NO): Operating update in Congo – 4Q24 WI production was 4,770 bbl/d.

Shell (SHEL LN): Writing down oil discovery in Namibia – The oil discovered on PEL 39 cannot be confirmed for commercial development given low permeability and high gas content.

Tower Resources (TRP LN): Farming out assets in Camaeroon and Namibia – Tower is farming out 42.5% WI in the Thali license in Camerron to Prime in exchange for a US$15 mm cash contribution towards the Thali work programme and drilling of the NJOM-3 well in 2025. Prime will also acquire a 25% WI in PEL96, offshore Namibia for US$2.5 mm in cash. As part of the transaction Tower will issue 5,650 mm shares to Pegasus.

EVENTS TO WATCH NEXT WEEK
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13/01/2025 - Repsol (REP SM): 4Q24 update
14/01/2025 – OMV (OMV AG): 4Q24 trading update
16/01/2025 – PetroTal (PTAL LN/CN): FY25 budget