AUCTUS ON FRIDAY - 21/02/2025

AUCTUS PUBLICATIONS
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Condor Energies (CDR CN)C; Target price of C$5.60 per share: Very high flow rate at bypassed zone boosts production and unlocks reserves - A potential bypassed 60 m gas pay section, identified using advanced cased-hole logging tools and reprocessed existing 3-D seismic data, was put in production over a 23 m perforated interval at a rate of 1,100 boe/d, increasing to 1,300 boe/d over the past five days as the completion fluid has been recovered. The flow rate is above expectations and unlocks reserves. This result showcases the potential upside at Condor’s Uzbekistan assets. The cost of the work-over was only ~US$0.23 mm. Prior to the work-over, the well was not producing. Assuming US$6/boe netbacks, the well pays back in less than a month. Five additional well candidates have been identified with similar geologic characteristics using a combination of legacy data and reprocessed 3-D seismic data. These will be worked over back to back (2 weeks per well). The arrival of a 3rd work-over rig and a 2nd wireline unit will enable Condor to accelerate production growth. A multi-well vertical and horizontal drilling campaign is also expected to commence in 2Q25. Production has averaged 11,455 boe/d over the last five days. This is the highest reported by Condor. Condor is on track to grow production to 14-15 mboe/d by mid-2025 and 15.5-17 mboe/d by YE25. First LNG sales in Kazakhstan are still expected in 1Q26.
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Corcel (CRCL LN)C; Target price of 1.00p per share: Raising new equity to grow and progress Angola - Corcel has raised £2.72 million of new equity at a price of 0.16p per share, representing a premium of 6.7% to yesterday's close. The company will also issue one warrant per new share with a strike price of 0.225p per share (24-month duration). Following a six-month period, Corcel will have the right to request the warrants to be exercised if the share price is equal to or above 0.30p per share for a period of 25 consecutive trading days. The proceeds from the raise will allow Corcel to (1) increase its interests in the Kwanza basin and (2) progress desktop studies in Angola to commission a new seismic campaign by the end of 2Q25. Exercising the warrants would provide ~£3.8 mm of additional capital which would fund the seismic programme. This programme will boost Corcel's bargaining position with potential farm-in partners. An additional 5% interest in KON-16 has an unrisked NAV of ~0.40p per share (representing more than 2.6 times the current share price). Successful drilling of a post-salt target at KON-16 (~100 mmbbl) could add ~1.00p per share, with a further unrisked value of 3.10p per share for the pre-salt target (~300 mmbbl).
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PetroTal (PTAL LN/TAL CN)C; Target price of £1.30 per share: 208% 2P Reserves Replacement Ratio - YE24 1P, 2P and 3P reserves at Bretana were estimated at 62.9 mmbbl (YE23: 48 mmbbl), 108 mmbbl (YE23: 100.2 mmbbl) and 206.6 mmbbl (YE23: 199.6 mmbbl) respectively. Additionally, Los Angeles is now estimated to hold 5.8 mmbbl of 2P reserves, an increase of 1.5 mmbbl from previous estimates. Overall, the new reserves estimates represent a Reserves Replacement Ratio of 293% for 1P and 208% for 2P reserves. The increase in 1P reserves reflects the conversion of reserves from the 2P and 3P categories, due to a better understanding of well production profiles and the drilling of seven development wells in 2024. The increase in 2P reserves reflects eight additional infill wells and the lateral extension of the field to the west and southwest, following successful appraisal drilling in 2024. We have increased our production profile for 2026-2028 by approximately 20% and incorporated higher capex forecasts until 2030. We assume the remaining 11 wells of the 2P reserve case will be drilled by YE29. We have also revisited our valuation for Bretana based on a production profile that recovers all 2P reserves by YE41. This results in a greater proportion of the 2P reserves being associated with production later in the life of the field, thereby carrying a lower NPV per barrel. We now forecast that PetroTal’s YE28 net cash plus the aggregate dividend distribution over 2025-2028 will exceed the current market cap. At the current share price, the expected FY25 dividend yield is greater than 12%.
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Pharos Energy (PHAR LN)C; Target price of £0.50 per share: MOU with EGPC in Egypt to improve terms and licence duration – Pharos and IPR have signed a non-binding MOU with EGPC to use their best efforts to conclude negotiations for the merger of the El Fayum and North Beni Suef Concession Agreements. While there is limited information at this stage, this is an important step that would unlock further investment through better fiscal terms and longer licence duration. The El-Fayum licence has a current expiry date of 2034 (including a 5 year extension), with 9 years remaining. A typical new licence in Egypt has a duration of 20-30 years, including two five-year extensions. IPR has already signed a third amendment on some of its other licences, which is encouraging regarding negotiations for El Fayum and North Beni Suef. In return for better terms and a longer licence duration, Pharos and IPR will need to commit to new work programs to boost production and unlock reserves and resources.While the amount of US$ receivables remains stable, we note that EGPC is regularly paying contractors. The approval of the new FDPs for TGT and CNV in Vietnam would increase our Core NAV by £0.03 per share. Successful appraisal at TGT and CNV would derisk approximately 5 mmboe of resources, with an unrisked value of £0.15 per share.
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Pulsar Helium (PLSR LN/CN)C; Target price of £0.80 per share: Flow test at Topaz expected in March – The down-hole testing equipment is scheduled to mobilise to the Jetstream #1 and #2 well site on 24 February. The flow rate and bottom-hole pressure testing will occur in March once well head pressures are anticipated to have stabilised. The flow testing will be conducted over a period of up to two weeks for each well. This is a very important well test that will enable the company to assess the commercial potential of the deeper sands at both wells.

Serica Energy (SQZ LN)C; Target price of £3.00 per share: Triton shut down until March: frustrating but unlikely to be too impactful – Production at Triton has been suspended due to issues caused by Storm Éowyn, which resulted in minor damage to one of the cargo tanks. While preparing to conduct repairs, an integrity issue with a coupling in the inert gas line required for purging the tanks was identified. The FPSO remains offline pending identification of the root cause. Production is now expected to restart in mid to late March, but the summer maintenance shutdown could also be longer than the expected 40 days as further safety and integrity investigations are conducted. The FY25 production guidance of ~40 mboe/d is under review. While the shutdown of Triton is likely to impact FY25 financials, this could have limited materiality for several reasons. The FY25 production guidance already factored in 80% production efficiency, including 45 days at Triton (12% downtime) for a total of 68% production efficiency. Assuming two months of shutdown in 1Q25 and a further 1.5 months in 3Q25 implies approximately 70% production efficiency. The FY25 guidance is based on the P90 profile of the new wells. So far, the wells have performed well above expectations, exceeding our assumptions by 60-100%. Production in February (excluding Triton) averaged 27 mboe/d to date. Given the nature of the required work (welding, …), we expect the costs associated with the repairs to be minimal. UK gas prices have been much higher than forecasted so far in 2025 (134p per therm vs. 100p per therm in our model). Even assuming a worst-case scenario of FY25 production in line with FY24 (34.6 mboe/d), this would still lead to operating cashflow (after tax and net of financial costs) of ~US$290 mm. This compares with the FY25 capex guidance of US$240 mm. Given the cash generation to come, it should not be presumed that the dividend will be cut, in our view.
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Zephyr Energy (ZPHR LN)C; Target price of £0.12 per share: Drilling completed in the Paradox. Production test in March – Drilling operations at the State 36-2 LNW-CC-R well have been completed. 97% of the lateral was drilled within the Cane Creek reservoir with elevated mud gas levels with notable peaks throughout the drilling of the Cane Creek reservoir. The results of the production test are expected in March.

IN OTHER NEWS
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AMERICAS

88 Energy (88E LN/AU): Farming out assets in Alaska – 88 is farming out 50% WI in project Phoenix to Burgundy Xploration in return for Burgundy funding up to US$39 mm of total gross future work programme including the drilling of a horizontal well.

Borders and Southern Petroleum (BOR LN): Equity financing for the Falklands – Borders has raised £1.86 mm of new equity at a price of 4.75p per share.

Challenger Energy (CEG LN): Selling Trinidad and Tobago – Challenger is selling its assets in Trinidad to Predator Oil & Gas (PRD LN) and the West Indian Energy Group (WEIGL) for US$6-8 mm. This includes US$0.25 mm in cash, US$0.50 mm in shares and US$0.75 mm in cash in three instalments at YE25, YE26 and YE27. In addition, WEIGL will assume all liabilities (US$4.25 mm). At YE27, an additional payment of up to US$2 mm is contingent of production exceeding 750 bbl/d.

Diversified Energy (DEC LN/US): Raising new equity for US acquisition – Diversified is raising US$123.3 mm of new equity priced at US$14.50 per share. The proceeds will enable the company to repay a portion of the debt associated with the acquisition of Maverick Natural Resources.

Galp Energia (GALP LI): 4Q24 results. Increasing dividend distribution – YE24 net debt was EUR1.2 bn. Galp is proposing a dividend per share increase of 15% to EUR0.62 per share. In addition the company plans to buyback EUR250 mm in shares in 2025.

Pantheon Resources (PANR LN): Convertible financing – Pantheon is issuing a new US$30.5-35 mm three-year convertible bond. The convertible bond will have a coupon of 5.0% per annum. The initial conversion price will be US$0.8675.

ASIA AND AUSTRALASIA

Murphy Oil (MUR US): High flow rate at wildcat in Vietnam – The Hai Su Vang-1X wildcat in Block 15-2/17 has been tested at a facility-constrained flow rate of 10 mbbl/d (37 deg API oil). The reserves associated with the discovery are estimated at 170-460 mmboe.

EUROPE

Eni (ENI IM): KKR increases stake in Enilive – KKR is acquiring a 5% stake in Enilive from Eni. The purchase will be funded through an additional investment of EUR587.5 mm.

Ithaca Energy (ITH LN): FY24 update in the UK – 4Q24 production was 116 mboe/d with peak production of 138 mboe/d. FY24 production is at the higher end of the guidance range. YE24 2P reserves and 2C resources are estimated at 658 mmboe (YE23: 544 mmboe).

Repsol (REP SM): FY24 results and 2025 outlook – FY24 production was 571 mboe/d. FY25 production is expected to average 530-550 mboe/d with EUR3.5-4.0 bn net capex. Repsol expects to distribute EUR0.975 per share in 2025, representing an 8.3% increase compared to 2024 remuneration. The company plans a share buyback programme for a minimum of EUR700 mm.

SUB-SAHARAN AFRICA

Afentra Energy (AET LN): Reserves and resources update in Angola – YE24 2P WI reserves were estimated at 34.2 mmbbl with WI 2C contingent resources of 20.9 mmbbl.

PetroNor E&P (PNOR NO): 4Q24 results – 4Q24 production in Congo was 4,759 bb/d. PetroNor held US$79.7 mm in net cash at YE24.

Woodside Energy (WDS AU): Operating update in Senegal – Early performance at Sangomar has demonstrated very good productivity. This has resulted in proved and proved plus probable reserves additions of 16.2 mmboe and 15.4 mmboe respectively.

EVENTS TO WATCH NEXT WEEK
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24/02/2025 – Gran Tierra Energia (GTE LN/CN/US): 4Q24 results
24/02/2025 – Kosmos Energy (KOS US/LN): 4Q24 results
25/02/2025 – Jadestone Energy (JSE LN): 4Q24 update
25/02/2025 – Panoro Energy (PEN NO): 4Q24 results
27/02/2025 – Maha Energy (MAHA-A SS): 4Q24 results
28/02/2025 – Africa Oil (AOI CN/SS): 4Q24 results