Auctus on Friday - 18/08/2023
AUCTUS PUBLICATIONS________________________________________
ADX Energy (ADX AU)C; target price of A$0.08 per share: Drilling permit at key prospect awarded – The drilling permit for the Welchau prospect (807 bcfe prospective resources) has been awarded. The well is expected to be drilled in 4Q23 after receiving environment clearance. The permit allows drilling and testing of the Welchau-1 well, as well as a longer-term production test if required.
Pulsar Helium (PLSR CN)C; target price of C$0.90 per share: Initiating coverage - Pulsar Helium is a new ~US$22 mm market cap TSX Venture listed helium E&P. Helium has unique properties that make it critical to high growth sectors such as technology and space. Helium has been historically produced as a by-product of natural gas extraction. The rapid dwindling of the world’s largest helium inventories and the fast rise of price indicators have drawn junior companies to the exploration and production of helium. So far most of their focus has been around exploration/appraisal in a few states in the USA, in Canada, Australia, South Africa and, to some extent, Tanzania and France. Pulsar’s assets are located in Minnesota (USA) and Greenland, which are new and less competitive areas but where helium has been encountered in large concentrations. The story benefits from imminent and very high impact appraisal drilling newsflow at a discovery that has already flowed helium at a high rate. Our C$0.90/sh target price reflects our ReNAV. It implies over 3x upside.
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Zephyr Energy (ZPHR LN)C: target price of £0.18 per share: High sales in the Williston. Progress at Well 36 2 (Paradox) hindered by extreme heat – 2Q23 sales volumes averaged 1,385 boe/d compared to 1Q23 sales volumes of 1,093 boe/d as more of Zephyr's existing production wells were changed from temporarily shut-in to producing status during 2Q23. We conservatively forecasted only ~1,050 boe/d for 2Q23. The recently acquired Slawson operated wellbore interests are now fully drilled and completed. Production from these working interests continues to be expected to be online by October following completion of surface facilities on the well pad. Zephyr has decided to participate in the drilling of 10 new wells in a highly attractive part of the Williston Basin, where the initial two wells drilled by the operator in 2021 have been some of the top performers in Zephyr’s non-operated portfolio, paying out in under six months from first production. The net overall capex is ~US$0.2 mm. The new wells are expected to be on stream before YE23 with first revenues ~150 days later. In the Paradox, progress in pulling out the tubing at well 36-2 has been hindered by recent extreme heat with operations limited to nighttime only. The work-over costs have totalled less than U$2 mm so far. All the submitted invoices have been approved by the insurer and reimbursement are regularly received within 30 days of receipt by the insurer.
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IN OTHER NEWS
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AMERICAS
Canadian Overseas Petroleum (COPL LN/XOP CN): 2Q23 results – 2Q23 production in the USA was 1,103 bbl/d. The company held US$5.2 mm in cash at the end of June and US$25.4 mm in outstanding bonds (2027 and 2028).
TomCo Energy (TOM LN): Reserves update in the USA – 2P reserves at the TSHH site have been estimated at 33.6 mmbbl.
EUROPE
Beacon Energy (BCE LN): 2Q23 Positive drilling results in Germany – The SCHB-2(2.) well has encountered good quality oil-bearing reservoirs in the Meletta-Schichten sandstones and the Pechelbronner-Schichten (PBS) sandstones within the Stockstadt Mitte segment of the Erfelden field. Initial evaluation of the logs over the PBS indicates a 34-metre gross interval containing 28 metres of oil-bearing net reservoir, with porosities averaging 18% and up to 28%, all of which exceed pre-drill estimates. These oil-bearing reservoirs were encountered approximately 25 metres higher than prognosis with oil observed on the shale shakers and in the mud pit whilst drilling these intervals. No water-bearing sands were encountered in the Meletta or the PBS intervals.
MIDDLE-EAST AND NORTH AFRICA
DNO (DNO NO): 2Q23 results – The Tawke field has been re-opened with a flow rate of ~40 mbbl/d. One half of the production is delivered to the KRG government with the balance sold locally. The oil is transported by road tankers. Prices average ~50% of pre-closure levels. Peshkabir remains closed. Production in Norway was ~ 10.8 mboe/d in 2Q23 while Cote d’Ivoire averaged 3.5 mbbl/d. Net cash at the end of June was US$177 mm.
Serinus Energy (SENX LN): 2Q23 results – 1H23 production 677 boe/d including 533 boe/d in Tunisia and the balance in Romania. At the end of June, Serinus had a working capital deficit of US$42. mm.
SUB-SAHARAN AFRICA
Africa Oil (AOI SS/CN): 2Q23 results – 2Q23 WI production in Nigeria was 19.5 mbbl/d. The cash position of Prime net to Africa Oil’s 50% shareholding as at the end of June was US$108.8 mm with net debt of US$266.2 mm. Africa Oil's cash and cash equivalents at the same date was US$175.7 mm. The FY23 production and financial guidance is unchanged.
EVENTS TO WATCH NEXT WEEK
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22/08/2023: Nostrum Oil & Gas (NOG LN) – 2Q23 results
23/08/2023: Ithaca Energy (ITH LN): 2Q23 results
24/08/2023: Panoro Energy (PEN NO) – 2Q23 results
ADX Energy is engaged as an oil and gas exploration company. As of Dec 31 2015, Co. operated five oil and gas permits in North Africa and Europe, which under following projects: Kerkouane project located in Tunisia; Pantelleria project, Nilde project and Orlando project, which are located in Italy; and Romania project, which Co. held 50% interest on its project.
Africa Oil is an international oil and gas exploration company based in Canada with oil interests in Kenya, Ethiopia, Puntland (Somalia) and Mali. Co. is an exploration stage enterprise that participates in oil and gas projects located in sub-Saharan Africa.
Canadian Overseas Petroleum is engaged in the exploration and development of oil and gas in the United Kingdom North Sea.
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.
Serinus Energy is engaged in the exploration for and development of oil and gas properties in Ukarine, Brunei and Syria.
TomCo Energy's principal activity is the development of its oil shale leases for future production. Co. holds interests in the following subsidiaries: The Oil Mining Company Inc, which is engaged in the holding of oil shale leases business; Tomco Palm Oil Limited, which explores the viability of establishing a palm oil production company; TomCo I LLC, which is the holding company of TomCo II LLC; and TomCo II LLC, which is engaged in the exploration and extraction of oil and gas through joint investments in oil leases.
Rose Petroleum is an oil and gas (O&G) and mining company with exploration assets and an operational crushing and flotation mill. Co.'s principal activities are the exploration and development of O&G resources together with the evaluation and acquisition of other mineral exploration targets, principally gold, silver, uranium and copper, and the development and operation of mines in Mexico. In Co.'s O&G division, the area of focus is on two unconventional oil and gas basins in the U.S.: the Uinta Basin and the Paradox Basin. In its mining division, Co. continues its milling operations through its subsidiary, Minerales VANE S.A. de C.V., which owns the SDA Mill in Mexico.
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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