Auctus on Friday - 02/02/2024
AUCTUS PUBLICATIONS________________________________________
ADX Energy (ADX AU)C; target price of A$0.65 per share: Operations on track – 4Q23 production was 218 boe/d as Anshof did not contribute to production during the quarter (in line with previous indications). Commercial production at Anshof is expected to restart in March after the commissioning of a permanent production facility. ADX held ~A$8 mm in cash as at YE23. Drilling at the high impact Welchau-1 well targeting between 365 bcf and 1,128 bcf gross prospective resources is expected to commence in February. The drilling rig is expected to become available to ADX at the end of next week. The well will be spudded after mobilisation and rig assembly which will take approximately 7 days after the release of the rig. The success case drilling programme is expected to take ~39 days. The planned Anshof-1 development well could be replaced by a sidetrack of Anshof-2. The replacement of the Anshof-1 well with an Anshof-2 sidetrack would reduce the cost to develop this part of the field and allow to retain the Anshof-1 well slot for a future well. Drilling of the first gas prospect in the ADX-AT-I licence is still expected in 2H24. Two prospects are under consideration: LICHT (already permitted with 16 bcf of best estimate gross prospective resources) and IRR (permitting ongoing with 38 bcf of best estimate gross prospective resources).
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Calima Energy (CE1 AU)C; target price of A$0.13 per share: Divestment of Canadian business on track – All the conditions precedent for the divestment of Blackspur, except for shareholder approval, have been met, and Calima anticipate the closing of the transaction around 26 February.
Chariot (CHAR LN)C; target price of £0.50 per share: Onshore drilling to start in 1Q24 – Drilling at Loukos in Morocco is expected to start around the end of 1Q24 with Chariot expecting the imminent approval of environment permit for up to 20 drilling locations. The company has secured the 101 rig, which is already operating in the country. The first prospect to be drilled will be Gaufrette (in line with previous indications). A success could unlock 26 bcf of Best Estimate recoverable prospective (gross) resources with an unrisked NAV of £0.06 per share, representing 75% of the current share price. The most likely second prospect to be drilled will be Dartois. A success could derisk 20 bcf of Best Estimate recoverable prospective (gross) resources with an unrisked NAV of £0.05 per share, representing 75% of the current share price. A successful discovery could be brought on stream by YE24. We currently forecast that Gaufrette or Dartois could produce ~5 mmcf/d in 2025, generating US$24 mm of after tax operating cashflow per year with overall development capex of US$28 mm (including exploration drilling).
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Chariot (CHAR LN)C; target price of £0.50 per share: Milestone for the electricity trading business in South Africa – Etana Energy (49% held by Chariot) has signed a PPA with Growthpoint Properties to supply 195 GWh per year of renewable energy. Etana will wheel electricity to their commercial property buildings located in several jurisdictions in South Africa. The electricity that will be wheeled by Etana includes 30GWh per annum of hydroelectric power from Serengeti Energy. The plant is currently under construction and is expected to start production in 2Q25. Etana will be paid a fee for the electricity wheeled through the grid. While the terms of the agreement have not been disclosed this is an important part of the electricity business that Chariot is building. This is also South Africa’s first multi-jurisdiction, multi-building, multi-source renewable energy wheeling arrangement. The electricity trading business is not only expected to enhance the margins of electricity generation but also to enable Chariot to secure interests in further power generation projects by capturing electricity commitments. These electricity generation/trading combined projects could potentially deliver double digit returns; which is much higher than similar projects in Europe. Chariot is already maturing its interest in 4 wind projects totalling a gross 400 MW using the trading business as the enabler that provides access to PPAs with end-users. It is currently meeting banks and other financial institutions to finance its involvement in these projects through project and mezzanine finance at the asset and subsidiary holding level.
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Longboat Energy (LBE LN)C; target price of £0.60 per share: Completing transactions in Norway – The acquisition of a 4.80% unitised interest in the Statfjord Øst Unit and a 4.32% unitised interest in the Sygna Unit by Longboat JAPEX Norge has been completed. Current production is 370 boe/d. The farm-out transaction of PL1182S and PL1049 has also been completed.
Pulsar Helium (PLSR CN)C; target price of C$0.80 per share: About to start high impact drilling at Topaz - The Jetstream #1 appraisal well at Topaz is expected to commence drilling on 2 February. Drilling and well testing is anticipated to be completed within one month, inclusive of a comprehensive open-hole wireline logging suite. Jetstream#1 will twin the LOD-6 discovery well that encountered a helium-rich gas flow but could not be tested at the time. Our unrisked NAV for the 0.26 bcf of contingent resources of helium at Topaz is C$1.57 per share. The recently acquired passive seismic suggests a potentially much larger prize. 0.3-1.0 bcf of additional resources could add C$1.60-5.25 per share (unrisked).
IN OTHER NEWS
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AMERICAS
Blue Star Helium (BNL AU): Operating update in the USA – First helium production at Voyager is expected during 1Q24. During initial evaluation through the drill pipe at the BBB #33 development well, only limited to no flow was observed from the reservoir. Minimal to no pressure readings have been recorded. These results are under investigations and are not consistent with wireline logging results. This could be due to well bore damage. Blue Star held A$6.9 mm in cash at YE23.
Diversified Energy (DEC LN/US): Operating update in the USA – 4Q23 production was 129.5 mboe/d. The company has a current liquidity of ~US$135 mm.
Galp (GALP LS): 4Q23 update – 4Q23 production was 126.8 mboe/d including 117.2 mboe/d in Brazil.
Royal Helium (RHC CN): Approved to receive investment from Canadian government – Royal has been approved to be a recipient of a contribution of C$3mm from the Government of Canada under its Aerospace Regional Recovery Initiative. Repayment of the contribution will commence on April 2025 and will thereafter be amortized with 60 equal monthly interest free payments.
Seacrest Petroleo Bermuda (SEAPT NO): Cancellation of equity raise – The offering of US$6.1 mm new shares at a price of NOK9 per share has been cancelled.
The Parkmead Group (PMG LN): Update in the Netherlands – Gas production from the LDS-01 discovery well has consistently produced at average rates of close to 5,000 boe/d (gross) and upwards of 370 boe/d (net) to Parkmead throughout November, December and in the year to date.
Trinity Exploration & Production (TRIN LN): Operational update in Trinidad – Trinity expects to produce 2.6 2.7 mbbl/d in 2024 with US$7-8 mm capex.
Union Jack Oil (UOJ LN): Entry in the USA – Union Jack has acquired three mineral royalty packages in the Permian including the Cronus Unit (a 25 well package), the Powell Range Unit (15 wells) and the Palm Springs unit (10 horizontal wells). The total consideration for the transaction was US$854,070.
ASIA AND AUSTRALASIA
Conrad Asia Energy (CRD AU): Operating update in Indonesia. Raising new equity – The capex for the Mako gas project is now estimated at US$325 mm (and US$250 mm until initial revenue). The deadline for finalising a binding gas sales agreement is now the end of 2Q24. Negotiating commercial and legal terms to access the West Natuna Transportation System is also taking longer than expected. The FID for Mako is expected to be delayed to mid 2024 with first gas also delayed until mid 2026. Coro Energy (CORO LN) and Empyrean Energy (EME) hold respectively 15% and 8.5% in Mako. Conrad is also raising A$15 mm of new equity priced at A$0.95 per share.
Jadestone Energy (JSE LN): Operating update – FY23 production was 13,813 boe/d, including 3,655 boe/d at Montara, 2,672 boe/d at Stag and 4,288 boe/d in Malaysia. Net debt at YE23 was US$4.2 mm. The start-up of the Akatara development in Malaysia remains on track for 2Q24.
OMV (OMV AG): Selling stake in Malaysia business – OMV is selling 50% in SapuraOMV to TotalEnergies for US$903 mm. SapuraOMV’s main assets are its 40% operated interest in block SK408 and 30% operated interest in block SK310, both located offshore Sarawak in Malaysia. In 2023, SapuraOMV’s operated production (100%) was approximately 500 mmcf/d of natural gas, feeding the Bintulu LNG plant, as well as 7 mboe/d of condensates. On block SK408, the development of the Jerun gas field is on track for startup in 2H24.
EUROPE
Licences award in the UK – A total of 24 licences were awarded to a group of 17 companies including Shell, Equinor, bp, TotalEnergies, Dana Petroleum, EnQuest, Apache, NEO Energy and Harvester Energy. Deltic Energy (DELT LN) has been provisionally awarded two licences over three part blocks (22/24f (part) & 22/25e (part) and 29/4b) covering ~226 km2. Orcadian Energy (ORCA LN) will be offered a 50% interest in two licences in the Central North Sea, one in partnership with Parkmead Group (Flynn), and the other in partnership with Triangle Energy (Mid-North Sea High).
OKEA (OKEA NO): Trading update in Norway – 4Q23 production in Norway was 30,082 boe/d. Net cash at YE23 was ~NOK1,050 mm.
OMV (OMV AG): 4Q23 results – 4Q23 adjusted net income was EUR665 mm with 364 mboe/d production. OMV expects to spend EUR3.8 bn in capex in 2024 and produce 330-350 mboe/d.
Shell (SHEL LN): 4Q23 results – 4Q23 adjusted earnings were US$7.3 bn with 2,653 mboe/d production. The quarterly dividend is increased by 4% and Shell will launch a US$3.5 bn buyback programme in 1Q24. Shell held 9.8 bn boe of 1P reserves at YE23, representing a reserves Replacement Ratio of 120% during 2023. The company expects to spend US$22-25 bn in capex in 2024.
FORMER SOVIET UNION
Cadogan Energy (CAD LN): Operating update in Ukraine – FY23 production was 326 bbl/d.
Condor Energies (CPI CN): Award of production enhancement contracts in Uzbekistan – Condor has entered into a production enhancement contract with the Uzbekistan government to increase the production and overall recovery rates from an integrated cluster of eight conventional natural gas-condensate fields in the country.
Nostrum Oil & Gas (NOG LN): Operational update in Kazakhstan – FY23 sales were 8,874 boe/d. In December, Nostrum received first gas from the Ural OG Rozhkovskoye field U-21 well for treatment into Nostrum's gas processing facility. Nostrum held US$161 mm in cash at YE23 (US$25 mm unrestricted). FY24 production at Chinarevskoye is expected to average 7-8 mboe/d.
MIDDLE EAST AND NORTH AFRICA
Gulf Keystone Petroleum (GKP LN): Operating update in Kurdistan – FY23 gross production was 21,891 bbl/d. Gross production so far in January 2024 has averaged 21.6 mbbl/d. The company had US$82 mm in cash at YE23 and no debt. The Kurdistan Regional Government owes US$151 mm net for October 2022 to March 2023 export sales. FY24 net capex is estimated at US$20 mm.
EVENTS TO WATCH NEXT WEEK
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06/02/2024: Tethys Oil (TETY SS) – FY23 results
06/02/2024: bp (BP LN) – FY23 results
08/02/2024: Aker BP (AKERBP NO) – FY23 results
08/02/2024: OKEA (OKEA NO) – FY23 results
Antares Energy is an exploration and production company pursuing oil and gas opportunities located onshore Texas in the U.S. Co.'s principal activity includes hydrocarbon production and exploration. Co. has exploration leases for the following projects located in in Texas: Oyster Creek, Southern Star, Big Star, Northern Star, and Hawkville. As of Dec 31 2012, Co.'s estimated total proved reserves were approximately 15.2 million barrels of oil equivalent (MMboe), proved and probable were approximately 53.2 MMboe and proved, probable and possible were approximately 66.8 MMboe.
Cadogan Petroleum is engaged in oil and gas exploration, development and production. Co. also conducts gas trading and provides services to other operators.
Calima Energy and its subsidiaries are engaged in investing in oil and gas exploration and production projects internationally and more specifically in West Africa.
Chariot Oil & Gas is an independent oil and gas exploration company focused offshore in West Africa with a portfolio of assets located in the under-explored regions of Namibia, Mauritania and Morocco.
Coro Energy is engaged in the exploration for and production of liquid and gaseous hydrocarbons in the Lombardy and Emilia Romagna regions of the broader Po-Veneto plain within the territory of the Italian Republic.
Cluff Natural Resources invests in global resources opportunities with a primary focus on U.K. based upstream energy projects. Co.'s principal activity is the exploration, evaluation and development of mineral exploration targets. As of Dec 31 2016, Co. held a 100% interest in two gas licenses in the Southern North Sea.
Diversified Gas & Oil is an Appalachian Basin focused natural gas and crude oil operations company.
Empyrean Energy is engaged in the business of financing the exploration, development and production of energy resource projects in regions with energy hungry markets close to existing infrastructure. Co. is focused on non-operating working interest positions in projects that have drill ready targets that substantially short cut the life-cycle of hydrocarbon projects by entering the project after exploration concept, initial exploration and drill target identification work has been completed.
Galp Energia is a holding company. Through its subsidiaries, Co. operates in the following segments: exploration and production, with activities relating to exploration, development and production of hydrocarbons, particularly in Angola, Brazil and Mozambique; refining and marketing, which owns refineries in Portugal and also includes activities relating to the retail and wholesale commercialization of oil products; and gas and power, which covers the purchasing, commercialization, distribution and storage of natural gas and electric and thermal power production. As of Dec 31 2014, Co. had proved and probable reserves of 638.0 million barrels of oil equivalent.
Jadestone Energy is engaged in the evaluation, acquisition, exploration and development of oil and gas properties.
Longboat Energy PLC, formerly Longboat Energy Ltd, is a United Kingdom-based investment company. The Company's investment objectives is to create a full-cycle North Sea exploration and production (E&P) company in order to deliver value to investors.
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).
Parkmead Group is an independent oil and gas exploration and production company. As of June 30 2017, Co. produced gas from a portfolio of four fields across the Netherlands and held oil and gas interests spanning 26 exploration and production blocks.
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.
Union Jack Oil is an onshore oil and gas exploration and production company with a focus on drilling, development, investment and production in the U.K. hydrocarbon sector.
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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