AUCTUS ON FRIDAY - 03/05/2024

AUCTUS PUBLICATIONS
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ADX Energy (ADX AU)C; target price of A$0.75 per share: Raising new equity to fund a high impact activity programme – ADX has raised A$13.5 mm of new equity priced at A$0.105 per share. One free-attaching option will be issued for evert two placement shares with an exercise price of A$0.15 per share and an expiry date of 08/05/2026. The proceeds from the raise will fund (1) the production testing of the 450 m gas column encountered at the Welchau exploration well (the well might also be deepened to assess the exploration potential below the current total depth of the well), (2) the residual drilling cost (net of the carry provided by MND) of a gas exploration well on the ADX-AT-I licence, (3) the residual cost (net of the carry provided by MND) of the drilling and tie-in the Anshof-2A sidetrack and (4) upgrades to the gas processing facilities at ADX’s Vienna Basin fields. The company also plans to drill the Anshof-1 development well after the results from Anshof-2A sidetrack well. As we incorporate the impact of the equity funding, we have changed our target price to A$0.75 per share. Our unrisked NAV for Welchau is A$1.13 per share. The 3P reserves upside case at Anshof has an unrisked value of A$0.17 per share.
See website for full report

Arrow Exploration (AXL LN/CN)C; target price of £0.65 per share: Further reserves addition at Carrizales Norte – FY23 production was in line with our expectations and the YE23 cash balance of US$12 mm had been reported previously. The highlight of the announcement is the discovery by the CN-8 well of multiple hydrocarbon-bearing intervals. 14 feet of net oil pay were encountered in the Carbonera in an area that was not considered prospective. The pay zone is a clean sandstone exhibiting consistent 25% porosity and high resistivities. The well has been put in production at a gross rate of 330 bbl/d (165 bbl/d net to Arrow). The result supports the stratigraphic play thesis and is expected to add a material amount of reserves. Pending further details, we have already added 1 mmbbl net resources to our valuation. The CN-7 development well has also encountered multiple hydrocarbon-bearing intervals. The well has been completed in the Carbonera with ~19 feet of net oil pay. The pay zone is a clean sandstone exhibiting consistent 28% porosity and high resistivities. The well has been put on production and is currently producing at 320 bbl/d gross (160 bbl/d net). Arrow is now considering publishing a mid year reserves report including the recent discoveries at CN-5 (Ubaque) and CN-8 (Carbonera). We currently estimate the overall net reserves addition at ~4.3 mmbbl. As we incorporate the CN-8 discovery, we have increased our target price to £0.65 per share.
See website for full report

Chariot Energy (CHAR LN)C; target price of £0.50 per share: Starting drilling onshore Morocco – The Gaufrette well has been spudded. Gaufrette Main target has Best Estimate recoverable prospective resources of 10 bcf. The well will also potentially penetrate a deeper target with additional prospective resources. Drilling success could unlock combined Best Estimate recoverable prospective resources of 26 bcf. Our unrisked NAV for the main target (10 bcf) at Gaufrette is £0.02/sh. Success would also derisk a further ~£0.04/sh. A discovery in the deeper sands could add another £0.02/sh.

Criterium Energy (CEQ CN)C; target price of C$0.30 per share: On track – The work-over programme has started with the first two work-overs having added a total of ~40 bbl/d. The third work-over was not completed as damaged equipment was encountered downhole. The second tranche of work-overs will start in May. Overall, 12-15 work-overs will be undertaken during 2024, at a pace of 2-3 workovers per month, potentially adding a total of 240-300 boe/d. The drilling of new wells is expected to start in 3Q24 at a cost of US$1.8 mm per new well. 10 infill development and infill drilling locations have been high-graded. Each well could add 75-200 bbl/d with a payback of 4-6 months. Importantly, the sale of Bulu continues to make progress. Completing the divestment of this asset would be a rerating event as it would add US$7.75 mm in cash to Criterium’s balance. This is more than the current market cap of the company. This could also allow the company to accelerate the drilling programme. Repaying an additional US$5.5 mm of debt could also trigger a US$3.8 mm debt write down. Production continues to be expected to reach 1.0-1.5 mboe/d by YE24. In addition, the development of the gas could add a further 1.0-1.5 mboe/d from 2025 or 2026.
See website for full report

New Zealand Energy (NZ CN)C: 4Q23 results – 4Q23 production was 20 boe/d. The company held C$1.2 mm in cash at YE23.

Panoro Energy (PEN NO)C; target price of NOK50 per share: Positive update in Gabon - 1Q24 gross production was 24,840 boe/d increasing to 29,800 boe/d to date in 2Q24 (Panoro WI: 17.5%). The increasing production reflects the first Hibiscus South well coming on stream in March and encouraging production performance from two wells on ESP at Hibiscus. A third Hibiscus well continues to produce on natural flow at high rate. We anticipate production will continue to grow given the addition of a recently completed well at Ruche that is expected to be put onstream in 2Q24. The fourth existing Hibiscus well will also be worked-over (with the potential replacement of the ESP) to be brought back to production during the current campaign. Drilling has also started at a new appraisal well at Hibiscus South to test a possible north-eastern extension of the Hibiscus South field. The associated resources are currently classified as 3P reserves (a few mmbbl gross) and could be moved into the 2P reserves category in a success case. In a success case, a production well would be drilled in this area and tied-in to the existing facilities to increase production further. The MaBoMo production facility is being sold for US$150 mm (gross) and leased back. Panoro will receive net sales proceeds of US$26.3 mm. While we estimate that net opex will increase by ~US$3 mm per year, the sale and leaseback provides Panoro with additional cash resources. The increasing production at Dussafu starts to address an important area of uncertainty. As we incorporate lower underlying opex (BW Energy reported US$23/bbl in 1Q24 vs US$28/bbl in 4Q23), the potential 2P reserves upside for the new Hibiscus South appraisal well and the positive impact from the sale and lease back transaction, we increase our target price from NOK47/sh to NOK50/sh. Our unrisked NAVs for the Akeng and Bourdon prospects are ~NOK16/sh and NOK5/sh respectively. See website for full report

Sintana Energy (SEI.V CN)C; target price of C$1.60 per share: Chevron farm-in rerates a new area in Namibia - Chevron is acquiring an 80% WI in PEL82 in the Walvis Basin, offshore north Namibia. As a result of the transaction NAMCOR and Custos’ 10% (each) residual interest will be carried. Sintana holds 49% of Custos. The Orange Basin’s acreage is now in the hands of multiple large companies. As Chevron looks to expand its footprint in the country and explore other opportunities, the company could have been attracted by PEL82 because of the extensive G&G data available on the licence. PEL82 is the most “advanced opportunity” in the Walvis Basin. 70% of the block is covered by 3D seismic (some acquired as recently as in 2018) and two wells have been drilled in the past encountering good quality sands (Murombe-1) and recovering light oil to surface (Wingat-1). The block was previously held by ExxonMobil and Galp until 2021-2022 before the discoveries in the Orange basin. Assuming the carry is similar to PEL90, Custos and NAMCOR could be carried for one exploration well plus one appraisal well. Water depth at PEL82 is similar to PEL83. Assuming a work programme of US$75-130 mm for 1-2 wells would lead to an implied value for the block of US$19-33 mm (80% of the block bought for 20% of the cost of the programme). This leads to an implied value of US$0.9-1.6 mm for Sintana’s 4.9% interest. Adding the value of the carry (4.9% x the cost of the programme) leads to a total value of US$5-8 mm (C$0.02-0.03 per share) net to Sintana.
See website for full report

VAALCO Energy (EGY US/LN)C; target price of US$10 per share: Completing the acquisition of Cote d’Ivoire assets – VAALCO has completed the acquisition of Svenska Petroleum that holds a 27.39% WI in the deepwater producing Baobab field in Block CI-40. The net purchase price was US$40.2 mm in cash. This is in line with our expectations. The company expects the acquisition to pay back by YE24.

Zephyr Energy (ZPHR LN)C; target price of £0.12 per share: Portion of debt exchanged for equity – Zephyr has retired US$3.88 mm of existing debt through the issuance of US$3.88 mm of equity cat a price of 4.85p per share.

IN OTHER NEWS
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AMERICAS

Canacol Energy (CNE CN): Operating update in Colombia – Canacol has sold 60 mm shares in Arrow Exploration for ~US$13.8 mm. Sales in 1Q24 were 150.4 mmcf/d. The Chontaduro 2 appraisal well encountered 88 feet true vertical depth of net gas pay with average porosity of 23% within the primary Cienaga de Oro sandstone reservoir target.

Gran Tierra Energy (GTE CN/US/LN): FY23 results – 1Q24 production in Colombia and Ecuador was 32,242 bbl/d. The company held US$510 mm of net debt at the end of March.

i3 Energy (I3E LN): FY23 results – FY23 production in Canada was 20.7 mboe/d. YE23 2P reserves were 179.9 mmboe. YE23 net debt was US$11.1 mm.

LNG Energy (LNG CN): FY23 results – FY23 production in Colombia was 18.1 mmcf/d plus 193 bbl/d condensate.

Pantheon Resources (PANR LN): Resources update in Alaska - The Alkaid horizon on the Ahpun field is estimated to hold 5 mmbbl and 27 bcf of possible reserves in addition to contingent resources totalling 74 mmbbl of marketable liquids and 396 bcf of recoverable natural gas.

Perenco: Acquisition of Brazil assets – Perenco is acquiring the Cherne and Bagre fields in the shallow waters of the Campos Basin from Petrobras. Perenco plans to restart production from the fields with a target rate of 10-15 mbbl/d.

Touchstone Exploration (TXP LN/CN): Acquiring Trinity E&P (TRIN LN) – Touchstone is acquiring Trinity in an all share transaction. Trinity shareholders will receive ~58.3 mm new Touchstone shares. On completion, Trinity shareholders will own ~19.9%. of the share capital of the combined group. The terms of the acquisition represent a premium of approximately 71.9% to the closing price of Trinity Share on the day prior to the announcement.

ASIA AND AUSTRALASIA

Jadestone Energy (JSE LN): FY23 results – 2P reserves in Australia, Malaysia and Thailand were estimated at 68.0 mmboe (YE22: 64.8 mmboe) with 105.6 mmboe 2C resources. Commercial gas sales from the Akatara gas field are expected to commence before the end of 2Q24. The 2024 production guidance range is narrowed from 20,000-23,000 boe/d to 20,000-22,000 boe/d. The change to the upper end of guidance reflects the production performance during 1Q24. 1Q24 production was 17.2 mboe/d. Net debt at the end of March was US$189 mm but the company received a payment of US$110.5 mm in early April for liftings in March.

Upland Resources (UPL LN): New equity raise for Malaysia – Upland has raised US$4 mm of new equity priced at 3.3p per share to fund the drilling on one well in Malaysia.

EUROPE

Deltic Energy (DELT LN): No farm-in partner at UK discovery – Deltic has not found a farm-in partner for the Pensacola discovery. The company needs to demonstrate its capacity to fund its share of an upcoming well (£15 mm net to Deltic) by the end of May. If an industry and/or funding solution is not in place by that date, Deltic will be required to withdraw from the licence.

Galp Energia (GALP LS): 1Q24 results – 1Q24 production in Brazil and Mozambique was 116 mboe/d.

OMV (OMV AG): 1Q24 results – 1Q24 adjusted net income was EUR0.7 bn with 352 mboe/d production.

Shell (SHEL LN): 1Q24 results – Adjusted net earnings for the period were US$7.7 bn with 2,864 mboe/d production. Shell has launched a new share buyback programme of US$3.5 bn which is expected to be completed by the 2Q24 results announcement.

FORMER SOVIET UNION

Nostrum Oil & Gas (NOG LN): 1Q24 update in Kazakhstan – 1Q24 sales were 10 mboe/d.

SUB-SAHARAN AFRICA

BW Energy (BWE NO): Operating update in Gabon and Brazil – 1Q24 production in Brazil and Gabon was respectively 9,030 bbl/d and 18,260 bbl/d.

Noble Helium (NBE AU): Operating update in Tanzania – Lab results confirm helium concentration of 2.46% in highly permeable reservoirs at the North Rukwa Project’s Mbelele prospect. Detailed analysis and integration of well data indicates the probable free gas cap at Mbelele to be six times larger than originally.

Seplat Energy (SEPL LN): 1Q24 results – 1Q24 production in Nigeria was 49,258 boepd. First gas at ANOH continues to be expected in 3Q24. Seplat had discovered hydrocarbons in previously untested deep reservoirs at Sapele-37 and Okporhuru-9. Net debt at end March was US$385 mm. The company has declared a dividend of US$3.0 cents per share for 1Q24. Domestic gas prices in Nigeria have increased from US$2.18/mcf to US$2.42/mcf. The FY24 guidance of 44,000-52,000 boe/d with capex of US$170 mm – US$200 mm is unchanged.

EVENTS TO WATCH NEXT WEEK
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07/05/2024 – Tethys Oil (TETY SS): 1Q24 results
08/05/2024 – VAALCO Energy (EGY US/LN): 1Q24 results
08/05/2024 – Parex Resources (PXT CN): 1Q24 results
09/05/2024 – Valeura Energy (VLE CN): 1Q24 results
09/05/2024 – PetroTal (PTAL LN/CN): 1Q24 results
09/05/2024 – Canacol Energy (CNE CN): 1Q24 results
09/05/2024 – Frontera Energy (FEC CN): 1Q24 results