Auctus on Friday - 10/11/2023
AUCTUS PUBLICATIONS________________________________________
ADX Energy (ADX AU)C; target price of A$0.80 per share: Rig-up at Anshof-2 – The rig-up at Anshof-2 has commenced with an expected spud date of 11 November. XST (20% WI in Anshof) will not participate in the well. ADX and MND will fund XST’s share of well costs on 50:50 basis and will in turn retain the right to 60% and 40% respectively of production from the well unless XST opts to buy back into the well at a premium of 400% to the well cost.
Panoro Energy (PEN NO)C; target price of NOK50.00 per share: Discovery at Hibiscus South - The DHBSM-1 exploration well at Hibiscus South has encountered 6-7 mmbbl recoverable resources (16 mmbbl in place). Net to Panoro’s 17.5% WI, this represents an addition of ~1 mmbbl. The well intersected ~20 metres of net oil pay in the Gamba formation which is productive at the Tortue and Hibiscus fields elsewhere on the block. The well will be completed and put in production in early 2024. Panoro will now drill another production well. The Hibiscus South discovery showcases the optionality and resources depth at the Dussafu licences where Panoro hold a core development asset and multiple exploration targets. Overall, we estimate that the remaining mapped prospects represent a total of ~37 mmbbl prospective resources net to Panoro. There are options for two further drilling slots at Dussafu that we expect will be exercised once the initial six well campaign is completed.
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Tethys Oil (TETY SS)C; target price of SEK100.00 per share: All eyes on Block 56. Upcoming high impact drilling at Block 58 in early 2024 - Net cash of ~US$28 mm at the end of September was near our expectations (~US$30 mm) but was impacted by a negative working capital movement (-US$1.5 mm). WI production in October at Blocks 3&4 was 8,289 bbl/d and FY23 WI production is expected to be at the lower end of the 9 mbbl/d +/- 200 bbl/d guidance. The reduced FY23 capex guidance of US$81-86 mm had already been announced in August. The key area of focus is Block-56 and the development and commercialization options for the Al-Jumd trend on the Eastern Flank. The duration of the licence has been extended to December 2024. In 4Q23, Tethys will drill the Menna prospect and test the Sarha-3 well. Together with the existing Al-Jumd well, this will define the perimeter of development. A development of the area could be sanctioned in 2024 and would provide additional sources of production that Tethys will operate. Further details on the prospective resources for the Central Area at Block 56 are expected to be disclosed in 1Q24. On Block 58, the very high impact Kunooz (South Fahd) prospect with 123 mmbbl unrisked resources continues to be expected to be drilled in early 2024. Additional prospective resources at South Lahan are expected to be announced soon. Tethys is in discussions with potential farm-out partners which would provide an implied valuation for the block and reduce Tethys’ capex exposure. The total unrisked NAV of the upcoming exploration programme until 1Q24 is ~SEK245/sh.
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VAALCO Energy (EGY US/LN)C; target price of US$9.00 per share: Increasing FY23 production guidance… Again - 3Q23 NRI sales volumes were 19.7 mboe/d, near previous indications. 4Q23 WI production is expected to stand at 22.9-24.6 mboe/d with Egypt (11.1-11.8 mbbl/d) and Gabon (9.4-10.1 mbbl/d) expected to be particularly strong. We are increasing our forecast from 23.2 mboe/d to 23.8 mboe/d. VAALCO has again increased its FY23 production guidance from 22.20 24.30 mboe/d (mid-point of 23.25 mboe/d) set in August to 23.45-24.40 mboe/d (mid-point of ~23.9 mboe/d). The FY23 production guidance had been previously increased from 20.4 24.4 mboe/d (mid-point of 22.4 mboe/d). The production guidance increase reflects better than expected drilling results and performance in Egypt and Canada and better uptime in Gabon (97% in 2023 versus 85% in 2022). VAALCO held US$103 mm in cash and cash equivalents at the end of September, in line with previous indications. The company generated US$57.2 mm of free cash flow during 3Q23. VAALCO continues to receive US$ payments in Egypt and the Egyptian receivables have been reduced by ~US$18 mm to ~US$19 mm. In addition, VAALCO continues to be owed ~US$50 mm for a share of Egyptian production over a period of time since the effective date when the licences were restructured under new terms.
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IN OTHER NEWS
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AMERICAS
88 Energy (88E LN/88E AU): Resources estimates in Alaska – The BFF reservoir at Project Phoenix is estimated to hold 250 mmboe of gross 2C contingent resources including 136 mmbbl of liquids.
Alvopetro Energy (ALV CN): 3Q23 results – 3Q23 sales in Brazil were 1,696 boe/d increasing to 1,839 boe/d in October. Working capital surplus at the end of September was US$11.4 mm. The BL-06 well on the Bom Lugar field was brought in production at a current oil rate of 14 bbl/d.
Canacol Energy (CNE CN): 3Q23 results – 3Q23 sales in Colombia were 178.2 mmcf/d. October sales were 170 mmcf/d. Net debt at the end of September stood at US$610 mm.
Frontera Energy (FEC CN): 3Q23 results and positive drilling results in Guyana – 3Q23 production in Colombia and Ecuador was 40,802 bbl/d. Net debt (excluding unrestricted subsidiaries) at the end of September stood at US$272 mm. Frontera intends to start a share buyback programme for up to 10% of the issued shares of the company. The Wei-1 well on the Corentyne block in Guyana discovered 114 feet of net pay. This includes 13 feet in the Maastrichtian (high quality sandstone reservoir with rock quality consistent with Liza) and 101 feet in the Campanian and Santonian horizons with lower permeability.
i3 Energy (I3E LN): 3Q23 update in Canada – 3Q23 production was 21,156 boe/d. The FY23 production guidance of 20-21 mboe/d has been re-iterated.
Maha Energy (MAHA-A SS): Operation update in Brazil – Production in September and October was 2.1 mboe/d
Parex Resources (PXT CN) – 3Q23 production in Colombia was 54,373 boe/d, subsequently reaching ~59 mboe/d. The company had a working capital deficit of US$58 mm at the end of September. Production is expected to exceed 60 mboe/d at YE23.
Royal Helium Corporation (RHC CN): Raising new equity for Canda helium – Royal has raised C$5.175 mm of new equity priced at C$0.24 per unit. Each unit comprises one share and one warrant at an exercise price of C$0.31 per share.
EUROPE
Equinor (EQNR NO): Discovery in Norway – 5-16 mmboe recoverable resources have been encountered at Gina Krog.
Lime Petroleum: Acquiring asset in Norway – Lime is acquiring 17% in the Brasse field from DNO and OKEA with 4 mmboe net contingent resources.
OMV (OMV AG): Deep geothermal investments for Austria – OMV and Wien Energie have established a JV for deep geothermal energy in the greater Vienna area and geothermal plants with output of up to 200 megawatts. The joint investment in the planning of these deep geothermal projects amounts to ~EUR20 mm.
Trillion Energy (TCF CN): Raising new equity for Turkey – Trillion is raising C$10 mm of new equity.
MIDDLE EAST AND NORTH AFRICA
DNO (DNO NO): 3Q23 results – Net 3Q23 production was 37,200 boe/d, with Kurdistan contributing 19,500 boe/d, Norway 14,300 boe/d and West Africa the balance. Production so far in 4Q23 in Kurdistan is averaging double the level of 3Q23. Net cash at the end of September was US$142 mm.
Forza Petroleum (FORZ CN): 3Q23 results – 3Q23 WI production in Kurdistan was 4.2 mbbl/d. The work program for the balance of 2023 remains largely suspended pending reopening of the Kurdistan Oil Export Pipeline and clarity regarding collection of overdue payments. The company expects to spend US$5.7 mm capex in 2024. Forza held US$69 mm in cash at the end of September. A US$76.2 mm deferred consideration is due in connection with the original acquisition of the Hawler license area.
ShaMaran Petroleum (SNM CN): 3Q23 results - Sarsang (Kurdistan) gross production was 27.7 mbbl/d during 3Q23 while Atrush remained shut-in due to a lack of oil storage and trucking facilities. Production restarted on 7 November with sales to a local refinery via pipeline. At 8 November, ShaMaran had cash of US$66.8 mm (including restricted cash of US$20.3 mm), receivables from past oil sales of US$94.9 mm and gross debt of US$293.1 mm. Net debt was US$197.9 mm.
United Oi & Gas (UOG LN): Operating update in Egypt – WI production YTD was 1,024 boe/d. Given the deteriorating macro economic situation in Egypt, no US$ payments have been received since August.
SUB-SAHARAN AFRICA
Afentra (AET LN): Acquisition of Angola assets approved by government – The acquisition of 14% non-operating interest in Block 3/05 and a 40% non-operating interest in Block 23 from Sonangol has been approved by the government.
Kosmos Energy (KOS US/LN): 3Q23 results – 3Q23 production was 68.2 mboe/d including 43.6 mboe/d in Ghana, 15.7 mboe/d in the USA and the balance in Equatorial Guinea. At Jubilee, gross production averaged ~95,900 bbl/d reaching ~100 mbbl/d currently. First gas in Mauritania/Senegal is expected in 1Q-2Q24. Kosmos has assumed operatorship of Yakaar-Teranga and increased its interest in the field to 90% (from 30%) following BP’s exit from the field. Net debt at the end of September was US$2.25 bn.
Shell (SHEL LN): Exploration budget for Namibia – ~25% of Shell’s global deepwater exploration spend will be directed to Namibia.
EVENTS TO WATCH NEXT WEEK
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13/11/2023: PetroTal (PTAL LN/TAL CN) – 3Q23 results
13/11/2023: Valeura Energy (VLE CN) – 3Q23 results
14/11/2023: Africa Oil (AOI CN/SS) – 3Q23 results
14/11/2023: Maha Energy (MAHA-A SS) – 3Q23 results
15/11/2023: Diversified Energy (TETY SS) – 3Q23 update
Alvopetro Energy is a resource company and is engaged in the exploration for, and the acquisition, development and production of, hydrocarbons in the Reconcavo, Tucano, Camamu-Almada and Sergipe-Alagoas basins in onshore Brazil. Co. develops producing hydrocarbons by appraising and developing existing discoveries and exploring in areas considered by management to be prospective for hydrocarbon resources. Co.'s assets consist of interests in three producing fields and 16 exploration blocks comprising 148,500 gross acres onshore Brazil.
Canacol Energy is engaged in core petroleum and natural gas exploration and development activities in Colombia, Brazil and Guyana.
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.
Equinor is engaged in oil and gas exploration and production activities. Co. is primarily focused on exploration, development and production of oil and gas on the Norwegian continental shelf (NCS). Co.'s operations are organized into four segments. The Development and Production Norway and Development and Production International segments explore, develop, produce and extract crude oil, natural gas and natural gas liquids. The Marketing, Processing and Renewable Energy segment markets, trades, transports and processes oil and natural gas and renewable energy. The Other segment consists of global well and project delivery, research and develpoment, and business development.
Frontera Energy is a publicly traded oil and gas company engaged in the exploration, development and production of heavy crude oil and natural gas in Colombia, Peru, Brazil, and Guatemala.
i3 Energy is engaged in the development and production of oil and gas in the UK North Sea. Co.'s strategy is to focus on the development of discoveries located close to existing infrastructure and the exploitation of producing fields, whilst maintaining limited exploration exposure.
Kosmos Energy is a holding company. Through its subsidiaries, the company operates as a deepwater independent oil and gas exploration and production company focused along the Atlantic Margins. The company's assets include production offshore Ghana, Equatorial Guinea and U.S. Gulf of Mexico, as well as gas development offshore Mauritania and Senegal. The company also maintains a sustainable exploration program balanced between proven basin infrastructure-led exploration (Equatorial Guinea and U.S. Gulf of Mexico), emerging basins (Mauritania, Senegal and Suriname) and frontier basins (Cote d'Ivoire, Namibia and Sao Tome and Principe).
Maha Energy AB is a Sweden-based independent, international upstream oil and gas company whose business activities include exploration, development and production of crude oil. It directly operates through Maha Energy Inc in Canada, as well as Maha Energy 1 [Brazil] AB and Maha Energy 2 [Brazil] AB in Sweden. It owns an oil field in Wyoming, the United States. The Company specializes in primary, secondary and enhanced oil and gas recovery technologies, and operates a technical office in Calgary and Alberta in Canada, as well as an operations office in Newcastle and Wyoming in the United States. The Company operates as wholly-owned subsidiaries Gran Tierra Finance (Luxembourg) SARL and Gran Tierra Brazco (Luxembourg) SARL.
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).
Panoro Energy is an international independent oil and gas company engaged in the exploration and production of oil and gas resources in Brazil and West Africa. In Brazil, Co. participates in a number of oil and gas licenses located in the Santos basin outside the south-east coast of Brazil and in the Camamu-Almada basin in the state of Bahia. In West Africa, Co. participates in a number of licences in Nigeria and Gabon. As of Dec 31 2013, Co.'s commercial production is from the Manati field in Brazil.
Parex Resources is engaged in oil and natural gas exploration, development and production in South America and the Caribbean region. As of Dec 31 2010, Co. had gross proved light and medium oil reserve of 1,066 thousand barrels (net: 980 thousand barrels).
Shamaran Petroleum is a Canadian-based oil and gas company engaged in the business of oil and gas exploration and development. Co. is in the pre-production stages of an exploration and development campaign in respect of petroleum properties located in the Kurdistan Region of Northern Iraq.
Tethys Oil AB is a Sweden-based energy company. The Company is focused on oil and gas exploration and production onshore areas with known discoveries. Its core area of focus is the Sultanate of Oman, where the Company holds licence interests in three onshore blocks. Tethys Oil has licences in three countries altogether: Oman, Lithuania and France. Two of the licenses are in production, namely Blocks 3 & 4 in Oman and Gargzdai in Lithuania. During 2013 the Company also had licenses in Sweden, however, they have expired and were not renewed. As of December 31, 2013, the Company had 10 wholly owned subsidiaries active in Sweden, Gibraltar, Switzerland and the British Virgin Islands, such as Tethys Oil Denmark AB, Tethys Oil Spain AB and Tethys Oil Turkey AB, among others.
United Oil & Gas is engaged to take control or investing in businesses within the oil and gas sector.
VAALCO Energy is an independent energy company engaged in the acquisition, exploration, development and production of crude oil. The company is primarily engaged in its Etame Production Sharing Contract related to the Etame Marin block located offshore the Republic of Gabon in West Africa. The company also owns interests in an undeveloped block offshore Equatorial Guinea, West Africa.
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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