Auctus on Friday - 24/11/2023

AUCTUS PUBLICATIONS
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ADX Energy (ADX AU)C; target price of A$0.80 per share: Equity raise to fund increased WI in Anshof – ADX is raising A$4.2 mm of new equity plus up to A$1 mm through an offer to shareholders at a price of A$0.10 per share. Subscribers will also receive half a warrant with an exercise price of A$0.16 per share. The capital injection will provide funding for ADX’s increased interest in Anshof (from 50-60%) following the decision of Xstate Resources not to participate in the upcoming programme as well as funding for the Welchau-1 gas well (50% funded by MCF Energy) which ADX expects to spud in January 2024 after an anticipated environmental clearance. MND now holds 40% in Anshof-2. Our target price of A$0.80 per share represents ~8x the current share price.
See website for full report

Sintana Energy (SEI.V CN)C; target price of C$0.90 per share: Drilling underway at PEL83. Chevron reported to drill up to 10 wells at PEL90 from 4Q24 – Galp Energia has spudded an exploration well at PEL83. This is the first well of an extensive drilling schedule for Sintana that will cover three different blocks, all with different partners. Chevron is also reported to start drilling at PEL90 in 4Q24. The company could drill up to 10 exploration wells on the licence. At US$125 mm per well, this would suggest up to ~US$1.2 bn total drilling cost. The value of the licence has to at least justify the drilling cost and a drilling programme of that magnitude would suggest a readthrough value of US$60 mm for Sintana’s 4.9% interests in PEL90. This is in addition to the US$8 mm seismic carry provided by Chevron to Sintana for a total readthrough value of US$68 mm for Sintana’s interests in PEL90, which is above the current market cap of the company. Our unrisked NAV for Sintana’s interests in PEL83 and PEL90 is C$0.68 per share (for each licence) based on the readthrough value from the recent equity financing of Impact Oil & Gas on PEL56 (Venus discovery operated by Total).

IN OTHER NEWS
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AMERICAS

Colombia: Fiscal regime sweetener – The ban to deduct royalty from taxable income is being annulled by Colombia Constitutional Court.

Helium Evolution (HEVI.V CN): Helium discovery in Canada – Joint Well #1 in Saskatchewan flowed 1.3 mmcf/d on test with 0.85% of helium. The company believes that the deliverability of Joint Well #1 could potentially increase by four to six times with stimulation. The company held C$7.1 mm in cash at the end of September.

NG Energy International (GASX CN): Well results in Colombia - The Aruchara-3 and Aruchara-1 wells flowed 14 mmcf/d from the Jimol Inferior zone during an extended production test.

Pantheon Resources (PANR LN): Strategy update in Alaska – Pantheon intends to take FID on the Ahpun project by YE25, bringing it on stream in 2026. Kodiak could be sanctioned in 2028. The company estimate US$120 mm will be required to bring the project on stream. The total maximum negative cumulative cashflow for the Ahpun development is estimated at ~US$300 mm. The overall development is expected to cost ~US$25 bn with 2,000 wells.

Seacrest Petroleo (SEAPT LN): 3Q23 results – 3Q23 WI production in Brazil was 9,204 boe/d, reaching 10 mboe/d in September. The company now anticipates to produce 7.4-7.6 mbbl/d in 2023 (8.0-8.2 mbbl/d previously) reflecting a temporary reduction in production in November resulting from a combination of weather-related delays to offtakes. A severe drought in the Amazonas resulted in the late cancellation of a major offtake following the declaration of force majeure by the buyer. A three-week period of stormy weather then delayed the replacement offtake. Adjusted net debt at the end of September was US$298 mm.

Trinity E&P (TRIN LN): Disappointing flow test result in Trinidad – Testing of the thin Lower Cruse 3 zone in the Jacobin well is being terminated, as despite clearing the sand blockage, further sand production issues were still experienced. The LC1 upper intervals will now be tested. The upper two zones are well developed oil-bearing sandstone intervals, with thicker net pay zones for testing (with a combined test interval circa five times that tested at the LC3 level), and generally better developed than the deeper reservoir encountered at the LC3 level.

United Oil & Gas (UOG LN): Preferred farm-out counterparty in Jamaica not taking discussions forward – The counterparty that had been identified as a preferred potential partner no longer wishes to pursue further discussions in relation to participation in the Walton Morant Licence.

EUROPE

Ithaca Energy (ITH LN): 3Q23 results – 3Q23 production in the UK was 61.7 mboe/d with YTD production of 71 mboe/d. The company is re-iterating its FY23 production guidance of 68-74 mboe/d. Ithaca’s non-operated assets are performing in line with expectations in the quarter with the exception of Pierce, where operational issues related to the vessel mooring system have temporarily shut down production from the field. The FY23 opex guidance has been lowered from US$560-610 mm to US$525-575 mm. The FY23 capex guidance for Rosebank has been increased from US$63 mm to US$90-110 mm. Adjusted net debt at the end of September was US$677 mm.

KUFPEC: Selling Norway business to PGNiG - KUFPEC is selling all of its assets in Norway to PGNiG Upstream for US$454 mm.

Neptune Energy: 3Q23 results – 3Q23 production was 139.1 mboe/d. The FY23 production guidance is now ~145 mboe/d (150 mboe/d previously). The FY23 capex guidance has been lowered to ~US$350 mm (US$350-400 mm previously) and the exploration and pre-development spend revised to