AUCTUS ON FRIDAY - 25/10/2024
AUCTUS PUBLICATIONS________________________________________
ADX Energy (ADX AU)C; Target price A$0.75 per share: Welchau test to start on 4th of November. LICHT well to reach main target next week – MCF Energy (the partner of ADX at Welchau) has announced that the well test at Welchau is expected to start on 4th of November. The initial well test results could also be available during November. The full well test operations will last much longer given that there are multiple zones to test. Our unrisked NAV for Welchau is A$1.18 per share. The Lichtenberg-1 exploration well (LICHT-1) has reached a depth of 2,140 m. with the main target reservoir expected at 2,500 m MD. The well total depth is ~2,900 m MD. By the time of the next market update on 29 October, the well could have reached the main target. Although our unrisked NAV for LICHT-1 is only A$0.05 per share, the flow rate could be high (in a success case) with positive impact on near term cash flow; which in turn would give ADX more fire power to explore the basin and appraise Welchau. In addition, LICHT-1 is a play opener that could derisk further follow-on prospects.
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Condor Energies (CDR CN)C; Target price C$5.80 per share: Positive response from first workovers – The initial result of the workover programme in Uzbekistan has delivered results exceeding the company’s expectations. Seven made-in-Canada artificial lift systems (plunger lifts) have been installed in existing wells. The first three wells have been put on production at a much higher flow rates (+100-300%) than prior to the workovers. These three wells have added a cumulative 330 boe/d of incremental production. The four other wells are currently being reactivated and expected to be producing shortly. A second workover rig will begin activities by early November to accelerate production ramp-up. There are >100 wells on Condor’s fields. The company will also perforate by-passed and new gas intervals. A made-in-Canada in-line flow separation system to separate water at the field gathering station is being installed. This is expected to reduce pressure losses in the pipeline and allow for lower well head flowing pressure; which, in turn, is expected to lead to higher flow rates. 3Q24 production was ~10 mboe/d. We forecast 10.8 mboe/d in 4Q24 increasing to ~13 mboe/d in 1Q25 and 15.5 mboe/d in 4Q25.
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GeoPark (GPRK US)C; Target price US$26 per share: High production in Argentina – Argentina is currently producing >12.5 mbbl/d, which is in line with the 3Q24 rate of 12.6 mbbl/d. GeoPark Argentina has received approval from the Argentinian securities regulator to issue up to US$500 mm in debt securities over the next five years, and has obtained an “AA+(arg)” credit rating from Fitch.
Panoro Energy (PEN NO)C; Target price NOK52 per share: Gabon production nears 40 mbbl/d with 3 further wells to come back onstream by YE24 – 3Q24 Gabon gross production was 27,465 bbl/d. The DHIBM-7H well at Hibiscus Northern Flank is now on stream taking overall current gross production in Gabon close to 40 mbbl/d. The current rate is very high when considering that three wells (out of eight in the Hibiscus-Ruche area) are still shut-in. These wells are expected to be onstream by YE24. Conventional ESPs will be installed in these three wells. Two of these wells are having their ESPs replaced while the third well) has never had an ESP installed. We continue to expect corporate production to be over 13 mbbl/d by YE24. The key near-term newsflow is the drilling of the Akeng Deep prospect on Block S in Equatorial Guinea. The well is targeting a 180 mmbbl prospect (Panoro WI: 12%) with an unrisked NAV of ~NOK15/sh. The well is expected to spud in about a week. Given the drilling results in Gabon in 2024, we are anticipating a high Reserves Replacement Ratio in 2024. The current dividend yield is >6.5%. 2025 will be a very different year compared to 2024 with higher production but much lower capex (~ only US$40 mm vs ~US$75 mm in 2024), which leaves ample room for further shareholder distributions.
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New Zealand Energy (N CN)C; Target price C$5.00 per share: Development well to be sidetrack into the main reservoir target – The Tariki-5 development well did not encounter the main reservoir target. The fault delimiting the reservoir is interpreted to be shallower than in the base case. The company will now side track the well to the west.
IN OTHER NEWS
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AMERICAS
Interoil: Production update in Colombia and Argentina – September production in Colombia and Argentina was respectively 480 boe/d and 1,602 boe/d.
Karoon Energy (KAR AU): 3Q24 results – 3Q24 production in Brazil and the USA was 29.1 mboe/d.
ASIA PACIFIC
Award of Small Field Area PSCs in Malaysia – Seascape Energy (SEA LN) and EnQuest (ENQ LN) have been awarded respectively 28% and 42% WI over the DEWA complex cluster off the coast of Sarawak. DEWA is comprised of 12 gas discoveries in shallow water (40-50 metres) near to infrastructure off the coast of Sarawak. The DEWA partnership is anticipated to initially focus on the D30, Danau, D41, D41W, Dana and Dafnah West discoveries which are estimated to contain circa 500 bcf GIIP. A low-cost development plan utilising normally unmanned platforms with minimal processing could support a potential production plateau of up to 100 mmcf/d.
EUROPE
Deltic Energy (DELT LN): Positive well result in the UK and change of strategy – A 160 metre thick section of Leman Sandstone with gas present throughout was encountered at the Selene exploration well. The well will now be logged. The company has decided to extend its area of focus to high impact exploration outside of the UK.
Eni (ENI IM): KKR to buy stake in Eni’s energy transition business/3Q24 results – KKR is taking a 25% stake in Enilive for EUR2.9 bn. 3Q24 adjusted net profit was EUR1.3 bn with 1,661 mboe/d production. The FY24 production guidance has been re-iterated. The share buyback programme for FY24 is now expected to amount to EUR2 bn, up from EUR1.6 bn previously.
Equinor (EQNR NO): 3Q24 results – Adjusted net income for the period was US$2.19 bn with 1,984 mboe/d production. The company will distribute US$0.70 per share in dividend for 3Q24 (US$0.35 per share ordinary plus US$0.35 per share extraordinary).
OKEA (OKEA NO): Operating update in Norway – 3Q24 production was 37,261 boe/d.
Japex: Looking to sell UK asset? –Media reports indicated that Japex is looking to sell its stake in the Seagull field.
Prospex Energy (PXEN LN): Good flow rate and positive well result in Spain – The Virua-1 ST3 has recommenced production. The well has been tested at rates of up to 17 mmcf/d. The Virua-18 well has encountered more hydrocarbon bearing sands than expected. A material upgrade of the recoverable resources estimates is expected. Prospex will receive 14.473% of the production income from the Viura gas field until payback of its initial capital investment from the acquisition in August 2024.
Var Energi (VAR NO): 3Q24 results – Production in Norway in the first nine months of 2024 was 281 mboe/d. The company expects to distribute US$270 mm in dividends for 4Q24 (=3Q24). The adjusted net debt at the end of September was US$4.1 bn. Johan Castberg is on-track for a 4Q24 start-up. Balder X is expected to start production in 2Q25. FY24 production is expected to be 280-290 mboe/d increasing to ~400 mboe/d by YE25.
MIDDLE EAST AND NORTH AFRICA
Tag Oil (TAO CN): Raising new equity for Egypt – Tag Oil is raising C$10 mm of new equity at a price of C$0.21 per share. Participants will also be issued half a warrant for every new share with a strike price of C$0.30 per share. The proceeds of the offering will allow Tag to advance appraisal and development activities in the Western Desert, at both the Badr Oil Field and the new 512,000-acre concession.
SUB-SAHARAN AFRICA
BW Energy (BWE NO): Operating update – WI production in Gabon and Brazil was 20.7 mbbl/d and 5.4 mbbl/d respectively. Net debt at the end of September was US$347 mm.
Seplat Energy (SEPL LN): Receiving ministerial consent for Nigeria acquisition – Consent has been granted by the Minister of Petroleum Resources in Nigeria to proceed with the acquisition of ExxonMobil’s assets in Nigeria.
EVENTS TO WATCH NEXT WEEK
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28/10/2024: Galp Energia (GALP LI) – 3Q24 results
29/10/2024: bp (BP LN) – 3Q24 results
29/10/2024: ADX Energy (ADX AU) – LICHT-1 Well update
30/10/2024: Aker BP (AKERBP NO) – 3Q24 results
30/10/2024: UK Budget
31/10/2024: OKEA (OKEA NO) – 3Q24 results
31/10/2024: Shell (SHEL LN) – 3Q24 results
31/10/2024: Repsol (REP SM) – 3Q24 results
BW Energy Ltd. BW Energy Limited is a Bermuda-based oil and gas company engaged in oil and gas exploration and production activities. The Company is involved in the acquisition, development and production of oil and natural gas fields. It has a diversified portfolio of production and development assets offshore West Africa and Brazil, and holds interests in three hydrocarbon licenses in Gabon, Brazil and Namibia. Its Dussafu Marin Permit and the associated Ruche Exclusive Exploitation Area (EEA) production license are located approximately 50 kilometers (km) off the coast of Gabon. The Ruche EEA covers an area of approximately 850 square kilometers. The Maromba discovery is located approximately 100 kilometers offshore in the southern part of the Campos Basin. The Kudu gas field is some 130 km offshore and covers an area approximately 4,500 square kilometers. The Company's subsidiaries include BW Energy Dussafu B.V., BW Energy Gabon Pte Ltd, BW Energy Gabon SA and BW Energy Holdings Pte Ltd.
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.
Eni is engaged in the oil and gas exploration and production, gas marketing operations, management of gas infrastructures, power generation, petrochemicals, oil field services and engineering industries. Co.'s operations are divided into three segments; Exploration and Production (oil and natural gas exploration and field development and production, as well as LNG operations), Gas and Power (supply, trading and marketing of gas and electricity, managing gas infrastructures for transport, distribution, storage, re-gasification, and LNG supply and marketing), and Refining and Marketing (supply of crude oil, refining and marketing of refined products). Co. maintains operations in 73 countries.
Enquest is an oil and gas production and development company. As of Dec 31 2016, Co.'s principal U.K. assets were its interests in the producing operated oil fields Heather/Broom, Thistle/Deveron, the Dons area, the Greater Kittiwake Area, Alma/Galia and Scolty/Crathes. In addition, Co. had interests in the Kraken development and also a non-operated interest in the producing Alba oil field. In Malaysia, Co.'s operated assets comprise the PM8/Seligi Production Sharing Contract and the Tanjong Baram Risk Services Contract. At Dec 31 2016, Co. had proven and probable reserves of 215.0 million barrels of oil equivalent.
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.
Karoon Gas Australia is an independent oil and gas company. Co. is engaged in the investment in hydrocarbon exploration and evaluation in Australia, Brazil and Peru. Co.'s operations are organized into three areas: Australia exploration, Brazil exploration and Peru exploration. The Australia segment is involved in the exploration and evaluation of hydrocarbons in two offshore permit areas. The Brazil segment is involved in the exploration and evaluation of hydrocarbons in five offshore Blocks. The Peru segment is involved in the exploration and evaluation of hydrocarbons in two Blocks, onshore and offshore.
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.
Okea ASA is a Norway-based oil company engaged in the oil and gas exploration and production industry. The Company contributes to the value creation on the Norwegian continental shelf with development and operation systems through the utilization of the result of previous and ongoing exploration activities in order to bring undeveloped oil on stream in strategic cooperation with service companies. Its services do not involve the exploration for petroleum. The Company operates an office in Trondheim, Norway.
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.
Sintana Energy is a development stage company engaged in oil and gas exploration and development activities in the United States.
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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