Auctus on Friday - 19/05/2023
AUCTUS PUBLICATIONS________________________________________
Arrow Exploration (AXL LN/CN)C; target price of £0.50 per share: Exploration success at Carrizales Norte –The Carrizales Norte-1 (CN-1) exploration well encountered a total of 148 feet of net oil pay measured depth (128 feet TVD) across three very high quality sands. We understand that this well above pre-drill expectations. This is the largest net oil pay encountered by a well so far on Tapir (RCE-5: 90 feet, RCE-4: 45 feet, RCE-3: 58 feet, RCE-2 80 feet, RCS-1: 55 feet). Because the reservoirs encountered at CN-1 are slightly deeper than at Rio Cravo, the pressure of the reservoirs is expected to be higher, resulting in high production rates. The result of the CN-1 well is material for the company as no reserves have yet been booked for the field. We currently carry only 1.8 mmbbl net P50 prospective resources for Carrizales Norte. This is very close to the YE22 net 2P reserves attributed to the Rio Cravo Este field but could be too conservative. We previously only attributed a 50% chance of success to this well. On successful well tests, we anticipate that a significant volume of resources will be converted into 2P reserves, resulting in a substantial increase in the company’s overall 2P reserves. We value Carrizales Norte at £0.08/sh. The result of the CN-1 well also derisks the FY23 production profile with further drilling locations. We continue to forecast YE23 production at ~5 mboe/d. The CN-1 well is expected to start production in June. We have increased our target price from £0.45 per share to £0.50 per share (~our ReNAV).
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Tethys Energy (TETY SS) C; target price of SEK120 per share: Production update in April – Production in April was 9,225 bbl/d.
Valeura Energy (VLE CN)C; target price of C$6.00 per share: Delivering on plan. Already 2.6 mbbl/d production at Wassana – Since production re-start at Wassana on 28 April, 11 of the 13 wells have been brought back into production. Production is gradually ramping up and is already averaging ~2,600 bbl/d. We are increasing our average production forecast for Wassana in 2Q23 from 700 bbl/d to 1,700 bbl/d. Drilling of additional wells at Wassana is expected to start in August with a YE23 exit rate of >5 mbbl/d. Production from the Mubadala assets averaged 20,475 bbl/d in 1Q23 and total production (including Wassana) has recently increased to over 23 mbbl/d. The Nong Yao C development project remains on track to deliver first oil from a new facility in 1Q24. Just under half of the US$180-200 mm FY23 capex programme is associated with production growth with the balance dedicated to production and maintenance activities. The production and maintenance capex is consistent with the US$70-85 mm per year historical capex spent by Mubadala to maintain production and replace 2P reserves year on year. The shares continue to offer deep value, production and cashflow growth with reserves upside. Confirmation that the ~US$300 mm of tax losses associated with Wassana could be applied to the other fields would be a very material impact event.
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Zephyr Energy (ZPHR LN)C; target price of £0.20 per share: Well test at State 36-2 likely during 2Q23 – 1Q23 sales volumes averaged 1,093 boe/d. This was in line with our expectations. 1Q23 sales volumes include 783 bbl/d of crude, 144 boe/d of NGL and ~1.3 mmcf/d of natural gas. 1Q23 operating income was US$5.7 mm, also in line with our expectations. While the recently acquired wellbore interests operated by Slawson Exploration have now been drilled and completed, these wells are now forecasted to be online by October rather than by July. This is due to minor delays related to the completion of surface facilities on the well pad. We now assume that net production from the Williston will decline ~5% per quarter and rebound to ~1.7-1.8 mboe/d in 4Q23 when the Slawson Exploration operated wells come online. Pending further details on the costs of the recompletion of the State 36-2 well and its flow rate, we have not changed our production forecast in the Paradox in 2023. Including the Williston, we now forecast overall FY23 net production of ~1,990 boe/d.
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IN OTHER NEWS
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AMERICAS
Canadian Overseas Petroleum (COPL LN/XOP CN): 1Q23 results – 1Q23 crude sales in the US were 974 bbl/d. Canadian Overseas held US$10.7 mm in cash at the end of March.
Pantheon Resources (PANR LN): Raising new equity for Alaska exploration – Pantheon has raised US$22 mm of new equity at a price of £0.17 per share. The purpose of the fundraise is principally to fund the flow testing of the Shelf Margin Deltaic horizon from the Alkaid #2 wellbore.
ASIA PACIFIC
Conrad Energy (CRD AU): Resources increase in Indonesia – 217 bcf 2C contingent resources (sales gas) have been estimated at Meulaboh and Singkil offshore Aceh.
EUROPE
Angus Energy (ANGS LN): Production update in the UK – Combined production from the Saltfleetby field is now 9.5 mmcf/d. The new B7T well is producing between 4-5 mmscf/d.
Egdon Resources (EDR LN): Cash offer to acquire the company - Petrichor Partners is acquiring Egdon at 4.5 p per share. This represents a 96% premium to the previous day close. Petrichor is part of Explorers Petroleum which is a privately owned by the Yates family of Southeastern New Mexico who have been active in the oil and gas industry since the 1920s.
Orcadian Energy (ORCA LN): UK licence not extended – Orcadian's request to extend Phase A of Licence P2320 has been declined.
Trillion Energy (TCF CN): Drilling results in Turkey – The Bayhanli well has encountered 43 m of net gas pay in 6 sand units of Akcakoca Member.
MIDDLE EAST AND NORTH AFRICA
Energean (EENOG LN): 1Q23 update – 1Q23 production was 94.4 mboe/d. Net debt at the end of March was US$2.4 bn. The FY23 production guidance has been reduced from 131-158 mboe/d to 125-140 mboe/d due to lower sales forecasts in Israel and higher than expected decline from NEA#6 in Egypt. The company continues to expect to deliver 200 boe/d production in the near term. Energean now expects YE23 net debt of US$2.7-2.9 bn (US$2.6-2.8 bn previously).
SUB-SAHARAN AFRICA
Africa Oil (AOI SS/CN): 1Q23 results – 1Q23 WI production in Nigeria was 20.9 mboe/d. Net debt at the end of March was US$161.7 mm.
Tower Resources (TRP LN) : Raising new equity for Cameroon – Tower is raising £2.3 mm of new equity at a price of 0.05 p per share for the preparation of the drilling of the NJOM-3 well.
EVENTS TO WATCH NEXT WEEK
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22/05/2023 – Maha Energy (MAHA-A SS): 1Q23 results
24/05/2023 – Panoro Energy (PEN NO): 1Q23 results
25/05/2023 – Jadestone Energy (JSE LN): 1Q23 results
24/05/2023 – BW Energy (BWE NO): 1Q23 results
Africa Oil is an international oil and gas exploration company based in Canada with oil interests in Kenya, Ethiopia, Puntland (Somalia) and Mali. Co. is an exploration stage enterprise that participates in oil and gas projects located in sub-Saharan Africa.
Front Range Resources is engaged in oil and natural gas exploration and production focusing on horizontal multi-stage frac development in Montney, Bluesky, Wilrich and Falher formations in the Deep Basin area of west central Alberta.
Canadian Overseas Petroleum is engaged in the exploration and development of oil and gas in the United Kingdom North Sea.
Egdon Resources is an onshore U.K. focused oil and gas exploration and production business. As of Jul 31 2017, Co. had net proven plus probable oil reserves of 0.6 million barrels and net proven plus probable gas reserves of 1.18 billion cubic feet.
Tethys Petroleum is an oil and gas exploration and production company focused on projects in Central Asia. Through its subsidiaries, Co. is engaged in the exploration for, and the acquisition, development and production of, oil and natural gas resources in Kazakhstan, Tajikistan and Uzbekistan.
Tower Resources is an oil and gas exploration company Co. is an operator of international licenses with a focus on projects in Africa. Co. has exploration projects in Cameroon, South Africa and Zambia. As of Dec 31 2016, Co. had interests in the following properties: a 50% interest in Algoa-Gamtoos, South Africa; a 100% interest in Thali PSC in the Rio Del Rey basin, offshore Cameroon; and a 100% interest in Block 40 & 41, Zambia. Co. has not yet commenced production.
Valeura Energy is engaged in the exploration, development and production of petroleum and natural gas in Turkey and Western Canada. As of Dec 31 2010, proven gross reserves for light and medium oil was 116 thousand barrels (net reserves of 104 thousand barrels); proven gross reserves for heavy oil was 10 thousand barrels (net reserves of 9 thousand barrels); proven gross reserves for natural gas was 1,047 million cubic feet (net reserves of 938 million cubic feet); and proven gross reserves for natural gas liquids was 26 thousand barrels (net reserves of 19 thousand barrels).
Rose Petroleum is an oil and gas (O&G) and mining company with exploration assets and an operational crushing and flotation mill. Co.'s principal activities are the exploration and development of O&G resources together with the evaluation and acquisition of other mineral exploration targets, principally gold, silver, uranium and copper, and the development and operation of mines in Mexico. In Co.'s O&G division, the area of focus is on two unconventional oil and gas basins in the U.S.: the Uinta Basin and the Paradox Basin. In its mining division, Co. continues its milling operations through its subsidiary, Minerales VANE S.A. de C.V., which owns the SDA Mill in Mexico.
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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