Auctus on Friday - 29/09/2023

AUCTUS PUBLICATIONS
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Criterium Energy (CEQ CN)C; target price of C$0.45 per share: Transactions repriced on more attractive terms – Criterium has renegotiated the terms of the Mont d’Or (MOPL) acquisition. Criterium will now assume only ~US$25.5 mm of debt rather than ~US$37 mm previously. A US$4.8 mm payment to the lenders and the conversion of US$4.9 mm of debt into equity (US$2.5 mm on completion of the acquisition plus US$2.4 mm in 2025) reduce further the existing debt to ~US$15.8 mm at closing. This is materially lower than the US$19.7 mm of debt under the previous terms. Tourmalet (a subsidiary of Provident Capital Partners, the seller of MOPL) will, as before, be issued US$1 mm in Criterium shares at closing. Criterium is raising new capital of C$15.3 mm, comprising C$10 mm of convertible debt plus C$5.3 mm of new equity. The C$10 mm convertible plus C$2.5 mm of the new equity is being issued to a strategic investor. The C$10 mm convertible carries an interest rate of 14.75% per annum and has a duration of 5 years. Criterium can buy back the convertible after two years and holds a right of first refusal on any conversion. The convertible holder will also be issued 62.5 mm warrants at an exercise price C$0.14/sh. The convertible debt can be converted into equity at C$0.16/sh. The new equity is being issued at a price of C$0.11/sh including one warrant with an exercise price of C$0.14/sh for every new share. As we incorporate the new terms of the transactions and assume the worst case of a full conversion of the convertible debt into equity, we have changed our target price to C$0.45/sh near our new ReNAV.
See website for full report

Longboat Energy (LBE LN)C; target price of £0.60 per share: Repositioning the business – Taking into account the investment by JAPEX to secure 49.9% of Longboat Norge, Longboat plc holds £10.9 mm in cash. This includes £5.3 mm representing Longboat’s share of the cash in Longboat Norge (50.1% of £10.6 mm). The cash consideration to be paid by Longboat Norge for interests in Sygna and Statfjord Øst on completion is expected to be near the headline price of US$12.75 mm announced in July. In the interim period until completion, a five well infill programme has been undertaken to double production to 600 boe/d net to Longboat Norge. Overall, we forecast that Longboat plc will hold ~£4 mm in cash at YE23. The repayment of £32 mm of exploration financing facility held by Longboat Norge due in November will be repaid from the £35 mm Norwegian Government tax rebate due at the same time. The cost of drilling Egyptian Vulture has been written off. This is not a surprise and we had previously eliminated the value of this asset from our ReNAV. The Lotus exploration well is expected to be drilled in 2024. This is the remaining high impact well of the programme with an unrisked NAV of £0.22 per share. The shares continue to trade well below the value of the business based on the Kveikje discovery and Statfjord Øst & Sygna only. With the Norway business being managed through the JV with JAPEX, we anticipate that Longboat business development activities to be increasingly focused on South East Asia..
See website for full report

Pulsar Helium (PLSR CN)C; target price of C$0.90 per share: About to start drilling high impact well – Pulsar has signed a rig contract with Capstar drilling to drill a high impact appraisal well at Topaz. The well will twin an existing well than encountered and flowed helium at high rate (10.5% helium concentration). The program is for one well, with the option to drill a second well at the company’s option. Drilling is expected to start around 10th December. A well test with 2 mmcf/d IP rate (0.2 mmcf/d of helium) would unlock C$0.50 per share and eliminate the development and commercial risk. Such a flow rate is likely to trigger a conversion of some of the 3C Contingent Resources into the 2P Reserves Category. At 5 mmcf/d (0.5 mmcf/d of helium), ~C$1.60 per share would be unlocked (assuming this triggers the entire conversion of the 3C Contingent Resources into the 2P Reserves category); while 10 mmcf/d (1 mmcf/d of helium) has an unrisked NAV of ~C$3.40 per share (on a similar decline rate as for our 5 mmcf/d IP rate case, this would suggest 0.6 bcf recoverable resources).
See website for full report

IN OTHER NEWS
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AMERICAS

ATOME Energy (ATOM LN): Operating update - Phase 1 of Villeta green hydrogen and green fertilizer project is on track to achieve FID by YE23, with construction activities commencing immediately thereafter and the green fertiliser project coming on stream by YE25. The company held US$3.6 mm in cash at the end of June.

Molecular Energy (MEM LN): 1H23 results – 1H23 production in Argentina was 1,559 boe/d. Drilling in Paraguay is expected to commence in October. Net debt at the end of June was ~US$43 mm.

Trinity E&P (TRIN LN):1H23 results – 1H23 production in Trinidad was 2,861 bbl/d. The company held US$11.3 mm in cash at the end of June (and US$2 mm in debt).

Westmount Energy (WTE LN): ExxonMobil and Hess exit Guyana blocks – ExxonMobil and Hess are exiting the Kaieteur Block.

EUROPE

Equinor (RQNR NO): Dry hole in Norway – Well 30/11-15 drilled on the PL 035 was dry.

IOG (IOG plc): Placed in administration. Trading suspended – In line of the underperformance of the IOG developed assets and the resulting creditor position, IOG will be placed into administration. The trading in the company’s shares on AIM will be suspended.

Ithaca Energy (ITH LN)/Equinor (EQNR NO): Authorities sanction new development in the UK – The Rosebank offshore development project (300 mmbbl) operated has been approved by the North Sea Transition Authority.

Kistos (KIST LN): 1H23 results – 1H23 production in the Netherlands, UK and Norway was 9.6 mboe/d. The company held cash of EUR247 mm at the end of June with net debt of EUR42 mm following the assumption of Mime Petroleum’s outstanding bonds. The FY23 production guidance of 8.5-10.5 mboe/d has been re-iterated.

TotalEnergies (TTE FP): Strategy update - TotalEnergies plans to grow hydrocarbon production by 2-3 % per year over the next five years. TotalEnergies expects to distribute about 44% of its operating cash flow in 2023 and has increased shareholder distribution guidance to more than 40% of operating cashflow beyond 2023 while keeping net investments between US$16-18 bn per year over 2024-28.

Trillion Energy (TCF CN): FY24 guidance – Trillion expects to produce 15.4 mmcfe/d gross production in Turkey at YE23. In 2024, the company plans to spend US$35 mm capex and produce 23.1 mmcf/d gross production (11.8 mmcfe/d net production) with an YE24 exit rate of 30.8 mmcf/d (15.6m mcfe/d net).

FORMER SOVIET UNION

Block Energy (BOE LN): Operating update in Georgia/1H23 results – The WR-34Z well has been put in production at a rate of 150 boe/d. The overall production as at 25 September was 684 boe/d. The JKT-01Z well is performing above the mid case reserves while the WR-B01Za performs above the high case of the reserve report. The company held US$0.9 mm in cash and US$19 mm in debt at the end of June.

Caspian Energy (CASP LN): 1H23 results – Caspian held US$0.5 mm in cash at the end of June with net current liabilities of US$13.1 mm. Production in Kazakhstan after the end of June was 1,953 bbl/d.

Petro Matad (MATD LN): Potential drilling delays in Mongolia – The plan to complete the drilling of the Heron 1 well on Block XX before winter is at risk given the slow response of the provincial government. The company held US$0.8 mm in cash at the end of June.

MIDDLE-EAST AND NORTH AFRICA

Gulf Keystone Petroleum (GKP LN): 1H23 results – Gross average local sales were 17.2 mbbl/d in August and 28.8 mbbl/d between 1-24 September. Following recent agreements with buyers, the company has ceased trucking operations and is injecting all crude sales into the pipeline for transportation to a local refinery in Kurdistan. Gross average sales are currently ~33 mbbl/d.

SDX Energy (SDX LN)C: Discovery in Egypt and 1H23 results – The KSR-21 well targeting a prospect in the Hoot formation has encountered gas charged sands within the targeted formation. The well will now be tested. 1H23 WI production was 3,291 boe/d. 1H23 gross production at South Disouq in Egypt was 36.3 mmcfe/d. 1H23 net production in Morocco was 2.3 mmcf/d. SDX held US$6.7 mm in cash at the end of June with net cash of ~US$6 mm.

United Oil & Gas (UOG LN): 1H23 results – 1H23 production in Egypt was 1,051 bbl/d of oil and 93 boe/d of natural gas. FY23 production is expected to be 930-1,030 boe/d. In the UK the current deadline for completion of the divestment of the interests in P2519 licence containing the Maria discovery to Quattro is likely to be extended beyond the current date of 30 September as Quattro have not yet completed their funding process. United held US$0.6 mm in cash at the end of June.

SUB-SAHARAN AFRICA

Bowleven (BLVN LN): Balance sheet update – The company had US$1.25 mm of cash left as at 23 September and believes that its cash resources will currently only allow it to fund the group through to the end of 1Q24. The sale by New Age of its 37.5% stake in the Etinde project in Camerron to Perenco has not been completed yet while the long stop date passed on 30 June.

Savannah Energy (SAVE LN): 1H23 results – 1H23 gross production in Nigeria was 23.5 mboe/d. Net debt at the end of June was US$443.4 mm (up from US$404.9 mm at YE22).

TotalEnergies (TTE FP)/Africa Oil (AOI CN/SS): Namibia update – The Nara-1X well on Block 2912 was dry. The Venus-1X well delivered a positive flow test result. A DST will be run at the Venus-1A appraisal well. Drilling of the Mangetti-1X exploration well located to the north of the Venus structure is expected to commence in October.

TotalEnergies (TTE FP): Selling assets in Angola – Total is selling 40% WI in Block 20 to Petronas for US$0.4 bn.

Wentworth Resources (WEN LN): 1H23 results – 1H23 gross production in Tanzania was 98.2 mmcf/d. The company has re-iterated its FY23 gross production guidance of 90-100 mmcf/d. Wentworth held US$40.7 mm in net cash at the end of March. The long stop date to complete the acquisition of the company by Maurel & Prom has been extended to YE23.

EVENTS TO WATCH NEXT WEEK
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02/10/2023: Repsol (REP SM) – 3Q23 update