AUCTUS ON FRIDAY - 09/02/2024
AUCTUS PUBLICATIONS________________________________________
Chariot (CHAR LN)C; target price of £0.50 per share: Receiving EIA approval for onshore drilling in Morocco – Chariot has received approval for its EIA for a total of 20 well at Loukos, onshore Morocco. The approval covers the initial drilling campaign of two exploration wells (Gaufrette and Dartois) as well as 17 further well locations and the re-entry of an existing gas discovery. Operations are expected to start at the end of 1Q24 as indicated previously. A success at Gaufrette could unlock 26 bcf of Best Estimate recoverable prospective (gross) resources with an unrisked NAV of £0.06 per share, representing ~70% of the current share price. A success at Dartois could derisk 20 bcf of Best Estimate recoverable prospective (gross) resources with an unrisked NAV of £0.05 per share, representing >55% of the current share price.
Pulsar Helium (PLSR CN)C; target price of C$0.80 per share: High impact well spud at Topaz – Drilling at the Jetstream #1 appraisal well at Topaz has commenced. Our unrisked NAV for the 0.26 bcf of contingent resources of helium at Topaz is C$1.57 per share. The recently acquired passive seismic suggests a potentially much larger prize. 0.3-1.0 bcf of additional resources could add C$1.60-5.25 per share (unrisked).
Tethys Oil (TETY SS)C; target price of SEK100 per share: All eyes on Block 56. Outcome of strategic review expected in 1Q24 – Overall 4Q23 financials were ahead of our expectations and, despite a small underlift position, YE23 cash was US$25.8 mm, above our forecasts of US$22.2 mm. Tethys expects to spend US$90-94 mm capex in 2024. This is above our forecasts of US$70 mm that incorporated only US$10 mm of exploration and appraisal capex on Block 56 and Block 58. Instead they will spend US$26.5 mm (US$8 mm on Block 56 and US$18.5 mm on Block 58). Two exploration wells will be drilled at Block 58 (we had assumed only one) and 19 appraisal wells and 3 exploration wells will be drilled on Blocks 3&4. The FY24 capex programme does not include the development of Block 56 that is expected to be disclosed in 1Q24. The exact size of the development will depend on the well test results at Menna-1 and Sarha-3. A full prospect and lead inventory is also expected in 1Q24. Tethys Oil has received a credit commitment for a US$60 mm term loan facility that could support the development of Block 56. Block 56 is a key area for production and reserves growth in 2024. The key focus of the exploration programme is the Kunooz well on Block 58, expected to be drilled in 1Q24 targeting 123 mmbbl prospective resources with an unrisked NAV of ~SEK200/sh. Given the high level of activities in 2024, Tethys’ profile is increasingly about growth. We view the drop in share price as an opportunity. In addition ongoing discussions with potential farm-in partners for Block 58, Tethys has initiated a strategic review process to unlock value. The outcome of the process is expected in 1Q24.
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IN OTHER NEWS
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AMERICAS
Alvopetro Energy (ALV CB): Operating update in Brazil – January sales volumes averaged 1,699 boe/d including 9.7 mmcf/d of natural gas. January sales volumes were impacted by reduced nominations from the offtaker, Bahiagás. Nominations for February have increased back to 10.6 mmcf/d.
Canacol Energy (CNE CN): Operating update in Colombia – FY24 contracted gas sales are estimated at 160-177 mmcf/d with US$138-151 mm capex.
Seacrest Petroleo Bermuda (SEAPT NO): Problems with pipeline in Brazil – Petrobras has informed Seacrest that the maximum permissible operating pressure and temperature of the South Pipeline are only 12 kgf/cm2 and 40 degC. This is below the operating pressure and temperature of 25 kgf/cm2 and 65 degC required to use the pipeline. Seacrest expects reparation and certification to be achieved in March. This is the responsibility of Petrobras.
Touchstone Exploration (TXP LN/TXP CN): Operating update in Trinidad – The Cascadura-2 openhole logs and drilling data indicated a total sand thickness of ~525 feet in the targeted Herrera formation. The well will start contributing to production in 3Q24. 4Q23 net sales were 8,504 boe/d.
ASIA PACIFIC
Woodside Energy (WDS LN/AU): Megamerger discussions terminated – The discussions with Santos regarding a potential merger have been terminated.
EUROPE
Aker BP (AKERBP NO): 4Q23 results – 4Q23 production in Norway was 444 mboe/d. In 2024, Aker BP expects to produce 410-440 mboe/d with capex ~US$5 bn, exploration spend of US$0.5 bn and abandonment spend of ~US$0.25 bn. YE23 net debt was US$3.1 bn. The quarterly dividend has been increased from US$0.55 per share to US$0.60 per share. The Ofelia well encountered 27-52 mmboe. The Surtsey prospect is not expected to be commercial.
bp (BP LN): 4Q23 results – 4Q23 adjusted net earnings were US$2.99 bn with 2,313 mboe/d production in 2023. The company has announced a US$3.5 bn buyback in 1H24. The 4Q23 dividend has been set at 7.27 cts per share representing a 10% increase vs 4Q22. FY24 and FY25 capex is expected to be ~US$16 bn. FY24 production is expected to be slightly higher than in 2023.
Deltic Energy (DELT LN): Farming-out UK asset – Deltic is farming out 25% of the Selene prospect to Dana Petroleum in return for US$0.5 mm in cash and a carry for the residual cost exposure to the Selene well to a value of US$5-6 mm. On completion of the transaction, Deltic will own 25% residual interest in Selene.
DNO (DNO NO): Buying UK North Sea asset – DNO is acquiring a 25% WI in the Arran field from ONE-Dyas for US$70 mm plus a cash consideration of up to US$5 mm. The transaction is expected to add about 4 mmboe net to DNO, of which 90% is gas, with projected net 2024 production of 2,000-2,500 boe/d.
Equinor (EQNR NO): 4Q23 results - Adjusted earnings during the period were US$1.88 bn with 2,197 mboe/d production. The quarterly ordinary dividend has been increased to US$0.35 per share from US$0.30 per share. The company will also pay an extraordinary dividend of US$0.35 per share. The company is launching a US$6 bn share buy-back programme for 2024. Production is expected to be stable until 2035. FY24 organic capex is estimated at US$13 bn. The reserve replacement ratio during 2023 was 104%.
OKEA (OKEA NO): 4Q23 results – 4Q23 production in Norway was 30.1 mboe/d. YE23 net cash was ~NOK1 bn. OKEA expects to produce 35-40 mboe/d in 2024 with NOK2.8-3.3 bn capex. YE23 reserves were estimated at 83.2 mmboe (+38% vs YE22) while YE23 2C resources stood at 65 mmboe (+50%).
Serica Energy (SQZ LN): 4Q23 results – FY23 production in the UK was over 40 mboe/d. FY23 production is expected to be 41-48 mboe/d. 2024 YTD production has averaged 43,184 boe/d. Capex at Bruce and Triton is ~£210 mm with most of this amount expected to be spent in 2024. Net cash at YE23 was £71 mm.
TotalEnergies (TTE FP): 4Q23 results and increased dividend – Adjusted net earnings for the period were US$5.2 bn with 2.46 mmboe/d production. A dividend of EUR3.01 per share has been proposed for 2023 (+7.1% vs 2022). The Reserve Replacement Ration for 2023 was 141%. The company is launching a share buy-back programme of US$2 bn for 1Q24, which will remain the base level for quarterly buybacks. FY24 production is expected to increase by 2% with US$17-18 bn capex.
UK Oil & Gas (UKOG LN): Unsuccessful well test in Turkey – Following extensive swab testing at Pinarova-1 it has been concluded that, in the absence of commercial rates of hydrocarbons, no further testing will take place.
Var Energi (VAR NO): Reserves and resources update in Norway – YE23 2P reserves and 2C resources were estimated at 1.2 bn boe and 745 mmboe respectively.
FORMER SOVIET UNION
Block Energy (BOE LN): Resources update in Georgia – The Lower Eocene and Upper Cretaceous reservoirs in the Patardzueli-Samgori field have been estimated to hold 1.1 tcf of 2C contingent resources.
MIDDLE EAST AND NORTH AFRICA
DNO (DNO NO): 4Q23 results – Net production in Kurdistan, Norway and Cote d’Ivoire was 69.7 mboe/d in 4Q23. Gross production in Tawke in Kurdistan had recovered to 80 mbbl/d at YE23. It is expected to remain at this level in 2024. FY24 net production in Norway is expected to average 15-16 mboe/d in 2024. FY24 capex is estimated at US$405 mm. YE23 net cash was US$153 mm.
SUB-SAHARAN AFRICA
Helium One (HE1 LN): Operating update Tanzania and new equity raise – The Itumbula West-1 well flowed gas to surface including 4.7% of helium, 2.2% of hydrogen, 1.5% of argon, 8% of oxygen and 86% of nitrogen. The overall flow rate was not reported. Helium One has raised £4.7 mm of new equity priced at 1.5p per share.
Noble Helium (NHE AU): Operating update in Tanzania – The lab testing of samples taken from the Mbelele prospect at North Rukwa in Tanzania has returned helium concentrations of 2.46%.
Africa Oil (AOI CN/SS)/TotalEnergies (TTE FP): Another discovery in Namibia – A new discovery has been made at the Mangetti-1X exploration well on PEL56 in a separate system to the Venus oil discovery. Mangetti-1X also achieved its secondary objective of successfully intersecting and appraising the northern area of the Venus accumulation. Mangetti has the potential to add additional recoverable resources on Block 2913B.
EVENTS TO WATCH NEXT WEEK
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12/02/2024: Galp Energia (GALP LS) – FY23 results
12/02/2024: PetroTal (PTAL LN/CN) – Reserves update
13/02/2024: Var Energi (VAR NO) – FY23 results
16/02/2024: Eni (ENI IM) – FY23 results
Aker BP ASA engages in the exploration, development, and production of petroleum resources on the Norwegian Shelf. In addition, Co. has a separate Johan Sverdrup business unit to manage its interest.
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.
Block Energy plc, formerly Goldcrest Resources plc, is an oil and gas company. The Company's projects include norio onshore oil field, east kavtiskhevi (block VIII), akoko asheba gold project and Mauritania copper. Norio project is 35 kilometres from the centre of Tbilisi, requiring low capex recompletions of existing wells and new horizontal wells, to existing production. East kavtiskhevi (block VIII), which consist 36.9 MMbbl risked resources in Cretaceous, 4,700 kilometers area and multiple prospective horizons. Asheba project is located at the southern end of the Ashanti belt 15km east of Endeavour Mining's Nzema mine and 30 kilometers south of the world class Tarkwa mine. At Asheba, mineralisation is centered on the old Cheriamen and Atinasi mining sites within multiple parallel steep dipping zones associated with intense silicification, disseminated pyrite and a stockwork of quart veinlets. Mauritania project is an exploration concept.
BP is an integrated oil and gas group based in the United Kingdom. Co. is engaged in the exploration and production of crude oil and natural gas; refining, marketing, supply and transportation; and the manufacture and marketing of petrochemicals. Co. operates globally, with business activities in Europe, the U.S., Canada, Russia, South America, Australasia, Asia and parts of Africa. Co. operates in two business segments: Exploration and Production - including oil and natural gas exploration and development and production; and Refining and Marketing- activities include the refining, manufacturing, supply and trading, marketing and transportation of crude oil, petroleum and petrochemicals.
Canacol Energy is engaged in core petroleum and natural gas exploration and development activities in Colombia, Brazil and Guyana.
Chariot Oil & Gas is an independent oil and gas exploration company focused offshore in West Africa with a portfolio of assets located in the under-explored regions of Namibia, Mauritania and Morocco.
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.
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.
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.
Serica Energy is an independent oil and gas company with production, development and exploration licence interests in the U.K. Continental Shelf and exploration interests in Ireland, Morocco and Namibia. As of Dec 31 2016, Co. had proved plus probable reserves of 3.8 million barrels of oil equivalent, which consisted of 2.1 million barrels of oil and 10.40 billion cubic feet of gas.
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.
Total is an international integrated oil and gas company also active in solar and biomass energy sources. Co. engages all aspects of the petroleum industry, including Upstream operations (oil and gas exploration, development and production, and LNG (Liquefied Natural Gas)) and Downstream operations (refining, petrochemicals, specialty chemicals, marketing and marketing and trading and shipping of crude oil and petroleum products). In addition, Co. is engaged in the coal mining and power generation sectors. Co.'s worldwide operations are conducted through three business segments: Upstream, Refining & Chemicals, and Marketing & Services.
Touchstone Exploration Inc., formerly Petrobank Energy and Resources Ltd., is an oil and gas exploration and production company. The Company's segments include Trinidad and Canada. The Company's core producing properties are located onshore within Trinidad. The Company's producing properties in Trinidad include Coora 1, Coora 2, New Dome, South Palo Seco, Barrackpore, Fyzabad, Icacos, Palo Seco and San Francique. The Company's exploratory properties in Trinidad include Bovallius, Moruga, New Grant, Ortoire, Otaheite, Piparo, Rousillac, Siparia and St. John. Its exploratory properties in Canada include Beadle, Druid, Luseland and Winter. The gross acres of the properties include approximately 106,604. The Company operates a total of approximately 370 wellbores on the Coora blocks. The New Dome block is located onshore in the southwest portion of Trinidad in the Ward of Siparia. The Barrackpore Block is located approximately 11 kilometers southeast of the city of San Fernando.
UK Oil & Gas Investments is an investment holding company. Co. is engaged in acquiring a portfolio of direct and indirect interests in exploration, development and production oil and gas assets which are based in the U.K.
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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