Auctus on Friday - 14/04/2023
AUCTUS PUBLICATIONS________________________________________
Arrow Exploration (AXL LN)C: Target price of £0.45 per share: Reaching 2,635 bbl/d without Capella. High cash position – The RCE-5 well flowed 680 bbl/d (340 bbl/d net to Arrow) of oil over the last 24 hours. The well is heavily choked (17/168) and is still unloading completion fluid (12% water cut). As witnessed at the other RCE wells, production is expected to increase as the well stabilizes. Initial production at RCE-5 is above expectations and the well could add reserves. The RCE-4 and RCE-3 wells are now producing respectively 944 bbl/d and 852 bbl/d (487 bbl/d and 426 bbl/d net). Production at each well has increased since the last announcement in late March (RCE-4: 728 bbl/d, RCE-3: 822 bbl/d). Despite Capella continuing to be shut in, overall corporate production is now 2,635 bbl/d. Adjusting for Capella would have led to total production of 2,935 bbl/d, broadly in line with the company’s target of 3,000 bbl/d by the end of April. The rig is now being moved to Carrizales Norte where up to three wells will be drilled. Even excluding Capella and ahead of starting to drill the CN-1 well, the current production of 2,635 bbl/d is already very close to our forecast for 2Q23 (2,875 bbl/d) that includes contribution from the first Carrizales Norte well. With seven additional wells to be drilled by YE23 that could add a further 1,900 bbl/d to 3,300 bbl/d net production by YE23 (before decline and in a success case), we see potential upside to our forecasts.
See website for full report
GeoPark (GPRK US) C; Target price of US$26 per share: First horizontal well at LL-34 in production at over 3,000 bbl/d – 1Q23 production was 36,578 boe/d. This is very close to our expectations of 37,200 bpe/d. High production at CPO-5 (WI: 5,012 bbl/d vs our expectation of 4,500 bbl/d) and Platanillo (2,227 bbl/d vs our expectation of 2,000 bbl/d) was offset by lower production in Chile and Brazil on lower gas offtake. Production in these two countries is lower margin than in Colombia. The Indico 6 and Indico 7 wells in the CPO-5 block in Colombia continue to be offline until definitive surface facilities are completed. These two wells represent ~2.4-3.3 mbbl/d net to GeoPark. The facilities continue to be expected to be completed in 2Q23 (May). The first horizontal well in the Tigana field (LL-34) has been put on production at a flow rate over 3,000 bbl/d with virtually no water cut from the Mirador formation. This is a very good flow rate that has taken gross production from the block from 54.8 mbbl/d in 1Q23 to ~57 mbbl/d currently. The well cost ~US$10 mm. According to Parex Resources (GeoPark’s partner), there are potentially ten horizontal well locations in the block. Mirador is a reservoir that has hardly been tapped so far but that can offer upside potential and could extend plateau production. Overall, we estimate that a minor portion of the reserves at LL-34 are associated with this reservoir. Other areas of interest and potential upside at LL-34 include the ongoing water flood programme in certain marginal areas and some additional appraisal activities in minor fields. GeoPark is re-iterating its FY23 guidance of 39.5-41.5 mboe/d.
See website for full report
Panoro Energy (PEN NO)C: Target price of NOK48 per share: Very good flow rate at new Dussafu well – The DHIBM-3H well has started production at a gross stabilized oil flow rate of 6 mbbl/d (Panoro WI: 17.5%). This is the first of six wells at the Hibiscus Ruche Phase I development. This is a very good flow rate. When Tortue started production in September 2018, three wells came on stream with aggregate production of 11-12 mbbl/d (3.5-4.0 mbbl/d per well). When the first two wells of Tortue Phase 2 were brought online, they added a total of ~10 mbbl/d (5 mbbl/d per well). The new gas lift compressor is expected to be fully operational around the end of the month, allowing the full potential of the well to be realized. Drilling will move to the second well of the campaign. Overall, the campaign is expected to add ~30 mbbl/d gross production by YE23/early 2024. Panoro continues to offer a combination of value, growth and dividend distribution. At the current share price, the minimum expected dividend to be declared in 2023 (US$20 mm assuming Brent is >US$80/bbl) represents a yield of ~7%. At US$100/bbl, this could increase to US$30 mm (~10% yield). The US$3 mm maiden dividend has already been paid in March.
See website for full report
Tethys Oil (TETY SS)C: Target price of SEK120 per share: Production update in Oman – Production from Blocks 3&4 was 9,290 bbl/d in March.
Zephyr Energy (ZPHR LN)C: Target price of £0.20 per share: Blow-out at State 36-2 under control. The fracture network could be very large – The State 36-2 LNW-CC well experienced a significant well control incident. The well is now under control. Because of the nature of the hydrocarbons (gas and condensate), the surface impacted by hydrocarbon residue is mostly limited to the well pad and the area immediately around it. Impacted soil will be removed and the required remediation is expected to be limited. During the incident, the well’s safety valve failed and subsequently the ram on the BOP did not close properly. The company is investigating the root cause of the failures. Zephyr’s incident management process managed the response to the incident very well. Utah state regulators were notified and were on site shortly after the beginning of the incident and approved the different steps taken by the company to contain the flow. This is very important in our view, as it mitigates future risk that the state authorities take punitive action against the company. Zephyr has a well control insurance in place. As experienced by Tullow a few years ago in Ghana, this can cover containment and remediation costs, and while it is early days, Zephyr is working closely with its insurance provider (including by utilizing the insurers preferred well control group). While the well has been “killed”, at present Zephyr does not expect to have to redrill the well in order to production test it. This assessment is supported by the fact that the well did not have to be redrilled after having been brought under control following the kick while drilling experienced in January. This suggests that even if the insurance does not cover the additional costs associated with the blow out, they remain manageable within the context of the company’s balance sheet. The well test is expected to resume in the coming weeks, subject to closer evaluation and potential additional preparatory well work.
See website for full report
IN OTHER NEWS
________________________________________
AMERICAS
88 Energy (88E LN): Well u[date in Alaska – The Hickory-1 well encountered 450 feet of net pay across all pay zones. The average total porosity is only 9-12%, including key zones identified for potential testing in the Upper and Lower SFS with between 11-16% total porosity.
Trinity E&P (TRIN LN): Fire on platform in Trinidad – A generator-related fire occurred on Trinity’s Bravo Platform in the Trintes Field. Production was halted and the fire has now been extinguished. The damage is limited to a generator with the platform structure and other platform electricals and equipment in good order. The company estimates that the replacement of the generator and associated repairs on the Bravo platform will be completed within three to four days.
ASIA AND AUSTRALASIA
Jadestone Energy (JSE LN): YE22 reserves and FY23 guidance – YE22 2P reserves were estimated at 64.8 mmboe (YE21: 44.7 mmboe) as the company has converted 16.8 mmboe 2C contingent resources into the 2P reserves category following FID at the Akatara field in Indonesia. Production in 1Q23 averaged just over 10,000 boe/d, reflecting tank repair and scheduled maintenance activities at Montara. Production for the nine months until YE23 is expected to average 13,500-17,000 boe/d. The Malaysia infill well campaign in 2H23, and the addition of Akatara production commencing during 1H24, should add a further 5,000 boe/d. The FY23 capex guidance has been set at US$110-140 mm.
EUROPE
Aker BP (AKERBP NO): Exploration well encounters oil in Norway – The 25/4-15 wildcat encountered 3-5 mmbbl of recoverable oil on licence PL 919.
Repsol (REP SM): Trading update – 1Q23 production was 608 mbbl/d.
Serica Energy (SQZ LN): FY22 results – FY22 production was ~26 mboe/d. YE22 cash was ~£432.5 mm. 1Q23 net production of Serica + Tailwind was 46.8 mboe/d. The company expects to produce 40-47 mboe/d in 2023. A final dividend of £0.14 per share has been declared (total distribution of £0.22 per share for 2022).
TotalEnergies (TTE FP): Considering bid for Neptune Energy? – Media reports highlighted that Total could be considering acquiring Neptune. Previous reports had indicated that Eni was also interested by the business. Neptune holds assets in the UK, the Netherlands, Norway, Germany, Indonesia and Algeria.
Var Energi (VAR NO): 1Q23 update in Norway – 1Q23 production was 214.4 mboe/d.
SUB-SAHARAN AFRICA
PetroNor (PNOR NO): 1Q23 update in Congo – 1Q23 net production at the PNGF Sud field complex was 5,206 bbl/d.
Savannah Energy (SAVE LN): 1Q23 update – 1Q23 production (excluding Chad) was 25.9 mboe/d. Net debt at the end of March was US$412.2 mm.
EVENTS TO WATCH NEXT WEEK
________________________________________
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.
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.
Jadestone Energy is engaged in the evaluation, acquisition, exploration and development of oil and gas properties.
OMV is an international energy company with activities in Exploration and Production (E&P), Refining and Marketing including petrochemicals (R&M), and Gas and Power (G&P). Co. explores and develops oil and gas resources and supply energy to over 100 million people. OMV has three operating segments: Exploration and Production (E&P), Refining and Marketing, including petrochemicals (R&M), and Gas and Power (G&P), as well as the segment Corporate and Other (Co&O).
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.
Repsol is an oil and gas company. Co. is engaged in all the activities relating to the oil and gas industry, including exploration, development and production of crude oil and natural gas, transportation of oil products, liquefied petroleum gas (LPG) and natural gas, refining, the production of a wide range of oil products and the retailing of oil products, oil derivatives, petrochemicals, LPG and natural gas, as well as the generation, transportation, distribution and supply of electricity. Co. operates in more than 40 countries. Co.'s operations are divided into four segments: Upstream, Downstream, LNG and Gas Natural Fenosa.
Savannah Petroleum is an oil and gas company. Co.'s principal activity is the management of its investment in Savannah Petroleum 1 Limited (SP1). SP1's principal activity is the management of its investment in Savannah Petroleum 2 Limited (SP2), and the provision of services to other companies within Co. SP2 has a 95% interest in Savannah Petroleum Niger R1/R2 S.A. whose principal activity is the exploration of hydrocarbons in the Republic of Niger.
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 Oil AB is a Sweden-based energy company. The Company is focused on oil and gas exploration and production onshore areas with known discoveries. Its core area of focus is the Sultanate of Oman, where the Company holds licence interests in three onshore blocks. Tethys Oil has licences in three countries altogether: Oman, Lithuania and France. Two of the licenses are in production, namely Blocks 3 & 4 in Oman and Gargzdai in Lithuania. During 2013 the Company also had licenses in Sweden, however, they have expired and were not renewed. As of December 31, 2013, the Company had 10 wholly owned subsidiaries active in Sweden, Gibraltar, Switzerland and the British Virgin Islands, such as Tethys Oil Denmark AB, Tethys Oil Spain AB and Tethys Oil Turkey AB, among others.
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.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.