AUCTUS ON FRIDAY - 31/05/2024
AUCTUS PUBLICATIONS________________________________________
Arrow Exploration (AXL LN/AXL CN)C; target price of £0.65 per share: All eyes on the first horizontal well at Carrizales Norte – The 1Q24 production of 2,730 boe/d was close to our expectations. Arrow’s cash position of US$11.6 mm was also in line. The first water disposal well at RCE is being brought into production and the conversion of the CN-4 well is currently waiting regulatory approval. These two disposal wells are very important to debottleneck the company’s oil production at RCE and Carrizales Norte. The key near term newsflow is the drilling result of the first CN Horizontal well (CNB HZ-1) from the Carrizales Norte B pad. The well has already spud and the production figures are expected in the coming weeks. This will have important consequences on the production growth outlook of the company. We currently assume gross IP rates of 1.5 mbbl/d per horizontal well.
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Chariot (CHAR LN)C; target price of £0.50 per share: Drilling success onshore Morocco – The OBA-1 well onshore Morocco has encountered an approximate 70 m gross interval containing elevated resistivities coincident with elevated mud gas readings, indicating potential gas pays, with no water-bearing reservoirs identified. While the approximate 200 m gross thickness for the reservoirs is in line with pre-drill expectations, the absence of water in the 70 m gross interval is particularly encouraging and could suggest larger than expected resources (12 bcf pre drill).The well is now expected to be tested in 3Q24. The well would then become a producer. Previous wells in the area have been tested at 1.5-2.0 mmcf/d. If the gas is sold at CNG at the well head, minimal development capex would be required. We view this result as very important as this changes the risk profile of Chariot that would become a producing company rather than an explorer. There is also additional resource upside (~8 bcf) in the area and additional wells can be drilled to increase production and reserves. The key near-term news flow remains the Anchois East well expected to spud in August. As we have increased the chance of development of the 20 bcf associated with Dartois from 35% to 75%, we have increased our ReNAV by £0.02 per share.
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Longboat Energy (LBE)C: Operating update in Norway and Malaysia - Performance at the Statfjord Satellites has been disappointing to date. Production has averaged approximately 544 boe/d during the prior four weeks and 401 boe/d for the period from January to April, significantly below both Longboat’s internal and operator forecasts. The underperformance relates to operational issues associated with well completions on Statfjord Øst, leaving two out of the five redevelopment wells drilled in 2023 still off-line. Longboat now anticipates average production of between 575- 625 boe/d for the full year 2024 net to the Longboat Japex. The Statfjord Øst 2024 gross capex budget has almost doubled to ~US$64 mm. At Kveikje, the Norwegian regulator has now become involved in the situation in an attempt to unlock the development plans for the significant resources (~350 mmboe) already identified in the area. The US$100 mm Acquisition Facility provided by JAPEX is not available to finance working capital shortfalls post-acquisition completion. In the event Longboat cannot meet its share of additional working capital shortfalls at Longboat JAPEX, Longboat could have to forfeit some shares in Lonboat JAPEX. In Malaysia, Longboat has made an application for acreage in shallow water offshore Sarawak (for a discovered resource opportunity). A farm-in process for Block 2A is expected to start in 2024.
Pharos Energy (PHAR LN)C: target price of £0.50 per share: Net cash up by ~US$21.5 mm in four months – Production from January to the end of April was 5,755 boe/d including 4,347 boe/d in Vietnam and 1,408 bbl/d in Egypt. This is in line with the company FY24 guidance of 5.2-6.5 mboe/d including 3.9-5.0 mbpoe/d in Vietnam and 1.3-1.5 mbbl/d in Egypt. The key near term news flow remains the farm-out of an interest in Blocks 125 & 126 in Vietnam. Net cash at the end of April was US$15 mm. This compares with a net debt position of US$6.6 mm at YE23 and represents an improvement of US$21.5 mm in the net cash position over the period. We understand that the cash position at the end of April did not include the proceeds of a lifting in Vietnam to be received later in 1H24. TAG Oil announced a very good flow rate at an unconventional horizontal well in the Abu-Roash “F” tight carbonate reservoir in the Badr oil field. During flowback, the oil production rates ranged between 400 and 800 bbl/d from a restricted lateral section of only 308 m as the well unloaded. With only 23% of the frac water recovered so far, oil production from the well is expected to increase. A longer lateral of 1,000 m would also boost production. This is important for Pharos given the same play extends onto Pharos’ licences. The unconventional oil in place resources on TAG Oil’s assets are estimated by the company at 500 mmbbl. TAG Oil has a market cap of C$79 mm (~US$ 55 mm). Pharos estimates 1bn bbl oil in place of unconventional resources in the same play on its licences. Everything else being equal, the read through value for Pharos 45% WI could be US$50 mm (or £0.10 per share). While going after these resources would require some work including the consolidation of the licences with better fiscal terms (in line with TAG Oil’s), the prize is very large.
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Southern Energy (SOUC LN/SOU CN)C: target price of £0.80 per share: Increased premium to Henry Hub suggests strong underlying fundamentals – 1Q24 production of 3,009 boe/d was in line with our forecasts. The net debt at the end of March was ~US$1 mm below our expectations. We continue to assume that the 2nd DUC will not be completed before 4Q24 with the further DUCs being completed in 1Q25 and 2Q25. We note however the strengthening of US gas prices with 3Q24 futures for Henry Hub now standing at ~US$2.8/mcf (we previously forecasted US$2.5/mcf). In addition, Southern is seeing a realization basis premium to Henry Hub in the South East of ~US$0.95-1.40/mmcf. This is very material as the >35% premium over Henry Hub has a major positive impact on economics. The premium seen over the summer compares with premium of
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.
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.
ConocoPhillips is an exploration and production company engaged in exploring for, producing, transporting and marketing crude oil, bitumen, natural gas, liquefied natural gas and natural gas liquids. The company's segments include: Alaska, which operates in Alaska; Lower 48, which operates in the United States and the Gulf of Mexico; Canada, which operates in Alberta and British Columbia; Europe and North Africa, which consists of operations and exploration activities in Norway, the United Kingdom and Libya; Asia Pacific and Middle East, which operates in China, Indonesia, Malaysia, Australia, Qatar, and Timor-Leste; and Other International, which operates in Colombia, Chile and Argentina.
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.
Gran Tierra Energy, together with its subsidiaries, is a company focused on oil and gas exploration and production in Colombia. Co. is primarily engaged in the exploration and production of oil and natural gas. Co. has one reportable segment based on geographic organization, Colombia. As of Dec 31 2017, Co. had total estimated proved reserves of 59.3 million barrels of oil and natural gas equivalent, consisting of 58.9 million barrels of oil and 2.1 million cubic feet of natural gas.
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.
Maha Energy AB is a Sweden-based independent, international upstream oil and gas company whose business activities include exploration, development and production of crude oil. It directly operates through Maha Energy Inc in Canada, as well as Maha Energy 1 [Brazil] AB and Maha Energy 2 [Brazil] AB in Sweden. It owns an oil field in Wyoming, the United States. The Company specializes in primary, secondary and enhanced oil and gas recovery technologies, and operates a technical office in Calgary and Alberta in Canada, as well as an operations office in Newcastle and Wyoming in the United States. The Company operates as wholly-owned subsidiaries Gran Tierra Finance (Luxembourg) SARL and Gran Tierra Brazco (Luxembourg) SARL.
Marathon Oil is an independent exploration and production company focused on the United States resource plays. The company also has international operations in Equatorial Guinea (E.G.). The company's segments are: United States, which explores for, produces and markets crude oil and condensate, natural gas liquids (NGLs) and natural gas in the United States; and International, which explores for, produces and markets crude oil and condensate, NGLs and natural gas outside of the United States as well as produces and markets products manufactured from natural gas, such as liquefied natural gas and methanol, in E.G.
Nostrum Oil & Gas is an independent oil and gas company, engaged in the production, development and exploration of oil and gas. Co. operates three exploration concessions and are primarily conducted through its oil and gas producing subsidiary Zhaikmunai LLP located in Kazakhstan. Zhaikmunai LLP carries out its activities in accordance with the Contract for Additional Exploration, Production and Production-Sharing of Crude Hydrocarbons in the Chinarevskoye oil and gas condensate field for the exploration and production of hydrocarbons in Chinarevskoye oil and gas condensate field.
Soco International is an oil and gas exploration and production company. Co. has exploration, development and production interests in Vietnam, and exploration and appraisal interests in the Republic of Congo and Angola. As of Dec 31 2016, Co.'s commercial reserves were 33.3 million barrels of oil equivalent.
VAALCO Energy is an independent energy company engaged in the acquisition, exploration, development and production of crude oil. The company is primarily engaged in its Etame Production Sharing Contract related to the Etame Marin block located offshore the Republic of Gabon in West Africa. The company also owns interests in an undeveloped block offshore Equatorial Guinea, West Africa.
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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