Auctus on Friday - 06/10/2023
AUCTUS PUBLICATIONS________________________________________
Calima Energy (CE1 AU)C; target price of A$0.45 per share: Operating update in Canada – The 3-well Pisces drilling programme has now been completed. The wells have been drilled under budget. The Pisces#10 well is already in production and the production performance is in line with the Pisces#6 and Pisces#7 wells that delivered production significantly above the typical glauconitic production curve. Peak production at these new wells is expected in December. 3Q23 production levels continue to be affected by weather related energy cuts and unforeseen work-overs.
Criterium Energy (CEQ CN)C; target price of C$0.40 per share: Funding for Indonesia acquisition upsized – The funding package associated with the acquisition of Mont d’Or (MOPL) has been upsized from C$15.3 mm to C$18.9 mm. This comprises C$12.2 mm of convertible (C$10 mm previously) and C$6.7 mm of new equity (C$5.3 mm previously). The C$12.2 mm convertible plus C$2.5 mm (unchanged) of the new equity is being issued to a strategic investor. The convertible continues to carry 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 76.25 mm warrants (62.5 mm previously) at an exercise price C$0.14/sh. The convertible debt can be converted into equity at C$0.16/sh (unchanged). 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 (unchanged). As we incorporate the upsized funding package with a larger number of shares and warrants, we have changed our target price to C$0.40/sh near our new ReNAV.
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GeoPark (GPRK US)C; target price of US$26 per share: CPO-5 wells back online. Multiple discoveries in Colombia and Ecuador – The Indico 6 and Indico 7 wells in the CPO-5 block in Colombia are now back online. Each well is expected to reach 4,000 bbl/d gross production (8,000 bbl/d gross total, 2,400 bbl/d net to GeoPark). The total gross production of both wells could reach 9,000 bbl/d by YE23. The Toritos 1 exploration well at LL-123 encountered hydrocarbons in the Guadalupe and Gacheta formations and is now on production at a rate of ~1.4 mbbl/d with 1% water cut. The Saltador 1 well at LL-123 is on production at a rate of 765 bbl/d with 3% water cut. Overall gross production from LL-123 is now >2.1 mbbl/d, which will contribute to 4Q23 production. This is expected to add reserves. The positive result at Toritos led GeoPark to decide to drill a new exploration well in 4Q23 (Bisbita Centro 1) on LL-123. The prospect will be located 1.5 km south of Saltador 1. The Yin 2 well (result announced in August) is currently producing 765 bbl/d with 1% water cut. The Perico Centro 1 exploration well has also encountered hydrocarbons in the U-sand formation (as at Yin-2) and has been put on production at a rate of 800 bbl/d (28 deg API and 1% water cut). These wells are also expected to add reserves. The U-sand is a new reservoir that had not been developed previously by GeoPark. With multiple near term drilling catalysts by YE23, we have increased our target price to US$26 per share to incorporate the positive exploration drilling results.
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Southern Energy (SOU LN/SOU CN)C; target price of £1.50 per share: Increase of credit facility – The Tranche B of Southern’s credit facility has been increased by US$2 mm to US$31.5 mm and extended to the end of August 2025. As a result, Southern will have approximately US$11.5 mm of capacity remaining on the Credit Facility with a current outstanding balance of ~US$17.6 mm. The amendment also extends the principal amortization period by an additional twelve months while maintaining the existing 12% per annum coupon.
Valeura Energy (VLE CN)C; target price of C$6.40 per share: 3Q23 update – 3Q23 production was 19,961 boe/d. Net cash at the end of September was US$103.4 mm.
Zephyr Energy (LBE LN)C; target price of £0.16 per share: Balance sheet ahead of expectations. Waiting on Paradox progress – 1H23 sales had been previously reported. Zephyr held US$6.2 mm in cash at the end of June, ahead of our expectations of US$4.8 mm. Zephyr is also carrying US$6.0 mm of current receivables and US$12.8 mm of current payables. Adding pre-payments results in a positive working capital position (pre debt) of ~US$2.2 mm. This is more favourable that the working capital deficit of US$5 mm that we were forecasting. Total debt at the end of June was US$33.7 mm, very close to our estimate of US$32.1 mm. While US$24 mm debt is classified as current, this reflects the US$13 mm revolver that is redetermined every six months as a normal course of business. The size of the revolver is driven by oil price and production. Both have increased since the last redetermination and we anticipate the borrowing base will grow again. With very limited capex in 2H23 (we assume ~US$2mm) and production from the Slawson wells expected to boost production in 4Q23, we anticipate the company’s net debt to reduce during the period. As we incorporate a six month delay in the Paradox and cost inflation, we have changed our target price to £0.16/sh in line with our new ReNAV.
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IN OTHER NEWS
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AMERICAS
Alvopetro Energy (ALV CN): Production update in Brazil – Sales volumes in September were 1,203 boe/d. Bahiagas is required to pay Alvopetro for gas not taken up to 8.5 mmcf/d. This amounted to 1.2 mmcf/d in September which is in addition to the September sales volume of 6.8 mmcf/d. This volume paid but not taken by Bahiagas is to be compensated by Alvopetro in the future through natural gas deliveries in excess of 9.5 mmcf/d. Natural gas deliveries during October have been approximately 8.7 mmcf/d to-date.
Canadian Overseas Petroleum (COPL LN/XOP CN): Funding for the USA – Canadian Overseas is raising US$4 mm of new equity at a price of 2.6p per share (+30% premium to yesterday share price). The existing 137,810,188 bondholder's Warrants will also be exercisable at 2.6p
Diversified Energy (DEC LN): Operating update in USA – 3Q23 production is anticipated to be in the range of 805-830 mmcfe/d.
Maha Energy (MAHA-A SS): Production update in Brazil and the USA – 3Q23 WI production was 1,953 boe/d including 2,127 boe/d in September.
TotalEnergies (TTE FP):Selling Canadian assets – Total has sold its 50% interests in the Surmont oil sands asset to ConocoPhillips for C$4.03 bn plus up to C$440 mm in contingent payments. Total is also selling its shares in TotalEnergies EP Canada comprising notably its participation in the Fort Hills oil sands asset to Suncor for C$1.47 bn.
EUROPE
Aker BP (AKERBP NO): 3Q23 update in Norway – 3Q23 production was 449.8 mboe/d.
Angus Energy (ANGS LN): Operating update in the UK – 3Q23 production was 8.6 mmcf/d plus 160 bbl/d of condensate.
Ascent Resources (AST LN): Strategic investor – Ascent is raising £1.5 mm of new equity priced at 3.5 p per share (35% premium to the previous day closing price) with MBD Partners, which is controlled by Ibrahim Diab. MBD will also be granted new five year warrants equivalent to 150% of their subscription amount at 5 pence per new warrant share if Ascent wins its arbitration claim against Slovenia. In the event Ascents loses the arbitration claim, then MBD will be granted new five year warrants equivalent to 200% of the subscription amount exercisable at 3.5 pence per new warrant share, and half of these warrants shall have a cashless exercise.
Eni (ENI IM): Discovery in Indonesia – The Geng North-1 exploration well drilled in North Ganal PSC,off the cost of East Kalimantan has encountered 5 tcf of gas in place with condensate content estimated up to 400 mmbbl. The well is estimated to have a production capacity of 80-100 mmcf/d plus 5-6 mbbl/d of condensate.
Europa Oil & Gas (EOG LN): Resources update in Ireland – Following the interpretation of recent seismic reprocessing, the Pmean prospective resource estimate for Inishkea West has increased by 92% to 1.55 tcf.
i3 Energy (I3E LN)/Europa Oil & Gas (EOG LN): Tain development cancelled – The Tain oil project has been cancelled and the acreage will be relinquished. i3 and Europa were looking to develop the Serinity discovery together with Tain.
OKEA (OKEA NO): Reserves downgrade in Norway – The net reserves estimate at Yme has been reduced from 7.6 mmboe to 5.5-6.5 mmboe.
Repsol (REP SM): Operating update – 3Q23 production was 595 mboe/d.
Shell (SHEL LN): 3Q23 update – 3Q23 production is expected to be 2,580-2,720 mboe/d.
Star Energy (STAR LN): Geothermal licences awarded in Croatia – Star has been awarded the Sjece and Pcelic licences. Sjece is located in north-eastern Croatia. The licence has 356 km of 2D sesimsic and 20 sq km of 3D seismic. Nine wells have been drilled with three hot reservoirs identified. A 15-25 MWe powerplant could be feasible. Pcelic is located in northern Croatia. The licence has 262 km of 2D seismic and two exploration wells have been drilled. A 20-30 Mwe powerplant could be feasible.
Var Energi (VAR NO): Selling Brage assets – Var is selling 12.2575% interest in the Brage Unit to Petrolia. Vår’s net production from the field was 1.0 mboe/d in 1H23 and had remaining net reserves 1.9 mmboe at YE22.
Wintershall Dea: Majority stake for sale? – Media reports highlighted that TotalEnergies, Equinor and Harbour Energy could be looking to acquire BASF’s ~73% interest in Wintershall.
SUB-SAHARAN AFRICA
PetroNor E&P (PNOR NO): Acquiring asset in Nigeria – PetroNor is acquiring 32% WI in the Aje field in Nigeria from New Age for US$6 mm in cash plus a deferred future gas production payment of up to US$20 mm.
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.
Calima Energy and its subsidiaries are engaged in investing in oil and gas exploration and production projects internationally and more specifically in West Africa.
Canadian Overseas Petroleum is engaged in the exploration and development of oil and gas in the United Kingdom North Sea.
Diversified Gas & Oil is an Appalachian Basin focused natural gas and crude oil operations company.
Eni is engaged in the oil and gas exploration and production, gas marketing operations, management of gas infrastructures, power generation, petrochemicals, oil field services and engineering industries. Co.'s operations are divided into three segments; Exploration and Production (oil and natural gas exploration and field development and production, as well as LNG operations), Gas and Power (supply, trading and marketing of gas and electricity, managing gas infrastructures for transport, distribution, storage, re-gasification, and LNG supply and marketing), and Refining and Marketing (supply of crude oil, refining and marketing of refined products). Co. maintains operations in 73 countries.
Europa Oil & Gas is an exploration and production company focused on Europe. The principal activity of Co. and its subsidiaries (the Group) is investment in oil and gas exploration, development and production. The Group's assets and activities are located in Ireland and the U.K.
i3 Energy is engaged in the development and production of oil and gas in the UK North Sea. Co.'s strategy is to focus on the development of discoveries located close to existing infrastructure and the exploitation of producing fields, whilst maintaining limited exploration exposure.
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.
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.
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.
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.
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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