AUCTUS ON FRIDAY - 07/06/2024

AUCTUS PUBLICATIONS
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Criterium Energy (CEQ CN) C: target price of C$0.35 per share: Re-iterating production guidance – 1Q24 production was 802 bbl/d with average realized price of US$82/bbl. This is in line with our expectations. Operating netbacks for the period stood at C$2.2 mm, also in line with our expectations. Operating cashflow before changes in working capital was (C$0.37 mm). With a large proportion of opex being fixed, growing production is very important to start generating positive operating cash flow. Production has already increased to 870 bbl/d with five well workovers executed in the MGH field year to date (including two workovers during 1Q24). The company has re-iterated its YE24 production guidance of 1.2-1.3 mbbl/d with YE24 net debt of US$22-23 mm (excluding the potential sale of Bulu). We forecast 1,250 boe/d production in 4Q24. This would lead to >C$2 mm operating cashflow (after interest payments) in 4Q24. A further 10 workovers are planned in 2024. The company will also start drilling new wells in 2H24. Criterium continues to anticipate the completion of the divestment of Bulu for US$7.75 mm by the end of August. This would have a very positive impact on the company’s balance sheet and its ability to increase production. Including the divestment of Bulu, we forecast YE24 net debt of US$14 mm, which could be reduced further by paying down the existing debt in return for additional write-down.
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Panoro Energy (PEN NO)C: target price of NOK52 per share – The northern flank at Hibiscus estimated to hold 8-12 mmbbl reserves – The northern flank at Hibiscus, appraised by the DHIBM-7P pilot vertical well, is estimated to hold 8-12 mmbbl gross reserves (Panoro WI: 17.5%). This is above our early estimate of 8 mmbbl. The well was drilled from the pilot hole of the recently drilled Hibiscus South well that had already encountered 5-6 mmbbl recoverable resources in a north-east extension of the field. Overall, 13-18 mmbbl reserves have been encountered so far this year at Dussafu, suggesting a very high reserve replacement ratio at YE24. The current rig operation is to complete a production well (DHBSM-2H) at the recently proven north-east extension of the Hibiscus South field. A production well will be drilled in the northern flank of Hibiscus later this year.
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Zephyr Energy (ZPHR LN)C: target price of £0.12 per share: Higher 1Q24 production than we anticipated. All eyes on high impact drilling in the Paradox – 1Q24 production (excluding NGL) in the Williston was 1,151 boe/d. This is 140 boe/d above our expectations and ~100 boe/d above 4Q23 production. Production in March (excluding NGL) had increased to 1,212 boe/d. This does not represent the full production capacity as the Slawson wells were partially curtailed due to lingering infrastructure constraints. We forecast 1,320 boe/d in 2Q24. Hitting the natural fracture system is critical to obtaining a high flow rate. Our unrisked NAV for the State 36-2R well is £0.11 per share. Success would also allow the booking of 2P reserves and growth in production. Overall production is expected to increase by 250% by 4Q24 (compared to the FY23 average production). The Salt Wash helium asset has an unrisked NAV of £0.03 per share for 0.13 bcf of helium.
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IN OTHER NEWS
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AMERICAS

88 Energy (88E LN): Resources update in Alaska – Project Leonis is estimated to hold 381 mmbbl gross prospective resources.

Alvopetro Energy (ALV CN): Production update in Brazil – Sales volumes in May were 1,418 boe/d (1,808 boe/d in April). Natural gas sales in May were impacted by reduced nominations from Bahiagás resulting from temporary reductions in consumer demand. This demand reduction is expected to continue throughout much of June and nominations for the month are currently set at 8.9 mmcf/d.

Mosman Oil & Gas (MSMN LN): Acquiring helium asset in the US – Mosman is acquiring 10% WI in the Vecta helium project in Las Animas County, Colorado from Vecta Oil & Gas for US$0.5 mm, to be paid in instalments of US$50,000 per month for 10 months. Vecta will own the remaining 90% WI and operate the project. Helium production in Las Animas County includes the historic Model Dome field which recorded 7-11% helium content. Vecta drilled the Sammons exploration well last year in an area of mutual Interest arrangement with Blue Star Helium and discovered helium and carbon dioxide. A well in the area is expected to cost only US$0.26 mm. The exploration strategy is to drill an exploration well on each of the 5 prospects in 2024.

Pantheon Resources (PANR LN): Gas contract in Alaska – Pantheon has signed a Gas Sales Precedent Agreement with the Alaska Gasline Development Corporation for up to 50 mmcf/d at a maximum price of US$1/mmbtu. This will form the base for the parties to negotiate a Gas Sales Agreement that will be conditional on both parties taking FID on their respective projects.

EUROPE

Beacon Energy (BCE LN): Disappointing operating update in Germany – The company could not achieve a sustained flow rate at the SCHB-2 sidetrack. Based on bottom hole pressures and flow rates observed, initial response from the reservoir appears to be poor.

Equinor (EQNR NO): Selling Norwegian asset – Equinor is selling 19.5% interests in production licenses PL 048E, which is the Eirin field, and PL 1201 to PGNiG.

MIDDLE EAST AND NORTH AFRICA

Gulfsands Petroleum: Balance sheet update and strategy update – Gulfsands has converted all its remaining debt into equity. The company held 110 mmboe 2C contingent resources in Syria at YE23 (+50% vs YE22). The vast majority of these 2C contingent resources are expected to be reclassified as 2P Reserves upon the lifting of Force Majeure. The company is looking for acquisitions in the MENA region.

SUB-SAHARAN AFRICA

Industry progress in South Africa – Eco (Atlantic) Oil & Gas is acquiring 75% WI in Block 1 in the orange basin from Tosaco Energy. Block 1 is 19,929km2 in area and is located on the border between Namibia and South Africa. The Eastern edge of the block is approximately 174 km off the South African shoreline, and the block reaches out some 263 km West into deep water in the Orange Basin. In return for the acquired interest, Eco will pay US$0.15 mm on signing, US$0.225 mm upon government title transfer and US$0.75 mm upon a resource report to be commissioned by Eco. Eco will also will carry the remaining 25% Interest through the work program for the first three years up to an agreed gross spend of US$2.3 mm. Eco is relinquishing its operated 50% WI in Block 2B offshore South Africa where it drilled the Gazania-1 well in 2022. Media reports also highlighted that Shell has filed plans for a 5 well drilling campaign in the Northern Cape Ultra Deep block in the Orange Basin block in South Africa. Total is also planning to start drilling next year in the area.

EVENTS TO WATCH NEXT WEEK
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13/06/2024 – OMV (OMV AG): Capital Market Day