AUCTUS ON FRIDAY - 09/08/2024
AUCTUS PUBLICATIONS________________________________________
Panoro Energy (PEN NO)C; Target price NOK52 per share: All eyes on EG – 1H24 production was 9,168 bbl/d. EG and Gabon production had already been disclosed. 1H24 production in Tunisia was 1,670 bbl/d (we forecasted 1,760 bbl/d) given subdued activities. In EG, the first infill well encountered the primary and secondary reservoirs in line with expectations. Production is expected to begin early September. The second infill well is expected to be completed and onstream in October. We forecast WI production in EG to reach 5.4 mbbl/d in 4Q24. The rig will then move to the Akeng Deep location. The well is targeting a 180 mmbbl prospect with an unrisked NAV of NOK16.30 per share.
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PetroTal (PTAL LN/TAL CN)C; Target price £1.40 per share: Accelerating drilling programme. Successfully dealing with low water levels – 2Q24 production of 18,290 bbl/d had been reported previously. Production in July was 20,034 bbl/d, very close to the production of 20,555 bbl/d in June. The dry river season indicators are at the moment at lower levels than 2023. However, the production guidance of ~13 mbbl/d for 3Q24 has been re-iterated thanks to the increased barge fleet size. Our FY24 forecast of 16.8 mbbl/d is unchanged (unchanged guidance of 16.5-17.5 mbbl/d). PetroTal is accelerating drilling capex to minimize rig standby fees and maximize production thanks to the increased water handling capacity. The 20H well is expected to be onstream by the end of 3Q24. Following the completion of the 20H well, PetroTal will drill and complete wells 21H, 22H and 23H at Bretana by the end of 1Q25. As a result, total FY24 capex is now expected to be US$150-175 mm instead of US$150-160 mm previously. We forecast production of ~22 mbbl/d in 2025 (including production from Los Angeles) with capex similar to 2024. The acquisition of Block 131 continues to be expected to completed in 4Q24. We have changed our target price to £1.40 per share as we incorporate higher capex and lower share buybacks in 2H24. The current dividend yield is >10%.
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Tethys Oil (TETY SS)C; target of SEK100 per share: Strong financials. All eyes on strategic review process, exploration drilling & reserves update – 2Q24 production of 7,688 bbl/d had been previously reported. 2Q24 production was negatively impacted by flooding and production is expected to return to normal during 3Q24. In light of the flooding, FY24 production guidance has been trimmed from 7.8-8.6 mbbl/d to 7.8-8.2 mbbl/d. 2H24 production is expected to be higher than in 1H24. The FY24 capex guidance has been reduced from US$90-94 mm to US$77 mm. This reflects (1) the second exploration well at Block 58 and (2) the exploration well at Block 56 both being moved to 2025. We are not carrying any value for these two wells. Approval of the development plan for Block 56 is expected within weeks. The associated reserves and resources are expected to be disclosed at that time. The development plan will include an EPF for Menna/Sarha and Al Jumd and a near field exploration strategy to rapidly increase production. Drilling operations at the high impact Kunooz-1 well are now expected to commence during the second week of August. The well is targeting 123.5 mmbbl unrisked prospective resources (unrisked NAV of ~SEK200 per share). The strategic review process is ongoing. The high level of interest has generated diverse potential alternatives and it requires time to assess the different options. This could include a (partial) divestment of Blocks 3&4 and an equalization of interests on the other Blocks.
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VAALCO Energy (EGY LN/US)C; Target price US$10 per share: Low capex redevelopment of Ebouri confirmed. Material exploration drilling in Canada in 2H24 – 2Q24 WI production was 25,411 boe/d, in line with our expectations and within the company’s guidance for 2Q24 (23.8-27 mboe/d). WI production of ~3.3 mbb/d in Cote d’Ivoire was particularly high. WI production has now stabilized at ~4.5 mbbl/d. In Gabon, production in 2Q24 was negatively impacted by a platform issue at Avouma. This is now resolved and production could be higher in 3Q24. The decline at the existing wells is lower while uptime is higher. VAALCO has re-iterated its FY24 guidance of 23.6-26.5 mboe/d with US$115-140 mm capex. Success at the 2H24 exploration well in the southern area of the Canada licence could derisk 8-12 mmboe. The H2S at the Ebouri field in Gabon can be handled with chemicals only and will not require a more expensive redevelopment with new infrastructure. This is a positive development and production is expected to restart in 2025 with a potential 6-8 mmbbl reserves addition. This will initially include drilling a side track of a previous well that was shut-in in 2014 with gross production of 3-4 mbbl/d and two work-overs. The overall 2025 drilling programme is expected to include seven firm wells plus five contingent wells (including Ebouri). Further details will be disclosed in November. In Egypt, the company is looking to secure a rig to return to drilling in 2H24. The potential additional capex is estimated at US$9.4 mm with additional production from early 2025. Drilling in EG is expected to start in mid to late 2026 with first oil in 2027.
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Valeura Energy (VLE CN)C; Target price C$10 per share: Production guidance re-iterated but lower capex and additional resources – The 2Q24 production and the cash position at the end of June had previously been reported. Development drilling at Nong Yao C has been completed with the 6 development wells encountering the reservoirs in line with expectations. One appraisal well was successful and will be converted into a seventh production well. First production is expected later in August. Two of the development wells also encountered appraisal target; which could derisks potential future infill drilling and add some reserves. Even including the appraisal programme, the Nong Yao C development is~ 25% under budget. As a result, overall FY24 capex guidance has been reduced from US$135-155 mm to US$135-145 mm. The FY24 production guidance range has been narrowed from 21.5-24.5 mbbl/d to 22-24 mbbl/d. The drilling rig is now moving to the Jasmine/Ban Yen field where five development and two appraisal wells will be drilled. The high impact Ratree exploration well will be slotted into the drilling schedule in due course, as the company continually seeks to optimise the programme. In 4Q24, Valeura plans to start drilling three infill development plus two appraisal wells at Manora. We have increased our target price to C$10 per share in line with our new ReNAV. The key near term catalysts are the corporate restructuring associated with Manora, Nong Yao, Yasmine/Ban Yen and Wassana and the drilling of Ratree (~C$2.65 per share unrisked NAV).
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IN OTHER NEWS
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AMERICAS
Alvopetro Energy (ALV CN): 2Q24 results. Share buyback – July sales in Brazil were 2,432 boe/d. ~50% of the funds flow from operations are intended to be allocated to stakeholder returns. When the funds dedicated to stakeholder returns are over the dividend amount, Alvopetro intends to allocate the surplus to share buybacks. Alvopetro had a working capital surplus of US$14.7 mm at the end of June.
Canacol Energy (CNE CN): 2Q24 results – 2Q24 realized contractual natural gas sales in Colombia were 158.5 mmcf/d. Ner debt at the end of June was ~US$670 mm.
Frontera Energy (FEC CN): 2Q24 update. Share buyback – 2Q24 production in Colombia and Ecuador was 39,912 boe/d. Production in June and July, averaged ~40,600 boe/d. The company is launching a C$30 mm share buyback programme. Net debt at the end of June was US$309 mm.
Gran Tierra Energy (GTE LN/US/CN): Positive well test results at exploration well in Colombia – The Bocachico Norte-J1 exploration well has produced at stabilized rates of 1,353 bbl/d of 35.5-degree API gravity oil and less than 1% water cut.
EUROPE
BlueNord (BNOR NO): Operating update in Denmark – Net production in July was 24.9 mboe/d. The Company reiterates its production guidance for 3Q24 of 29.0 – 36.0 mboe/d.
Harbour Energy (HBR LN): 1H24 operating update – 1H24 production was 159 mboe/d. The company has declared an interim dividend of US$0.13 per share (in line with policy). The FY24 production guidance narrowed to 155-165 mboe/d (from 150-165 mboe/d). Production in 2025 is expected to be stable compared to 2024.
Prospex Energy (PXEN LN): Raising new equity for Spanish acquisition – Prospex is raising £4.2 mm of new equity at a price of 6p per share. The proceeds will fund the acquisition of a 10% indirect interest in the Viura producing gas field in northern Spain. HEYCO Energy, the majority owner of HEYCO Energy Iberia, the owner of 58.7964% of the Viura Field, has subscribed 41.7 mm new shares in the equity raise, amounting to £2.5 mm. The Viura producing gas field, onshore northern Spain, has original gas in place of 211 bcf and 2P reserves of 105 bcf. To date just 16 bcf of gas has been produced from Viura meaning that the remaining 2P reserves are 90 bcf.
MIDDLE EAST AND NORTH AFRICA
DNO (DNO NO): 2Q24 update – Gross production in Kurdistan over the period was 79,783 boe/d. Norway net production was 16,321 boe/d with 3,256 boe/d in Cote d’Ivoire.
Genel Energy (GENL LN): 2Q24 update in Kurdistan – WI production in Kurdistan over the period was 19,510 bbl/d. Domestic sales price has averaged US$34/bbl for the period, with the last two months priced at US$37/bbl, Net cash at the end of June was US$125.5 mm.
Predator Energy (PRD LN): Operating update in Morocco – The Jurassic MOU-5 structure has been estimated to hold P50 Prospective Resources of 5.9 tcf net to the Company, with a risking of 12%. The gas sample analysed in the Moulouya Fan in MOU-3 showed evidence of the presence of helium. MOU-3 was drilled closed to significant faults extending down into basement rocks. Predator has decided to include a test for helium in the MOU-4 rigless testing programme and for a potential testing programme for MOU-5 if the well results are positive for gas.
ShaMaran Petroleum (SNM CN): 2Q24 results – 2Q24 gross production at Atrush in Kurdistan was 54.8 mbbl/d. net debt at the end of Juen was US$179 mm.
SUB-SAHARAN AFRICA
Bowleven (BLVN LN): Delisting from AIM – Bowleven is cancelling the admission of its ordinary shares pence from trading on AIM. Bowleven’s main shareholder is offering to buy minorities at a price of 0.225 p per share.
Kosmos Energy (KOS US): 2Q24 results – 2Q24 net production was 61.2 mboe/d including 41.9 mboe/d in Ghana, 8.5 mbbl/d in EG and 11.7 mboe/d in USA. Net debt at the end of June was US$2.5 bn. The ramp up in production at Jubilee has been slower than expected, primarily as a result of one producer well (J-69) underperforming expectations and a temporary reduction in water injection. First LNG in Senegal and Mauritania is expected in 4Q24.
Orca Energy (ORC.A/B CN): Claim against the government of Tanzania – Orca has issued a notice of dispute against the Government of Tanzania for breaches of the Production Sharing Agreement and the Gas Agreement for an amount in excess of US$1.2 bn.
Savannah Energy (SAVE LN): Acquisition of assets in South Sudan cancelled – The sale and purchase agreement to acquire Petronas’ entire oil and gas business in South Sudan has been cancelled by Petronas.
Tullow Oil (TLW LN): 1H24 update – 1H24 production was 63.7 mboe/d including 35.1 mbbl/d at Jubilee, 10.4 mbbl/d at TEN and 10.2 mbbl/d in Gabon. Net debt at the end of June was US$1.7 bn. FY24 production is expected to be at the lower end of the 62-68 mboe/d guidance range, driven primarily by underperformance of a single Jubilee well due to a lack of pressure communication from water injection in this specific area. The FY24 capex guidance has been reduced to US$230 mm from US$250 mm.
EVENTS TO WATCH NEXT WEEK
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13/08/2024: Maha Energy (MAHA-A SS) – 2Q24 results
14/08/2024: Africa Oil (AOI SS/CN) – 2Q24 results
14/08/2024: GeoPark (GPRK US) – 2Q24 results
15/08/2024: DNO (DNO NO) – 2Q24 results
15/08/2024: Diversified Energy (DEC LN/US) – 2Q24 results
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.
Bowleven is an oil and gas company focused on Africa, where it holds a combination of development and exploration interests in Cameroon. Co.'s assets are aggregated into a single reporting segment: Africa operations, which focus on exploration and appraisal activities in Cameroon. All assets that are aggregated in this segment are in the exploration phase.
Canacol Energy is engaged in core petroleum and natural gas exploration and development activities in Colombia, Brazil and Guyana.
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.
Frontera Energy is a publicly traded oil and gas company engaged in the exploration, development and production of heavy crude oil and natural gas in Colombia, Peru, Brazil, and Guatemala.
Genel Energy is a holding company. Co. is principally engaged in the business of oil and gas exploration and production. Co. has three segments: Oil, which is comprised of the producing assets, Taq Taq and Tawke, which are located in the Kurdistan Region of Iraq (KRI) and makes predominantly all sales to the Kurdistan Regional Government; Gas, which is comprised of the upstream and midstream activity on Miran and Bina Bawi also in the KRI; and Exploration, which is comprised of its exploration activity, principally located in the KRI, Somaliland and Morocco. As of Dec 31 2016, Co. had proved plus probable working interest reserves of 161.0 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.
Kosmos Energy is a holding company. Through its subsidiaries, the company operates as a deepwater independent oil and gas exploration and production company focused along the Atlantic Margins. The company's assets include production offshore Ghana, Equatorial Guinea and U.S. Gulf of Mexico, as well as gas development offshore Mauritania and Senegal. The company also maintains a sustainable exploration program balanced between proven basin infrastructure-led exploration (Equatorial Guinea and U.S. Gulf of Mexico), emerging basins (Mauritania, Senegal and Suriname) and frontier basins (Cote d'Ivoire, Namibia and Sao Tome and Principe).
Orca Exploration Group is an international company engaged in hydrocarbon exploration, development and supply of gas in Tanzania, the establishment of a coastal gas pipeline network in East Africa, oil appraisal and gas exploration in Italy and the acquisition of exploration opportunities in Europe and Africa.
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.
Predator Oil & Gas Holdings PLC seeks to consolidate the acquisition of a specific non-operated oil and gas business opportunity in the Republic of Trinidad and Tobago, to generate income for Co., and exploration and appraisal assets in the Licensing Options offshore Ireland that form an existing operating business operated by POGV. Both businesses are consistent with Co.'s focus on responsible, environmentally aware, investment in the fossil fuel industry.
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.
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.
Tullow Oil is an independent oil and gas exploration and production company. Co.'s focus is on finding oil in Africa and South America. Co.'s primary activities include targeted exploration and appraisal, selective development projects and growing its production. As of Dec 31 2017, Co.'s portfolio included 90 licences in 16 countries. Co.'s operations are organized into three business delivery teams: West Africa; East Africa; and New Ventures. As of Dec 31 2017, on a working interest basis, Co. had commercial reserves of 245.7 million barrels of oil, 268.90 billion cubic feet of gas, and 290.5 million barrels of oil equivalent (petroleum).
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).
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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