AUCTUS ON FRIDAY - 11/10/2024
AUCTUS PUBLICATIONS________________________________________
GeoPark (GPRK US)C; Target price US$26 per share: Downtime and blockades continue to impact production. All eyes on Argentina – 3Q24 production was 33,215 boe/d with production in Colombia still impacted by downtime and blockades (we expected 34.6 mboe/d). Production at Llanos-34 continues to decline. Production in Brazil remains shut-in. GeoPark had highlighted these downside risks in August. This was partially offset by (1) high production of 1,581 boe/d from Llanos Exploration (Llanos 87 and 123), mainly driven by the Toritos 2 and the Toritos Norte wells and (2) increasing production in Ecuador (1,786 boe/d). We now assume that Colombia production will continue to be impacted by blockades in 4Q24 with Llanos 34 and Platanillo continuing to decline. We also assume that production in Brazil will come-back online in early January rather than early October. Excluding Argentina, we now forecast ~33 mboe/d production in 4Q24. Argentina continues to be a bright spot. 3Q24 gross production at Mata Mora was 12,621 boe/d reaching 15,418 boe/d during August. We now anticipate that the Argentinian acquisition will complete during October orNovember rather than early October. This has no impact on our financial forecasts given that the effective date of the transaction has not changed. The first exploration pad (3 wells) at Confluencia Norte will start production next week. This could be material. Our unrisked NAV for this block is US$4.60 per share. As we incorporate (1) the lower production in Colombia, (2) the delay in restoring Brazil production, (3) a more conservative valuation of Llanos 34’s 3P reserves given the steeper decline than expected and (4) the negative result of the Espejo Norte A1 exploration well in Ecuador, we have changed our target price to US$26 per share that has been set in line with our new ReNAV. The current dividend yield is ~6.7%.
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PetroTal (PTAL LN/TAL CN)C; Target price £1.40 per share: Production and cash well above expectations – 3Q24 production was 15,160 bbl/d. This is well above expectations of 13 mbbl/d. While the river levels were at record lows, PetroTal has maximized the barge fleet capacity during the quarter. Production during the first week of October was 10.7 mbbl/d. With the end of the dry season in sight, production is expected to return to capacity by mid-November, As a result, FY24 production is expected to be at the top end of the 16.5-17.5 mbbl/d guidance. Petrotal held US$133 mm in cash (US$121 mm unrestricted) at the end of October. This is also significantly above our expectations of only US$75 mm. The difference is due to (1) higher production than we forecasted and (2) a very large reduction in receivables from US$106 mm at the end of June to just US$55 mm at the end of September. Payables have increased from ~US$70 mm to US$81 mm. Overall the difference between receivables and payables has decreased by >US$60 mm from end of June to end of September. The completion of the acquisition of Block 131, expected to add ~1.2 mbbl/d of light oil production in 2025 (our forecasts), is on track to be completed by YE24 with the Supreme Decree allowing for the amendment of the licence having been signed by the President of Peru. This is the last major regulatory hurdle. The renewal of the investment certificate from the Peruvian tax authority is expected to be received in 30 days. We do not anticipate any cash payment on closing.
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Pulsar Helium (PLSR CN)C; Target price C$1.90 per share: Seismic interpretation confirms prospectivity and highlight new potential targets – The interpretation of the 20.4 km long 2D seismic at Topaz shows a continuous reflective package at the helium-bearing interval encountered at Jetstream #1 that extends ~1.5 km west and 2 km east of the well. This firms up the mapping of the contingent and prospective resources. In addition, the 2D seismic shows other reflective packages suggesting additional potential prospectivity in new zones.
Tethys Oil (TETY SS)C; Target price SEK80 per share: Production update – WI production at Blocks 3&4 was 7,724 bbl/d in September. This compares with 7,740 bbl/d in August and 7,687 bbl/d in July.
Zephyr Energy (VLE CN)C; Target price £0.13 per share: Paradox well to be lengthened. Potential funding by industry partner provides external validation – Zephyr has decided to extend the State 36-2R well in the Paradox basin by drilling a 5,500 ft lateral on the well. We are not surprised by this decision given that the acid job performed on the existing 130 ft interval was very successful with peak test production of >2,100 boe/d. Zephyr believes that the ultimate recovery of the extended well could reach 2 mmboe, which is well above what would have been recovered from the 130 ft interval. The 5,500 ft lateral is expected to cost ~US$7 mm (including acidization and production testing). Assuming US$12 mm total cost per development well would imply ~US$2/boe drillex. This is very low. Zephyr has entered into a non-binding LOI with a US-based industry investor with non-operated investment experience to fully fund the extended lateral. While the terms of the proposed transaction have not been disclosed, Zephyr would retain operatorship and receive a majority of the economic benefits from the well. In addition, the investor would not receive any further interest or option in the Paradox project other than the individual wellbore interest. This is a very positive development as this validates the quality and the potential of Zephyr’s interests in the Paradox basin. While transactions with a similar structure are very common in more established US basins, this is a first for the Paradox.
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IN OTHER NEWS
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AMERICAS
Alvopetro Energy (ALV CN): Operating update in Brazil – Alvopetro sold 1,963 boe/d in September. The 183-1 well flowed only water.
Petrobras: Resources estimates found by exploration campaign in Colombia – Following the drilling of Sirius-1 and Sirius-2, the gas in place encountered in the Guajira offshore basin is estimated at ~6 tcf,
Parex Resources (PXT CN): Operating update – 3Q24 production in Colombia was 47,569 boe/d.
ASIA PACIFIC
Sinochem: Selling overseas assets – Media reports highlighted that Sinochem is selling its overseas assets (non Chinese). This includes assets in Colombia, Brazil and the USA.
EUROPE
Angus Energy (ANGS LN): Production update in the UK – 3Q24 production was 5.8 mmcf/d plus 109 bbl/d of condensate.
BlueNord (BNOR NO): Production update in Denmark – September production was 26.5 mboe/d.
Equinor (EQNR NO): Buying a minority stake in Orsted – Equinor has acquired 9.8% in Orsted.
Milton Capital (MII LN): Energy RTO – Milton has executed a non-binding term sheet and exclusivity agreement to acquire energy transition assets in Europe.
OMV (OMV AG): Trading update – 3Q24 production was 364 mboe/d.
Repsol (REP SM): 3Q24 operating update – 3Q24 production was 553 mboe/d.
Shell (SHEL LN): 3Q24 update – 3Q24 production is expected to range between 2,660-2,800 mboe/d.
Var Energi (VAR NO): 3Q24 update – 3Q24 production in Norway was 256 mboe/d. Var is narrowing the FY24 production guidance range to between 280 to 290 mboe/d, with the upside level dependent upon the timing of the start-up of Johan Castberg.
FORMER SOVIET UNION
Petro Matad (MTAD LN): Operating update in Mongolia – The Gobi Bear-1 exploration well encountered 34 m of sandstones reservoir with a porosity of 13%. The resistivity profile suggests the sands may contain a hydrocarbon charge but the absence of good oil shows whilst drilling leads to some uncertainty. In light of the ambiguous results from drilling and logging, the well will be suspended whilst the company gathers relevant information from well samples and regional data in the Tamsag Basin in order to refine the interpretation.
MIDDLE EAST AND NORTH AFRICA
Gulf Keystone Petroleum (GKP LN): Share buyback and dividend – Gulf Keystone had US$110 mm in cash as at 7 October. 2024 production year to date was ~42.3 mbbl/d. Gulf Keystone has declared an interim dividend of US$20 mm. The company is also launching a share buyback programme for up to US$10 mm.
SUB-SAHARAN AFRICA
PetroNor E&P (PNOR NO): 3Q24 update in Congo – 3Q24 WI production was 4,763 bbl/d.
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.
Equinor is engaged in oil and gas exploration and production activities. Co. is primarily focused on exploration, development and production of oil and gas on the Norwegian continental shelf (NCS). Co.'s operations are organized into four segments. The Development and Production Norway and Development and Production International segments explore, develop, produce and extract crude oil, natural gas and natural gas liquids. The Marketing, Processing and Renewable Energy segment markets, trades, transports and processes oil and natural gas and renewable energy. The Other segment consists of global well and project delivery, research and develpoment, and business development.
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).
Parex Resources is engaged in oil and natural gas exploration, development and production in South America and the Caribbean region. As of Dec 31 2010, Co. had gross proved light and medium oil reserve of 1,066 thousand barrels (net: 980 thousand barrels).
Petro Matad's principal activity consists of oil exploration in Mongolia. Co. is focused on its exploration activities on its Production Sharing Contracts with the Mineral Resources and Petroleum Authority of Mongolia on Blocks IV, V and XX in Mongolia.
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.
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.
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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