Auctus on Friday - 24/02/2023
AUCTUS PUBLICATIONS________________________________________
Arrow Exploration (AXL LN/CN)C: Target price of £0.45 per share: Positive drilling results at RCE-3 - RCE-3, the first well of the FY23 10 well drilling programme, has encountered 58 feet of net oil pay across seven hydrocarbon bearing intervals. This includes 19 feet in the Carbonera C7 (three intervals) and 39 feet in the Lower Gacheta (four intervals). The initial focus is expected to be the C7 zone (as it was for the RCE-2 and RCS-1 wells) that is expected to be put on stream in early March. It could add 300-500 bbl/d net production to Arrow. The total 58 feet of net pay compares with 55 feet in the RCS-1 well and 80 feet in the RCE-2 well. Importantly, ~500 bbl/d net production comes from 16 feet in the C7 at RCE-2 while the C7A and C7B produces ~350 bbl/d (net) at RCS-1 from a total 38 feet of net pay. The main sand in the C7A and C7B at RCCS-1 was not perforated. The results of the RCE-3 well are also expected to add 2P reserves as a new zone was discovered in the Gacheta. The well also confirmed the continuity of the sands. The FY23 drilling programme could add between 2,800 and 4,800 boe/d net production (before decline and in a success case) to the existing production base of ~1,800 boe/d (excluding the short term negative impact of the blockades at Ombu). The RCE-4 well will spud in March and will be followed by RCE-5. Arrow will then drill three wells at Carrizales Norte.
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Hartshead Resources (HHR AU)C: Target price of A$0.18 per share: Operations update – Hartshead has awarded a contract for a geophysical survey across Anning and Somerville. The vessel is expected to be on site in April 2023. The survey at the platform locations will confirm seabed conditions for the platform jacket design and provide data for the environmental statement to be submitted in 2023. The environmental statement is a key component of the Field Development Plan (FDP) submission and is also required for the Platform Front-End Engineering Design (FEED) jacket design verification. The pre-qualification process for the Anning and Somerville gas fields Platform and Jacket EPIC contract has commenced. The award of the contract is expected in 3Q23.
Panoro Energy (PEN NO)C; Target price of NOK48 per share: >65% production increase expected during 2023 – FY22 production of ~7.5 mbbl/d and YE22 net debt of US$47 mm had already been reported. 4Q22 gross production in Tunisia of 4,612 bbl/d was particularly high as 15 wells are now in production. The focus for 2023 is to grow production and the FY23 production guidance of 9-11 mbbl/d with 7.0-7.5 mbbl/d in 1Q23 increasing to at least 12.5 mbbl/d (when all six new production wells at the Hibiscus/Ruche Phase I development are onstream) has been re-iterated. With a three well drilling programme starting in 4Q23 in EG, we see upside to this figure. We forecast average production of 13.6 mbbl/d 2024. In 2024, Panoro will drill the 180 mmbbl Akeng deep prospect (Panoro WI: 12% - the farm-in is subject to customary approvals) located 15 km away from the Ceiba FPSO in EG. This well could be particularly material. With two additional optional drilling slots in Gabon and two extra optional slots in EG, the company has the possibility to participate in further exploration wells in both countries in 2024. A first quarterly dividend of US$3 mm has been declared. Panoro intends to distribute at least US$20 mm in 2023 in an environment where Brent is >US$80/bbl. Panoro continues to offer a combination of value, growth and dividend distribution. At the current share price, the expected FY23 dividend will represent ~6-9% yield.
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IN OTHER NEWS
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AMERICAS
Frontera Energy (FEC CN): Reserves update in Colombia – YE22 2P reserves have been estimated at 175 mmboe, down from 178.3 mmboe at YE21.
Gran Tierra Energy (GTE CN/LN): 4Q22 results – Total current production in Colombia is 32.3 mbbl/d. The company held 130 mmboe net 2P reserves at YE22. This represents a Reserve Replacement Ratio of 148% compared with 2021. YE22 net debt was US$453 mm.
EUROPE
Eni (ENI IM): 4Q22 results. Increasing dividend. Outlook – 4Q22 adjusted net profit was EUR2.5 bn with 1,617 mboe/d production. Upstream production is expected to grow by a 3-4% CAGR through 2026, then plateau to 2030. 25-30% of cash flow from operation will be allocated to dividends and buybacks. The proposed 2023 dividend is raised by 7% to eur0.94 per share.
IGas Energy (IGAS CN): Operating update in the UK – FY22 production was 1,898 boe/d. December production was 2,221 boe/d. YE22 2P reserves were estimated at 17.04 mmboe, up from 15.79 mmboe at YE21. YE22 net debt was £6.1 mm.
UK Oil & Gas (UKOG LN): Resources estimates in the UK – The Loxley gas discovery has been estimated to hold 40.2 bcf gross 2C contingent resources, of which 31 bcf is located within PEDL234.
Wintershall Dea: 4Q22 results – 4Q22 production was 323 mboe/d. YE22 net debt was EUR1.3 bn. The company expects to produce 325-350 mboe/d in 2023 with EUR1.4-1.65 capex.
SUB-SAHARAN AFRICA
PetroNor E&P (PNOR NO): 4Q22 results – WI 2H22 production at PNGF Sud in Congo was 4,440 bbl/d increasing to >5,241 bbl/d in December and January. YE22 net debt was US$13.8 mm.
EVENTS TO WATCH NEXT WEEK
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27/02/2023 – Kosmos Energy (KOS US/LN): FY22 results
27/02/2023 – Woodside Energy (WDS AU/LM): FY22 results
27/02/2023 – Africa Oil (AOI CN/SS): FY22 results
28/02/2022 – BW Energy (BWE NO): FY22 results
01/03/2023 – Frontera Energy (FEC CN): FY22 results
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.
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.
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.
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.
IGas Energy is engaged in exploring for, appraising, developing and producing oil and gas. Co. has producing assets in Scotland, East Midlands and the Weald Basin and is seeking to develop shale resources across its acreage position focusing on the East Midlands, Yorkshire and the North West of England. As of Dec 31 2016, Co. had proved plus probable reserves of 13.4 million barrels of oil equivalent, which consisted of 12.7 million barrels of oil and 3.95 billion cubic feet of gas.
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.
UK Oil & Gas Investments is an investment holding company. Co. is engaged in acquiring a portfolio of direct and indirect interests in exploration, development and production oil and gas assets which are based in the U.K.
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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