Auctus on Friday - 17/02/2023
AUCTUS PUBLICATIONS________________________________________
Calima Energy (CE1 AU)C: Target price of A$0.50 per share: Positive testing results opens the Montney - Calima has so far obtained very good results from the re-testing of the Calima #2 and Calima #3 wells. This could de-risk the initial development of the Montney with potential for production in 2024. This could also materially increase the likelihood of attracting an industry partner. Calima has been estimated to hold 2C contingent resources of 35.8 mmbbl of liquids plus 748 bcf of natural gas in the Montney. At the Calima #2 well, Calima was retesting the Middle Montney. The well was flowed at a maximum constrained rate of 6.3 mmcf/d in a 2 3/8” tubing. This is a very good rate compared to what was achieved four years ago (10 mmcf/d but from a 5 ½” casing, i.e five times the flow area of the tubing used in 2023) and is well above the type curve. The peak condensate ratio of 248 bbl/mcf observed at Calima #2 is much higher than previously (155 bbl/mmcf in 2019). The average condensate ratio of 102 bbl/mmcf (22 bbl/mmcf in 2019) over the duration of the test is more representative for stabilized production and is also well above expectations. NGLs are also expected to be recovered through gas processing and could add 15-25 bbl/mmcf of liquids. Given that the majority of the revenue of the well is associated with the liquids production, this is very material. Condensates are sold at a premium to WTI, which is much higher than the rest of Calima’s production. Calima #3 tested the Upper Montney with a peak flow rate of 5.25 mmcf/d, proving that this horizon can produce significant quantities of gas (which was uncertain previously). The condensate rate peak was only 8.4 bbl/mcf but the well has not stabilized yet with only ~6% of the frack fluid recovered. More than 10-20% of load fluid recovery is often needed to demonstrate long term well performance. Even if the condensate yield does not increase, the Upper Montney gas will boost the value of the development of the Middle Montney.
See website for full report
Longboat Energy (LBE LN)C: Target price of £1.30 per share: Timely entry into an attractive geography - Longboat has been awarded a 36.75% WI in and operatorship of Block 2A, a large exploration block offshore Sarawak (Malaysia) with multi tcf gas resource potential. Petronas holds 40% WI. Kertang, the key prospect on the block, is a large anticlinal structure with a closure of over 100 km2 at multiple levels in stacked reservoirs. Seismic indicators for the presence of gas can be observed in the area and over the crest of the prospect. Block 2A is located north-west of the prolific Central Luconia hydrocarbon province, outboard of recent gas discoveries. The Block covers ~12,000 km2 and is located in water depths of 100-1,400 m. The Bintulu LNG plant, is located onshore Sarawak. Longboat’s work commitments in the first phase are minimal. Offshore Sarawak is one of the few areas around the world where super majors continue to drill exploration wells. In 2022, eight new oil and gas discoveries were made offshore Sarawak. The largest oil discovery was made by Petronas in Block SK306. Within Central Luconia, Shell had discoveries at the Inai-1 and Temu-1 wells in MLNG Block, while Mubadala Energy found more gas in Block SK320 at the Cengkih-1 well. In the emerging province of Western Luconia, ConocoPhillips drilled three exploration wells in Block WL4-00 and discovered gas at the Gagau-1 well while the Salam-3 and Benum-2 wells confirmed the extension of oil and gas accumulations in adjacent fault blocks. In the mature Baram province, PTTEP made another gas discovery in Block SK410B through the Paprika-1 well, where the giant Lang Lebah was also discovered in 2019. In Sabah ultra deep waters, TotalEnergies made an oil and gas discovery at the Tepat-2 well in Block N. There is a good match between the asset characteristics of offshore Sarawak and Longboat’s expertise offshore Norway.
See website for full report
PetroTal (PTAL LN/TAL)C; Target price of £1.50 per share: Moving to the main board of the TSX – PetroTal has received final approval to list its common shares on the Toronto Stock Exchange instead of the TSX-V.
Tethys Oil (TETY SS)C; Target price of SEK120 per share: Production update in Oman – WI production from Blocks 3&4 in January was 9,392 bbl/d. This is in line with our expectations.
VAALCO Energy (EGY US/LN)C: Target price of US$9.50 per share: Strong production in Egypt. Lower performance from new wells in Gabon. Weather related delays in Canada - 4Q22 WI production was 18,175 boe/d including the contribution of TransGlobe’s assets since midOctober. 4Q22 WI production in Egypt was 8,850 bbl/d, ahead of our expectations of 8,000 bbl/d while Canada generated 2,250 boe/d, below our expectations of 2,500 boe/d, as a result of weather and operational delays impacting well tie-ins. 4Q22 WI production in Gabon was 7,075 bbl/d below our forecasts of 8,000 bbl/d. This reflects the ramp-up of production following the FSO switch-over and the performance of the North Tchibala 2H-ST that is producing 250 bbl/d gross production. The company has not managed to increase production to the modelled flow rate (1,500 bbl/d). The well does not produce any water and the reservoir pressure is stable. Only one third of the injected fracking fluid has been recovered. As we incorporate (1) lower production in Gabon, (2) higher capex and (3) a new drilling programme in Gabon starting from mid 2024 depending on drilling rig availability, we are reducing our target price to US$9.50/sh. The shares continue to offer value. The dividend yield is ~5% and the company has launched a buy back programme for 6% of the market cap.
See website for full report
Zephyr Energy (ZPHR LN) C; Target price of £0.20 per share: High production and income in the Williston - 4Q22 sales volumes averaged 1,192 boe/d, resulting in 1,490 boe/d over FY22, which is near the top end of the FY22 sales guidance and in line with our forecasts. This was achieved despite the fact that number of Zephyr's existing production wells were temporarily shut-in during 4Q22 due to "frac-protect" procedures while new nearby wells were stimulated and completed. FY22 revenue is estimated at US$42.9 mm, in line with the upgraded guidance of US$40-45 mm. FY22 operating income is estimated at US$35.7 mm, in line with our expectations. The FY23 production guidance of 1.55-1.75 mboe/d net production in the Williston Basin has been re-iterated. Pending the flow test results of the State 36-2 LNW-CC well, we re-iterate our target price of £0.20/sh. The ongoing programme has an unrisked value of £0.15/sh just based on the contingent resources in the Cane Creek reservoir on Zephyr acreage (39.25 mmboe net). Success in the C-9 reservoir around YE23 could add a further £0.12/sh.
See website for full report
IN OTHER NEWS
________________________________________
AMERICAS
Challenger Energy (CEG LN): Selling Caribbean asset – Challenger is selling Caribbean Rex for US$1.5 mm. This includes Challenger’s interests in the South Erin field.
EUROPE
Angus Energy (ANGS LN): Appeal to authorize project in the UK successful – Angus’ appeal against the decision by West Sussex County Council to refuse permission for an extended well test at its Balcombe oil site has been upheld.
EnQuest (ENQ LN): Trading update in the UK and Malaysia – FY22 production was 47,259 boe/d. Gross production at Kraken and Magnus was respectively 26.091 boe/d and 12,461 boe/d. Golden Eagle production for the year was lower than expected at 6,323 boe/d. FY23 net production in Malaysia was 6,458 boe/d. YE22 net debt was US$717 mm. The company expects to produce 42-46 mboe/d in 2023 with US$220 mm capex as drilling at Kraken will be deferred. Extensive shutdowns are expected at Kraken and GKA.
Equinor (EQNR NO): Dry hole in Norway – Appraisal well 16/2-23 S on licence PL 265 was dry.
IOG (IOG LN): Operational update in the UK – IOG has decided to drill the Blythe H2 well ahead of Southwark A1. The H2 well does not require hydraulic stimulation. In a success case, the well is expected to initially deliver 30 40 mmcf/d. The well is expected to cost £13 mm net to IOG. Gross production from the fields is currently in the 15-20 mmcf/d range.
Ithaca Energy (ITH LN): 4Q22 update in the UK North Sea – 4Q22 production was 80.8 mboe/d. Ithaca Energy expects to pay a total dividend for FY 2023 of US$400 mm.
Reabold Resources (RBD LN), Baron Oil (BOIL LN) and Upland Resources (UPL LN): Independent resources estimates in the UK – Licence P2478 is estimated to hold 201 mmboe gross prospective resources (unrisked). The Dunrobin West prospect will be the first to be drilled. It is estimated to hold 119 mmboe gross prospective resources across two prospects. The Jurassic primary target carries a chance of success of 34% while the secondary Triassic target only 12%.
Repsol (REP SM): 4Q22 results – 4Q22 adjusted net income was EUR2 bn with 551 mboe/d production. The company will raise its dividend by 11%.
Serinus Energy (SQZ LN): Wins arbitration case could increase stake in Romania assets – The International Chamber of Commerce has ruled that, as a result of OEBS' default under the Joint Operating Agreement between the parties, OEBS' 40% participating interest in the Satu Mare Concession in Romania will be transferred to Serinus.
Var Energi (VAR NO): FY22 results – 4Q22 production in Norway was 214 mboe/d. YE22 net debt was US$2.7 bn. The FY23 production guidance has been set at 210-230 mboe/d with US$2.65-2.95 bn capex. The company plans to distribute a dividend of US$270 mm for 1Q23 for. For 2023, Vår Energi plans to distribute dividends of approximately 30% of cash flow from operations after tax. YE22 2P reserves were estimated at 1,070 mmboe (YE21: 1,133 mmboe).
MIDDLE EAST AND NORTH AFRICA
Capricorn Energy (CNE LN): Terminating transaction with NewMed – The proposed transaction to merge Capricorn with NewMed Energy has been terminated.
ShaMaran Petroleum (SNM CN): Reserves update and FY23 outlook in Kurdistan – YE22 WI 2P reserves stood at 68.3 mmbbl with 34.8 mmbbl 2C contingent resources. FY23 Net production from Atrush and Sarsang is expected to be 15-18 mbbl/d with US$64 mm net capex.
SUB-SAHARAN AFRICA
Galp Energia (GALP LS): Selling Angola – Galp is selling its Angolan assets to Somoil for US$830 mm. The assets and stakes include Block 14 (9% Galp), Block 14K (4.5% Galp), and Block 32 (5% Galp).
Tullow Oil (TLW LN): Taking tax claim in Ghana to international arbitration – Tullow has received a corporate tax assessment for US$190.5 mm relating to the disallowance of loan interest for the fiscal years 2010 - 2020. Tullow has also received a new corporate income tax assessment and demand notice for US$196.5 mm relating to proceeds received by Tullow during the fiscal years 2016 – 2019 under Tullow’s corporate Business Interruption Insurance policy. Tullow has filed requests for arbitration with the International Chamber of Commerce in London.
EVENTS TO WATCH NEXT WEEK
________________________________________
21/02/2023 – Gran Tierra Energy (GTE CN/LN/US): FY22 results
22/02/2023 – Panoro Energy (PEN NO): FY22 results
23/02/2023 – Eni (ENI IM): FY22 results
Baron Oil is an independent oil and natural gas exploration company. Co. owns exploration acreage in the U.K. and Peru. The principal activity of Co. is that of oil and gas exploration and production.
Cairn Energy is an oil and gas exploration and development company. Co. has three groups of business unit: Senegal, which focuses on appraising the discoveries offshore Senegal and to identify further exploration prospects for drilling; U.K and Norway, which includes exploration activities in the North Sea, Norwegian Sea and Barents Sea and management of Co.'s development assets in the U.K. North Sea; and International, which consists of all other regions where Co. holds exploration licenses, including Greenland, Ireland, Morocco, Western Sahara, Mauritania and the Mediterranean. As at Dec 31 2016, Co. had total proved plus probable reserves of 51.5 million barrels of oil equivalent.
Calima Energy and its subsidiaries are engaged in investing in oil and gas exploration and production projects internationally and more specifically in West Africa.
Enquest is an oil and gas production and development company. As of Dec 31 2016, Co.'s principal U.K. assets were its interests in the producing operated oil fields Heather/Broom, Thistle/Deveron, the Dons area, the Greater Kittiwake Area, Alma/Galia and Scolty/Crathes. In addition, Co. had interests in the Kraken development and also a non-operated interest in the producing Alba oil field. In Malaysia, Co.'s operated assets comprise the PM8/Seligi Production Sharing Contract and the Tanjong Baram Risk Services Contract. At Dec 31 2016, Co. had proven and probable reserves of 215.0 million barrels of oil equivalent.
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.
Independent Oil and Gas, through its subsidiaries, is engaged in the business of oil and gas exploration and/or operations in the North Sea. Co. has its oil and gas interests are in the U.K. sector of the North Sea.
Longboat Energy PLC, formerly Longboat Energy Ltd, is a United Kingdom-based investment company. The Company's investment objectives is to create a full-cycle North Sea exploration and production (E&P) company in order to deliver value to investors.
Reabold Resources is engaged in investing company in the natural resources sector.
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.
Serinus Energy is engaged in the exploration for and development of oil and gas properties in Ukarine, Brunei and Syria.
Shamaran Petroleum is a Canadian-based oil and gas company engaged in the business of oil and gas exploration and development. Co. is in the pre-production stages of an exploration and development campaign in respect of petroleum properties located in the Kurdistan Region of Northern Iraq.
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.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.