Auctus on Friday - 13/10/2023
AUCTUS PUBLICATIONS________________________________________
Pulsar Helium (PLSR CN)C; target price of C$0.90 per share: Additional acreage should increase the size of the prize – Pulsar has signed a lease with a private mineral rights holder to expand the area of the company’s Topaz helium project. The additional mineral rights are within a 6.2 mile radius of the Topaz discovery and cover a total of
2,840 gross acres (1,049 net acres). This represents ~100% increase to the existing 1,040 net acres under lease. Pulsar has also an option to acquire a further 2,092 net acres. The new lease is for an initial term of 20 years (extendable up to a maximum of 40 years). The lease gives Pulsar exclusive rights to non-hydrocarbon gases. The private mineral right owner will receive U$11,000 in cash from Pulsar. and retains a production royalty of 3%. The acreage addition is expected to increase the amount of prospective resources (current 2U: ~3 mmcf, 3U: ~76 mmcf currently). We estimate the unrisked NAV of 100 mmcf of helium at ~C$0.65 per share. The ambient noise tomography survey on Topaz has also been concluded and will provide better definition of the project.
Valeura Energy (VLE CN)C; target price of C$6.40 per share: ~20 mbbl/d production in 2Q23 – 2Q23 production was 19,961 bbl/d with the difference to our forecast mostly reflecting the timing of drilling. Wassana (1.6 mbbl/d production during 2Q23) was offline in 3Q23. Valeura made a Petroleum Income Tax payment of US$29 mm during 3Q23. Net cash (based on cash minus debt and excluding any current receivables, current payables and inventories) at the end of September was US$103.4 mm. This excludes liftings that occurred in early October. Over 3Q23, Valeura has generated US$15.7 mm free cash flow. Including the late liftings and grossing for the tax payment would lead to ~US$70 mm pre-tax free cashflow over 3Q23. We forecast ~21 mbbl/d production in 4Q23. On US$90/bbl for Brent, no cash tax during the quarter (+US$29 mm vs 3Q23, everything else being equal) and a normal lifting schedule (positive working capital movement vs 3Q23 due to the liftings in early October), we forecast that Valeura will generate ~US$85 mm free cash flow in 4Q23 leading to net cash of ~US$190 mm at YE23.
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IN OTHER NEWS
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AMERICAS
Alvopetro Energy (ALV CN): Drilling update in Brazil – The 183-A3 well on the Murucututu natural gas field encountered potential net natural gas pay across two separate formations totalling 127.7 m, with an average porosity of 10.3%. This includes 116.1 m in the Caruaçu exploration target with 38.5% water saturation and an average porosity of 10.4%. Alvopetro currently has no reserves or resources assigned to this Target.
Canacol Energy (CNE CN): Operation update in Colombia – Average realized contractual natural gas sales for the month of October to date are 162 mmcf/d, with current contractual natural gas sales being 180 mmcf/d of gas. There were unexpected production capacity restrictions, but Canacol expects to have production back to normal levels shortly. The company anticipates that it will be able to make up lost sales volumes by year end and meet its average production and financial targets and therefore does not expect this situation to have a material impact on its operations and results.
Kosmos Energy (KOS US/LN): Oil discovery in USA – The Tiberius exploration in the Gulf of Mexico encountered ~250 feet of net oil pay in the primary Wilcox target.
Royal Helium (RHC CN): Helium facility commissioned in Canada – Royal has completed the commissioning of its Steveville helium purification facility and has commenced the start-up of the facility. The Steveville plant is engineered to process 15 mmcf/d of raw gas fed by two of the 100% owned helium wells at Steveville with an output capacity of approximately 22,000 mcf of 99.999% helium per year.
ASIA PACIFIC
Jadestone Energy (JSE LN): Operating update – Since resuming production on 2 September, Montara has averaged ~7,000 bbl/d. It is expected that, over time, average oil production rates will normalise back towards previous guidance in the 6,000 - 6,500 bbl/d range. First gas at Akatara in Indonesia remains expected around mid 2024. The company’s RBL borrowing capacity during the upcoming 6 month period has been increased from US$190 mm to US$200 mm . For the subsequent 6-month period (2Q-3Q24), the borrowing capacity will be the lower of the approved banking model as of 31 March 2024 or US$150 mm (previously forecasted at US$99 mm).
EUROPE
OMV (OMV AG): 3Q23 update – 3Q23 production was 364 mboe/d.
Var Energi (VAR NO): 3Q23 update in Norway – 3Q23 production was 210 mboe/d. The FY23 production guidance is 210 to 220 mboe/d. The anticipated exit production rate for the year is above 230 mboe/d.
FORMER SOVIET UNION
Block Energy (BOE LN): 3Q23 operational update in Georgia – 3Q23 production was 630 boe/d.
Enwell Energy (ENW LN): Update in Ukraine – 3Q23 production was 2,248 boe/d. The company held US$72.9 mm in cash at the end of September.
SUB-SAHARAN AFRICA
Invictus Energy (IVZ AU): Drilling update in Zimbabwe – The Mukuyu-2 well encountered multiple pairs of well-developed seals and reservoir sands with effective porosities averaging 15 to 20% in the Pebbly Arkose and Dande formations. Total background gas in this hole section, above the primary targets in the Upper Angwa, is higher than those observed in Mukuyu-1 and heavier hydrocarbons (C4 and C5) have been detected. The presence of residual hydrocarbons is interpreted from wireline logs over an approximate 20 m gross reservoir interval with quality properties in the upper Dande formation. The sands across the secondary target intervals are thicker and more developed than at Mukuyu-1.
San Leon Energy (SLE LN): Transactions in Nigeria – The transaction between Midwestern oil & Gas and San Leon has been terminated. Tri Ri Asset Management is investing up to US$187 mm in San Leon. San Leon will acquire a 13.5% further interest in Energy Link Infrastructure, provide a loan of US$37 mm to Energy Link and repay the US$5 mm loan from Tosca. On completion San Leon would own 55% of Energy Link. The new loan gives the right to subscribe for 35% of Energy Link. Energy Link owns a new pipeline and a floating storage and offloading vessel. The “up to US$187 mm” investment in San Leon consists of (i) a US$125 mm convertible secured loan, (2) a US$16 mm subscription for new shares at 30 p per share and (3) a potential US$46 mm further investment from the grant of 62,500,000 warrants with an exercise of 60 p per share.
Canacol Energy is engaged in core petroleum and natural gas exploration and development activities in Colombia, Brazil and Guyana.
Jadestone Energy is engaged in the evaluation, acquisition, exploration and development of oil and gas properties.
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).
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).
San Leon Energy is a specialist oil and gas company with a portfolio of assets across Europe and North Africa based in Ireland. Co. is engaged in the exploration and production of oil and gas. Co. is focused on the exploration and production of oil and gas projects in Poland, Albania, Morocco, Spain, Ireland, Romania and Italy. Co. develops and builds its balanced European portfolio using conventional and unconventional shale assets. Co.'s main focus is on Polish unconventional oil and gas reserves. Co.'s subsidiaries, San Leon Services Limited, San Leon Energy (UK) Limted and San Leon Services Sp. z o.o. provide employment and administrative services to the Group.
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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