Calima Energy Ltd (ASX: CE1): High production in 4Q23 and 1Q24
• 3Q23 production was 3,683 boe/d, slightly below the company’s guidance due to maintenance, turn-around operations at two of the production facilities and unscheduled downhole maintenance on pumping equipment on a few of the more productive wells. We forecasted 3,890 boe/d.• This is more than offset by the high current production of ~4,100 boe/d following Pisces 10 and 11 being brought into production. Pisces 11 continues to clean up with Pisces 12 due to commence production in November. Calima forecasts 4Q23 production of 4,028 boe/d and we have increased our 4Q23 production forecast of 3,740 boe/d to 4,030 boe/d to be in line with Calima’s guidance.
• 1Q24 production is expected to remain ~4.1 mboe/d, which is also above our previous forecast of 3.9 mboe/d.
• We re-iterate our target price of A$0.45 per share, which represents >5x the current share price.
More on financials
The low 3Q23 production was offset by stronger realizations than we expected. Overall, the reported cash of A$17.3 mm at the end of September was very close to our expectations (A$18.4 mm). The FY23 capex will be ~A$35 mm. While the WCS-WTI discount has increased, it appears to be narrowing beyond our anticipations (futures of US$13 14/bbl) from December 2024 to March 2024. We currently carry US$19/bbl for 4Q23 and US$20/bbl in 1Q24. A smaller discount could have an important positive impact on our estimates. The Trans Mountain expansion continues to be expected to be on stream in 2Q24.
Valuation
At US$86/bbl for WTI, we forecast overall FCF of ~>A$60 mm from 2023 to 2025. This is ~10% above the current market cap and leaves ample financial resources to distribute a generous dividend. Our Core NAV based only on the company’s 2P reserves is ~A$0.32 per share, which represents >3.5x the current share price. Our ReNAV is unchanged at ~A$0.45/sh.
Calima Energy and its subsidiaries are engaged in investing in oil and gas exploration and production projects internationally and more specifically in West Africa.
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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