Calima Energy Ltd (ASX: CE1): Increasing dividend distribution to ~10% yield
Increasing dividend distribution to ~10% yield• 2Q23 production was 4,152 boe/d, above the estimates provided previously (4,125 boe/d).
• The J2J waterflood programme has added 130 bbl/d production, which we view as very encouraging since rolling out the waterflood programme to the rest of the asset could have a positive impact on recovery factors and reserves.
• The Pisces #8 and #9 wells continue to outperform with production 15% above the type curve. As of the end of July, Pisces #8 and Pisces #9 were producing ~400 boe/d and ~200 boe/d respectively. This implies minimal declines compared to the peak rates achieved in April.
• Calima will distribute a dividend of A$3 mm in September (in line with previous indications). The company will also distribute a further A$2 mm in January. While the second distribution is in line with our forecast, we view this confirmation as a positive.
• The headline 2Q23 capex of A$7.6 mm was higher than expected (A$3 mm) but reflects a negative working capital movement that we had mostly already incorporated into our operating cashflow forecast (~A$3 mm). No drilling or completion projects occurred in the quarter.
• We re-iterate our target price of A$0.50/sh.
Capital programme, production forecast and differentials
Calima plans to drill 3 new Brooks wells in 2H23. The campaign is expected to start in early September with first production in early November. Until the new wells come on stream, production is expected to be 3.8-4.0 mboe/d. We assume 3,890 boe/d in 3Q23. The company continues to forecast sustaining annualized capital expenditures of ~A$25-35 mm and this in 2023 we carry a full year spend of ~A$32 mmWe now assume ~4,080 boe/d production in 2023 (~4,200 boe/d previously). Our forecasts are broadly unchanged afterwards. The WTI-WCS differentials are currently ~US$14/bbl, which is more favourable than we forecast (US$16/bbl in 3Q23).
Valuation
At current oil prices, we forecast overall FCF of >A$40 mm from 2023 to 2025. This represents ~80% of the current market cap. Our Core Nav based on the company’s 2P reserves only is A$0.28 per share (~3.0x the current share price) while our ReNAV is ~A$0.50/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.
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.