Corcel plc (AIM: CRCL): Successful workover in Brazil
• The EI-1 well at the Irai gas field in Brazil has been tested at a rate of 120 boe/d (~0.7 mmcf/d). The well had been shut-in since 2022. This test rate exceeds our forecast of ~0.5 mmcf/d for the first quarter of production, achieved within three months from signing the agreement with Irai's owner.• Once onstream, production from the EI-1 well will boost production from the existing EI-3 well, which we estimate at ~0.6-0.7 mmcf/d.
• The next step involves working over a second well before deciding on the option to acquire 20% of Irai. Corcel also holds a Right-of-First Refusal (ROFR) on the remaining 80%, as well as another ROFR for 100% of the adjacent TUC-T-172 exploration block. Total production, including the two work-overs, is expected to reach ~1.2 mmcf/d over a 12-month period.
• If Corcel decides to exercise the option to acquire 20% of Irai, it will advance a capped US$2.95 mm for additional development activities over a two-year period, in two tranches. The first tranche of US$0.85 mm will fund one new development well in 1H25. A follow-on funding of US$2.1 mm in the first half of 2026 will support further development through mid-2026.
• Given that Irai is a producing field, program is expected to be funded by offtakers or through debt financing.
• A typical well has an Initial Production (IP) rate of ~210 boe/d gross production, recovers ~0.2 million barrels of oil equivalent (mmboe), and costs less than US$1 mm. A total of four new wells could take peak production to ~1,000 boe/d.
• We reiterate our target price of 1.00 pence per share. The next potential catalyst is the acquisition of an additional interest in KON-16. An additional 5% interest has an unrisked Net Asset Value (NAV) of ~0.40 pence per share.
• Successful drilling of a post-salt target at KON-16 (~100 mmbbl) in Angola, assuming a 49.5% net interest, could add ~1.00 pence per share, with a further unrisked value of 3.10 pence per share for the pre-salt target (~300 mmbbl).
Valuation
Our new ReNAV is unchanged at 0.99p per share. We value Irai (assuming Corcel exercises the option to acquire 20% in the licence) at ~0.04p per share net to Corcel.
Regency Mines is engaged as a natural resource exploration and development company. Co. manages a balanced portfolio of mineral and oil and gas projects and investments at different stages of development. Co. is active in multiple international locations including the U.K., Papua New Guinea, the U.S. and Greenland.
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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