Criterium Energy Ltd (TSX-V: CEQ): Re-iterating production guidance
• 1Q24 production was 802 bbl/d with average realized price of US$82/bbl.• This is in line with our expectations.
• Operating netbacks for the period stood at C$2.2 mm, also in line with our expectations.
• Operating cashflow before changes in working capital was (C$0.37 mm).
• With a large proportion of opex being fixed, growing production is very important to start generating positive operating cash flow. Production has already increased to 870 bbl/d with five well workovers executed in the MGH field year to date (including two workovers during 1Q24).
• The company has re-iterated its YE24 production guidance of 1.2-1.3 mbbl/d with YE24 net debt of US$22-23 mm (excluding the potential sale of Bulu). We forecast 1,250 boe/d production in 4Q24. This would lead to >C$2 mm operating cashflow (after interest payments) in 4Q24.
• A further 10 workovers are planned in 2024. The company will also start drilling new wells in 2H24.
• Criterium continues to anticipate the completion of the divestment of Bulu for US$7.75 mm by the end of August. This would have a very positive impact on the company’s balance sheet and its ability to increase production. Including the divestment of Bulu, we forecast YE24 net debt of US$14 mm, which could be reduced further by paying down the existing debt in return for additional write-down.
• We re-iterate our target price of C$0.35 per share in line with our ReNAV.
Reflections on 1Q24 accounts
This is the first time that Criterium has published the consolidated accounts reflecting the Mont d’Or acquisition. Criterium carries C$7.7 mm of current tax payables. This amount corresponds to tax due for 2019. Mont d’Or has an agreement with the State to pay C$0.04 mm per month for income tax plus C$0.1 mm per month for property tax (~C$1.7 mm per year). This is expected to continue.
Valuation
As we incorporate the 1Q24 financials, our Core NAV and ReNAV now stand at respectively C$0.23 per and C$0.33 per share.
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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