Auctus on Friday - 25/08/2023

AUCTUS PUBLICATIONS
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Calima Energy (CE1 AU)C; target price of A$0.50 per share: Drilling programme update – A new 3 well drilling programme will commence in mid-September and will include 3 Pisces wells. The wells are expected to reach peak production in December post fracture stimulation. This will allow the company to maintain production ~4,000 boe/d. This is in line with previous indications.

Hartshead Resources (HHR AU): We are discontinuing coverage of Hartshead Resources.
See website for full report

Panoro Energy (PEN NO)C; target price of NOK50 per share: Increasing dividend. M&A transaction in Gabon highlights the value of Panoro’s assets - 2Q23 production and cash and debt at the end of June had reported previously. In Tunisia 1H23 gross production of 4,250 bbl/d was very high (1Q23: 3,960 bbl/d) due to a very successful campaign of ESP replacements. An ongoing review of the reservoir model could open new drilling locations and potentially allow Panoro to book additional reserves. A 2Q23 dividend of NOK40 mm has been declared. This is above our expectations (NOK31 mm) and up from NOK31 mm in 1Q23. With more exploration activities expected in 2024, we re-iterate our target price of NOK50 per share that has been set close to our ReNAV. Last week, Maurel & Prom announced the acquisition of Assala Energy for US$730 mm in cash. M&P is also assuming Assala’s US$600 mm RBL facility. Assuming the RBL facility is entirely drawn and cash is stripped from the business would suggest an acquisition price of US$1.33 bn. Assala Energy owns 75.5% of Assala Gabon which produces 40.7 mbbl/d (WI) and held 97 mmbbl of 2P reserves at YE22. This equates to 80 mmbbl 2P reserves and 32.9 mbbl/d production net to Assala Energy for transaction multiples of ~US$16.6/bbl of 2P reserves and US$40,425/bopd. Applying these metrics to Panoro’s 16.9 mmbbl 2P reserves in Gabon and 7 mbbl/d WI production ~YE23 suggests a readthrough value of ~US$280 mm (~NOK25/sh) for Panoro’s stake in Dussafu, which is above our NAV for the asset (~NOK21/sh). Applying the transaction metrics to the reserves in EG (similar NPV/bbl as in Gabon on our numbers) would lead to an overall value for EG + Gabon of ~NOK45/sh.
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Southern Energy (SOUC LN/SOU CN)C: target price of £01.50 per share: Returning to growth from 3Q23 – 2Q23 production stood at 2,651 boe/d, in line with 1Q23 (2,607 boe/d). Current production (including the recently acquired asset in Gwinville) is ~2.9 mboe/d. Net debt at the end of March stood at ~US$26.2 mm including working capital (net debt at the end of March: US$19.7 mm). The company held ~US$2.2 mm in cash at the end of June as it paid US$15.4 mm in capex payables during 2Q23. As at the end of June, US$11.5 mm from the credit facility remains unused and available. During the rest of 3Q23, Southern plans to workover a number of acquired wellbores. The company is also in the process of installing the necessary pipeline infrastructure to consolidate the two existing gathering systems, allowing the company to run one central compressor station versus the five that were running before the transaction. This will eliminate ~0.25 mmcf/d of fuel gas which will be added directly to sales volumes. The remediation work for the 18-10 #3 Upper Selma Chalk well is expected to commence in late 3Q23. With two of the four drilled but uncompleted (DUC) wells expected to be completed in 4Q23, we expect production to grow to ~3 mboe/d in 3Q23 and >4 mboe/d in 4Q23. The two remaining DUCs are expected to be completed during 1Q24. As we incorporate a slightly slower production ramp-up, we have trimmed our target price from £1.60/sh to £1.50/sh, which still represents >6x the current price.
See website for full report

IN OTHER NEWS
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AMERICAS

Ecuador: Moratorium on large oil field – Media reports indicated that the Ishpongo-Tiputini-Tambococha field will be shut down following a referendum. This is the fourth largest oil field in Ecuador with 54.8 mbbl/d production.

Seacrest Petroleo (SEAPT NO): 2Q23 results – 2Q23 pro forma production in Brazil was 8,795 boe/d. The FY23 production guidance remains 8,700-8,900 boe/d. Net debt at the end of June was US$275 mm.

Touchstone Exploration (TXP LN/CN): Operating update in Trinidad - Although high reservoir pressures were observed during the production tests of the various zones at Royston-1X, minimal natural flow to surface was observed, indicating low permeability. As a result, Touchstone has now comingled the three uppermost prospective intervals and is waiting for a service rig to place the well on pump. The company hopes that this will allow the well to produce at a higher production rate. Initial sales volumes at Cascadura are expected during the last week of August.

ASIA PACIFC

Jadestone Energy (JSE LN): Montara update in Australia – Jadestone Energy does not anticipate production at Montara to be shut in for more than 60 days.

Woodside Energy (WDS AU/LN): 1H23 results – 1H23 production was 502 mboe/d. The company has declared an interim dividend of A$0.80/sh (6.9% annualized dividend yield). Net debt at the end of June was A$3.2 bn.

EUROPE

Deltic Energy (DELT LN): 1H23 update – Deltic held £9.1 mm in cash at the end of June. The Selen exploration well continues to be expected to be drilled in 3Q24 while an appraisal well at Pensacola is targeted for 4Q24.

Equinor (EQNR NO): Discovery in Norway – Equinor has encountered ~ 9–35 mmboe near the Fran field.

Harbour Energy (HBR LN): 1H23 results – 1H23 production was 196 mboe/d. An interim dividend of US$100 mm has been declared. The FY23 production guidance has been narrowed from 185-200 mboe/d to 185-195 mboe/d with lower capex of US$1 bn (US$1.1 bn previously) due to delays. The company anticipates to be net debt free in 1H24. In Mexico the second commitment well on Block 30 (where the Kan-1 well encountered 200-300 mmbbl of oil in place) was abandoned before reaching the main target due to operational issues.

Trillion Energy (TCF LN): 2Q23 results – 2Q23 gross production from the SASB field in Turkey was 8.16 mmcf/d. The company was carrying a working deficit of US$9.1 mm at the end of June.

FORMER SOVIET UNION

Nostrum Oil & Gas (NOG LN): 2Q23 results – Daily sales volumes in Kazakhstan averaged 9,020 boe/d during 1H23. Nostrum will return to drilling at Chinarevskoye in 2023 and 2024 with a drilling capex of ~US$26 mm.

MIDDLE-EAST AND NORTH AFRICA

Cheiron: Operational update in Egypt – Following the successful drilling of the GNN-11 exploration well, overall gross production from the Geisum and Tawila West Concession is ~23 mbbl/d. The new Nubia discovery confirms the exploration potential in the northern area of the Concession and Cheiron and Kufpec are planning to drill at least three additional exploration wells in the Concession area.

SUB-SAHARAN AFRICA

BW Energy (BWE NO): 2Q23 results – Dussafu gross production in Gabon has reached 30 mbbl/d after the third Hibiscus well was brought online in July. Net debt at the end of June was US$59 mm.

Maurel & Prom (MAU FP): Buying Assala Energy – Maurel is buying Assala for US$730 mm. In addition, Assala’s US$600 mm RBL facility will be rolled-over. Assala’s WI production in Gabon was 40.7 mbbl/d (1H23 production). The company held 97 mmbbl WI 2P reserves at YE22.

EVENTS TO WATCH NEXT WEEK
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31/08/2023: Gulf Keystone Petroleum (GKP LN) – 2Q23 results