Panoro Energy ASA (OSE: PEN): 1Q23 financials in line
• 1Q23 production was 6,320 bbl/d (we expected 7,250 bbl/d) as the FPSO in Gabon was shut down for an extended period to complete the necessary final tie-in work of the Hibiscus Ruche Phase I development at the Dussafu Marin Permit. Gross production in Gabon was 7 mbbl/d in the quarter (we assumed 10 mbbl/d). There was also some short term restricted production in Tunisia and EG. These issues are now resolved and the FPSO in Gabon is back online.• Panoro held US$41 mm in cash at the end of March. This is very close to our expectations (US$43 mm).
• Net debt at the end of March was US$27 mm, which is also very close to our forecast (US$24 mm).
• The company has re-iterated its FY23 production guidance of 9.5 11.5 mbbl/d with production expected to reach over 13 mbbl/d once the six new Hibiscus Ruche wells are online.
• The shares continue to offer a combination of value, growth and dividend distribution.
• We re-iterate our target price of NOK50 per share.
Production ramp-up in Gabon
1Q23 gross production in Gabon was ~7 mbbl/d (Panoro WI: 17.5%). The new Gas Lift Compressor is expected to be fully operational imminently to support production from all six existing wells at the Tortue field. This is expected to take production from Tortue to ~18 mbbl/d very shortly. Additionally, we estimate that each new additional well at the Hibiscus Ruche Phase I development (total of six) adds 5 mbbl/d approximately every six weeks leading to gross production for the block peaking at around 40 mbbl/d in early 2024. We note that the first Hibiscus production well came onstream in early April at a stabilized gross rate of 6 mbbl/d from the prolific Gamba reservoir. The second new production well is drilling ahead.
Valuation
Our ReNAV is unchanged at ~NOK50 per share. We continue to forecast that Panoro will generate ~US$250 mm free cash flow in aggregate over 2023 2024. This assumes ~US$92/bbl for Brent. Even at Brent as low as US$75/bbl until YE24, the aggregate free cash flow over 2023-24 would be >US$170 mm. This now represents >50% of the current market cap.
Panoro Energy is an international independent oil and gas company engaged in the exploration and production of oil and gas resources in Brazil and West Africa. In Brazil, Co. participates in a number of oil and gas licenses located in the Santos basin outside the south-east coast of Brazil and in the Camamu-Almada basin in the state of Bahia. In West Africa, Co. participates in a number of licences in Nigeria and Gabon. As of Dec 31 2013, Co.'s commercial production is from the Manati field in Brazil.
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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