Panoro Energy ASA (OSE: PEN): ~45% production growth in 2024
• FY23 production was ~8.5 mbbl/d, implying ~9.5-9.7 mbbl/d in 4Q23.• The YE23 net debt position of ~US$66 mm reflects a 0.26 mm bbl lifting expected in December that was completed in January. This resulted in US$20 mm revenue deferred to January.
• The electrical issue at the ESPs on Dussafu has not been fully resolved and continues to negatively impact gross production. Currently ~25 mbbl/d with three of the four new producing wells back on stream (two on ESP, one on natural flow).
• Production in Gabon is expected to grow again from March with a new Hibiscus South development well (currently drilling) coming on stream . Another Hibiscus development well will then be drilled , followed by a new Ruche development well. Panoro continues to anticipate gross production plateau of ~40 mbbl/d.
• In EG, the three well drilling campaign has started with the first well expected to come on stream around the end of 1Q24.
• Overall, 1Q24 production is expected to be 9.5-10 mbbl/d increasing to 11-14 mbbl/d over FY24. Panoro expects to spend US$75 mm in 2024 in line with previous indications (US$70-75 mm).
• As we incorporate a lower Brent price assumption for 2024 and marginally reduce our FY24 production forecast, we have changed our target price to NOK47 per share. The mid point of the production guidance suggests 47% production growth with the company anticipating increasing shareholder distributions by 100-150% at US$85/bbl for Brent. High impact drilling in Gabon and EG could add material reserves.
Exploration drilling
The key 2024 exploration wells are Akeng Deep in EG (~22 mmbbl prospective resources net to Panoro and ~NOK13 per share) and Bourdon in Gabon (~5 mmbbl prospective resources net to Panoro and ~NOK5 per share).
Valuation
We are now forecasting US$85.5/bbl for Brent in 2024 (US$90/bbl previously) and we have paired back our FY24 production forecast from ~13.4 mbbl/d to 12.7 mbbl/d. Our Core NAV and ReNAV now stand at ~NOK31/sh and NOK47/sh. At US$80/bbl for Brent, we estimate that the cumulative free cash flow over 2024-2026 is near 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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