Panoro Energy ASA (OSE: PEN): >65% production increase expected during 2023
• FY22 production of ~7.5 mbbl/d and YE22 net debt of US$47 mm had already been reported. 4Q22 gross production in Tunisia of 4,612 bbl/d was particularly high as 15 wells are now in production.• The focus for 2023 is to grow production and the FY23 production guidance of 9-11 mbbl/d with 7.0-7.5 mbbl/d in 1Q23 increasing to at least 12.5 mbbl/d (when all six new production wells at the Hibiscus/Ruche Phase I development are onstream) has been re-iterated. With a three well drilling programme starting in 4Q23 in EG, we see upside to this figure. We forecast average production of 13.6 mbbl/d 2024.
• In 2024, Panoro will drill the 180 mmbbl Akeng deep prospect (Panoro WI: 12% - the farm is subject to customary approvals) located 15 km away from the Ceiba FPSO in EG. This well could be particularly material. With two additional optional drilling slots in Gabon and two extra optional slots in EG, the company has the possibility to participate in further exploration wells in both countries in 2024.
• A first quarterly dividend of US$3 mm has been declared. Panoro intends to distribute at least US$20 mm in 2023 in an environment where Brent is >US$80/bbl.
• Panoro continues to offer a combination of value, growth and dividend distribution. At the current share price, the expected FY23 dividend will represent ~6-9% yield. We re-iterate our target price of NOK48 per share.
New Licence in EG
Panoro has been awarded a 56% WI in Block EG-01 in EG with Kosmos holding 24% WI. The block is adjacent to the Okume Complex and to the Block S licence. The obligations consist of desktop studies based on existing 3D data. The previous operator, G3 Oleo e Gas, had drilled two wells that encountered hydrocarbon shows in 2016. The licence was the only asset of G3 in the region and Panoro/Kosmos have a much better understanding of the regional geology given their experience with Okume/Ceiba and their knowledge of Block S. This should allow Panoro and Kosmos to better define prospects on Block EG-01. The short distance to infrastructure would boost the value of any discovery on the Block.
Valuation
With lower capex from 2024, we continue to forecast that Panoro will generate total free cash flow over 2023 2024 representing ~70% of its current market cap. Our core NAV and ReNAV stand at respectively ~NOK41 and NOK47 per share.
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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