Panoro Energy ASA (OSE: PEN): 92% reserves replacement in 2022
• YE22 1P, 2P and 3P reserves were estimated at respectively ~23 mmbbl, 36 mmbbl and 49 mmbbl, broadly equal to the estimates at YE21.• Panoro has replaced 92% of its production during 2022 (2.8 mmbbl).
• The main driver for the reserves addition was the licence extension in EG (+2.7 mmbbl). This is in line with our expectations.
• Reserves at the other assets reflect the YE21 estimates net of production during 2022.
• In addition, Panoro was estimated to hold 23.9 mmbbl of 2C contingent resources at YE22. This includes 13.1 mmbbl in EG that are associated with projects that have not yet been approved and potential production beyond the current licence expiry dates. Some of these contingent resources may be re-assigned as reserves if certain projects are approved or licence terms further extended.
• The shares continue to offer a combination of value, growth and dividend distribution. We re-iterate our target price of NOK50 per share.
Contingent resources in Tunisia
Net contingent resources in Tunisia have increased from 1.6 mmbbl to 3.9 mmbbl. Grossing-up for the additional interests acquired by Panoro in 2023 would lead to a net 2C contingent resources position of 6.5 mmbbl, which is material for the company. These resources were identified in the El Ain, Guebiba and Rhemoura fields in the TPS assets and result from a step-up in activities. Some of these resources could be converted into reserves over the coming 1-2 years if certain projects are approved or the licences are extended.
Valuation
Our ReNAV is unchanged at NOK50 per share. We view the share price pull back this week as an opportunity. 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 represents ~55% 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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