Panoro Energy ASA (OSE: PEN): Discovery in Gabon. Reiterating production guidance
• The Hibiscus South exploration well on the Dussafu permit has encountered 25 m of pay in an overall hydrocarbon column of 35 m in the Gamba formation.• This discovery could add ~5-6 mmbbl gross recoverable reserves (~1 mmbbl net to Panoro).
• The Hibiscus South structure is a separate accumulation with a deeper oil-water contact than the nearby Hibiscus Field.
• Importantly, a production well could now be drilled at Hibiscus South and tied to the MaBoMo facility, which would boost the overall wellhead production capacity. With the recently completed well at Ruche expected to be put on stream this quarter and the upcoming work-over of the fourth well at Hibiscus, this gives greater confidence in the objective of reaching ~40 mbbl/d gross production in Gabon.
• Panoro has re-iterated its FY24 production guidance of 11-13 mbbl/d. We re-iterate our target price of NOK50 per share. The key newsflow over the coming 12 months is the drilling of the Akeng Deep and Bourdon prospects with respective unrisked NAV of ~NOK16/sh and NOK5/sh respectively.
2Q24 update
2Q24 production was 9,605 bbl/d. Production in Gabon and Equatorial Guinea had already been reported by BW Energy and Kosmos Energy. Production in Tunisia was 1,777 bbl/d (we forecasted ~2.1 mbbl/d). We anticipate 2Q24 production to be higher. Panoro held US$22.5 mm in cash at the end of March including advances against future liftings of US$17.5 mm (US$23.8 mm at YE23) and a further US$10 mm draw of the RBL. The cash position is difficult to read without the details of the working capital movement during the quarter. Pending further details we have assumed that negative working capital movements in 1Q24 would be reserved in 2Q24. US$10 mm of the US$26 mm proceeds from the sale and lease back for the MaBoMo production facility will the used to reduce the amount due under the RBL.
Valuation
Our Core NAV and ReNAV stand at ~NOK32/sh and ~NOK51/sh. At US$85/bbl for Brent, we estimate that the cumulative free cash flow over 2024-2026 is greater than the current market cap. High oil prices could also support higher overall shareholder distributions.
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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