Panoro Energy ASA (OSE: PEN): Drilling to restart in EG in June. 70% 2P reserve replacement ratio in 2023
• A drilling contract has been awarded for the Noble Venturer drill ship to recommence infill drilling at the Ceiba Field and Okume Complex in June. Owing to limitations arising from the shallower water depth at one of the planned infill well locations, the drilling campaign will now comprise of two infill wells. The third infill well will be deferred as part of a potential future drilling campaign.• This allow production in EG to return to growth. In addition, the rig will then drill the high impact Akeng Deep ILX exploration on Block S with 180 mmbbl gross prospective resources.
• The YE2P WI reserves in Gabon were estimated at ~17 mmbbl, flat compared to YE22 with reserves addition associated with the Hibiscus South discovery and the increased size of Hibiscus, offsetting FY23 production (1.1 mmbbl) and lower oil price assumptions (US$77-78 bbl/d from 2024 to 2027 increasing to US$80-89/bbl from 2028 to 20231 versus US$80/bbl in 2024 increasing 3% per year previously), which resulted in ~1 mmbbl reclassified from 2P reserves to 2C contingent.
• The YE23 WI reserves in EG were estimated at ~11.7 mmbbl, down 14.2 mmbbl at YE22, reflecting FY23 production (1.3 mmbbl), lower oil price assumptions and adjustments to decline curves on specific wells due to lower field performance (~1.2 mmbbl).
• The YE23 gross reserves in Tunisia broadly reflects the YE22 reserves estimate less FY23 production. Overall and including the acquisition of a further interest in the Tunisian assets, the company has replaced ~70% of its FY23 production
• We re-iterate our target price of NOK47/sh. Our unrisked NAVs for the Akeng and Bourdon prospects are ~NOK16/sh and NOK5/sh respectively. Key upcoming newsflow includes production ramp-up at Dussafu.
Valuation
Our Core NAV and ReNAV stand at ~NOK28/sh and ~NOK48/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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