Panoro Energy ASA (OSE: PEN): Drilling to restart in EG in June. 70% 2P reserve replacement ratio in 2023
Positive update in Gabon• 1Q24 gross production was 24,840 boe/d increasing to 29,800 boe/d to date in 2Q24 (Panoro WI: 17.5%).
• The increasing production reflects the first Hibiscus South well coming on stream in March and encouraging production performance from two wells on ESP at Hibiscus. A third Hibiscus well continues to produce on natural flow at high rate.
• We anticipate production will continue to grow given the addition of a recently completed well at Ruche that is expected to be put onstream in 2Q24. The fourth existing Hibiscus well will also be worked-over (with the potential replacement of the ESP) to be brought back to production during the current campaign.
• Drilling has also started at a new appraisal well at Hibiscus South to test a possible north-eastern extension of the Hibiscus South field. The associated resources are currently classified as 3P reserves (a few mmbbl gross) and could be moved into the 2P reserves category in a success case. In a success case, a production well would be drilled in this area and tied-in to the existing facilities to increase production further.
• The MaBoMo production facility is being sold for US$150 mm (gross) and leased back. Panoro will receive net sales proceeds of US$26.3 mm.
• While we estimate that net opex will increase by ~US$3 mm per year, the sale and leaseback provides Panoro with additional cash resources.
• The increasing production at Dussafu starts to address an important area of uncertainty. As we incorporate lower underlying opex (BW Energy reported US$23/bbl in 1Q24 vs US$28/bbl in 4Q23), the potential 2P reserves upside for the new Hibiscus South appraisal well and the positive impact from the sale and lease back transaction, we increase our target price from NOK47/sh to NOK50/sh.
• Our unrisked NAVs for the Akeng and Bourdon prospects are ~NOK16/sh and NOK5/sh respectively.
Valuation
Our Core NAV and ReNAV stand at ~NOK31/sh and ~NOK50/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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