Panoro Energy ASA (OSE: PEN): Good drilling results in Gabon could unlock additional reserves
• The DHIBM-6H well at Hibiscus/Ruche (Dussafu) has been put on production at a rate of 6.5 mbbl/d. This is higher than we initially expected, and is similar to the IP rates achieved at the first three wells in the programme.• The well has again encountered good quality oil-saturated reservoir sands and BW Energy (the operator) has indicated that there are potentially positive implications for Hibiscus reserve estimates.
• With more exploration activity expected in 2024, we re-iterate our target price of NOK50 per share.
Current production impacted by short term issues
Current gross production in Gabon is 26.5 mbbl/d, 8-10 mbbl/d below the current production capacity due to electrical supply issues to the ESPs at two wells. As previously announced, the DHIBM-4H well is flowing naturally at ~2.8 mbbl/d. The DHIBM-3H well however, is temporarily not producing. The issues do not appear to be related and the electrical problem at DHIBM-3H should be fixed soon. Panoro continues to anticipate gross production of ~40 mbbl/d at Dussafu with two futher wells to be drilled on the Ruche field.
Financials and Valuation
Our Core NAV and ReNAV are unchanged at ~NOK36/sh and ~NOK48/sh. A sustained higher oil price has a material impact on our cashflow forecasts. At US$92/bbl for Brent over 2H23 and 2024, we forecast that Panoro could generate ~US$250 mm of aggregate free cash flow over the period (assuming no exploration spending), representing almost 75% of the current market cap. This could also have positive implications for dividend 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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