Panoro Energy ASA (OSE: PEN): Heads of terms for high potential EG block
• Panoro has agreed heads of terms for the award of Block-23 in EG. Panoro could hold up to 80% WI in the block. There will now be a period of exclusive negotiations to finalise a Production Sharing Contract.• Block EG-23 is located offshore Equatorial Guinea north of Bioko Island and adjacent to the producing Alba gas and condensate field. The Alba gas field started production in the late 90’s and reached peak production of >200 mboe/d (including >50% sold as LNG) in 2009.
• Covering a surface area of approximately 600 km2 in water depths ranging from 50 metres to 100 metres, 19 wells have been drilled on Block EG-23 to date, resulting in seven hydrocarbon discoveries (four oil, two gas and one gas/condensate), some of which have been tested. The block was previously held by Marathon.
• Panoro’s technical evaluation indicates that a range of plays (oil and/or gas) exists on the block and has identified a number of prospects and leads in addition to the existing discoveries.
• The initial work programme will be focused on re-processing existing seismic data to mature prospects with an option to then enter a second stage which would entail drilling. Given the modest water depth, the company can probably use a jack-up mounted rig for drilling.
• With declining production the Alba Field, growing spare capacity in existing gas infrastructure and an increasing focus on US operations, Marathon, the operator of the Alba, field announced in 2021 the intention to create a Gas Mega Hub, with the Punta Europa gas complex (including LNG facilities) at the centre, to process and liquefy gas from proximate fields in EG and neighboring countries. The first phase of the Gas Mega Hub began in early 2021 with the delivery of wet gas from the offshore Alen Field to the Punta Europa complex for processing and liquefaction.
• This is a very important development as this could provide a monetization route for gas discoveries on Block-23.
• We re-iterate our target price of NOK47/sh. Our unrisked NAVs for the Akeng and Bourdon prospects are ~NOK13/sh and NOK5/sh respectively. Key upcoming newsflow includes production ramp-up at Dussafu and confirming a drilling rig in EG.
Valuation
Our Core NAV and ReNAV stand at ~NOK31/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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