Panoro Energy ASA (OSE: PEN): Increasing shareholder distributions to >15% of the current market cap at US$70/bbl
• FY24 production, YE24 cash and debt had been reported previously.• FY25 production is expected to be 11-13 mbbl/d with only US$35 mm capex. We have trimmed our production forecast from 13.1 mbbl/d to 12.5 mbbl/d and our capex estimates from US$40 mm to US$35 mm.
• The highlight of the announcement is the significant increase in shareholder distributions. Panoro has declared a NOK80 mm dividend for 4Q24, up from NOK50 mm in 3Q24. In 2025, Panoro plans to distribute NOK500 mm, including quarterly dividends of NOK80 mm for each of 1Q25, 2Q25 and 3Q25, bringing the annualised dividend to NOK320 mm. The remaining balance will be allocated to special dividends and share buybacks. This targeted distribution is based on a Brent price of US$70/bbl and could be increased if the oil price is higher—we forecast ~US$74 per bbl for Brent in 2025. This already represents 15.9% of the current market capitalization.
• From 2026, Panoro is permitted to distribute up to 50% of free cash flow.
• We re-iterate our target price of NOK46 per share in line with our ReNAV.
• Drilling results at the Bourdon prospect in Gabon are expected during 1Q25. Our unrisked value for the prospect is >NOK4 per share.
More on financials
Panoro expects aggregate liftings of 3.7 mmbbl in 2025. FY25 opex are estimated at ~US$21/bl, plus an additional US$3/bbl in non-recurring costs for Equatorial Guinea. This is higher than our assumptions of ~US$19.5/bbl, which were based on a production rate exceeding the midpoint of the production guidance of 11-13 mbbl/d.
Valuation and forecast
Our new Core NAV and ReNAV of NOK32.5 per share and NOK45.5 per share, respectively incorporate our updated production and capex forecasts, as well as higher opex for 2025. We have also rolled forward our DCF model by a year to the end of 2025. We forecast that the company’s YE29 net cash plus the aggregate shareholder distributions over 2025-2029 will exceed the current market capitalization.
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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