Panoro Energy ASA (OSE: PEN): NOK100 mm share buyback
• The 1Q24 production of 9,605 bbl/d, the cash position of US$22.4 mm and the debt position of US$80.6 mm had been reported previously.• The 1Q24 operating cash flow of US$25 mm was impacted by US$5.4 mm of negative working capital movement and US$3.6 mm negative inventory movement. This suggests an underlying operating cash flow of US$34 mm for the period.
• While the yearly maintenance shutdown period at Dussafu is now expected to be three weeks rather than two, the FY23 production guidance of 11-13 mbbl/d has been re-iterated.
• The highlight of the announcement was the launch of a NOK100 mm share buyback programme to be completed by the end of September. Overall, assuming no change to the quarterly dividend of NOK50 mm, the total shareholder distribution as it stands for 2024 would be up to NOK300 mm. With increasing free cash flow due to higher production and lower capex in 2H24, the actual shareholder distribution in 2024 could be higher (Panoro has guided for total shareholder returns of NOK400-500mm as per its 2024 shareholder returns policy).
• As we increase the amount of share buyback in 2024 and incorporate the drilling success at the Northern Flank of Hibiscus main, we increase our target price from NOK50 per share to NOK52 per share.
Bourdon
The Bourdon prospect will be targeted by the final well of the FY24 drilling campaign in Gabon. Bourdon is estimated to hold ~29 mmbbl gross prospective resources (Panoro WI: 17.5%). In case of success, the prospect would be appraised with two wells. Because of its location, the field development would require dedicated infrastructure but the reserves would be produced through the existing FPSO. The production capacity of the FPSO (40 mbbl/d) could be increased by at least ~10% if required.
Valuation
Our Core NAV and ReNAV are respectively ~NOK32 per share and ~NOK52 per share. Even after the recent share price appreciation, at US$80/bbl for Brent, we estimate that the cumulative free cash flow over 2024-2026 would still represent ~80% of the current market cap.
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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