Panoro Energy ASA (OSE: PEN): Reflecting on Akeng Deep results. Dividend yield reaches >7%
• Oil zones were encountered in the Upper Albian at Akeng Deep.• While the sands appear thinner than expected and the quantity of oil is sub-commercial, the discovery of oil confirms an active petroleum system in this exploration area.
• The company will recalibrate the subsurface model to assess whether the presence of oil supports further exploration and appraisal activities in the area. The results are viewed as encouraging.
• For the time being, we are now not attributing any value to Akeng Deep but we note that the upper cretaceous play is not dead.
• There are no material commitments at EG-01 beyond seismic studies.
• We have changed our target price to NOK46 per share in line with our new ReNAV.
• The current dividend yield for 2024 is now >7%. We expect that this could increase further in 2025 given our forecast free cash flow. The recent refinancing of the RBL with a lower cost US$150 mm bond will provide some further flexibility.
Valuation and forecast
Our Core NAV is unchanged at NOK32 per share but our ReNAV is now NOK46 per share. We forecast that Panoro will generate >US$100 mm free cash flow in 2025. This represents >40% of the current market cap. The Bourdon prospect to be drilled in Gabon next year has an unrisked value of >NOK4 per share.
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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