Panoro Energy ASA (OSE: PEN): Reserves addition much larger than expected
• YE24 2P reserves were independently estimated at 42.3 mmbbl (+7.6 mmbbl vs YE23, representing a Reserve Replacement Ration of 309%). This figure far exceeds our previous expectation of 34.5 mmbbl for YE24 2P reserves - an estimate that included a 4 mmbbl addition in 1H24 to counterbalance 2024 production.• The higher than expected reserves addition is driven by robust reservoir performance in Gabon coupled with the conversion of contingent resources into 2P reserves in EG.
• In Gabon, YE24 WI 2P reserves were estimated at 20.75 mmbbl (vs. our figure of ~16.5 mmbbl) thanks to improved recovery per well and reduced decline rates.
• In EG, YE24 WI 2P reserves were reported at 16.3 mmbbl (vs. our estimate of 10.1 mmbbl).
• We have revised the estimated recoverable volume at Bourdon from 5.1 mmbbl to 4.4 mmbbl while increasing the development chance from 75% to 100%. As we incorporate the higher than expected YE24 reserves, we have increased our target price from NOK47/sh to NOK49/sh.
• The expected 2025 cash distribution yield is expected to exceed 14%.
Potential new production hub at Bourbon
Following the drilling of DBM-1 ST2, Bourdon is estimated to contain ~4.4 mmbbl recoverable resources net to Panoro’s 17.5% WI. It is poised to serve as the anchor development for a new production hub, with dedicated infrastructure and four initial development wells (as indicated by the operator). For a stand-alone development of this magnitude, we estimate total gross capex at US$250-300 mm. Development is not expected to commence before YE27, as the 2026 drilling campaign at Dussafu is expected to include new development wells at Hibiscus (to maintain the production plateau) along with additional exploration drilling. Bourdon’s development cost will form part of the overall licence cost pool and be recovered immediately through cash flow from current production. With Dussafu’s high prospectivity, any new discovery in the area could add significant incremental value by leveraging Bourdon’s future infrastructure - mirroring the approach taken with Tortue, Hibiscus, and Ruche.
Valuation
We have reduced our Brent price assumptions for 2Q-4Q25 from US$73.3/bbl to US$66.7/bbl. Our new Core NAV and ReNAV are NOK38.3 per share and NOK48.7 respectively. We have included in our model the drilling of four new development wells at Dussafu in 2026 to extend the plateau production. We assume the drilling of infill wells in EG from 2027 onwards that will also offset decline from 2027 to 2029.
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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