Panoro Energy ASA (OSE: PEN): Rig contract in Gabon extended to February 2025. Bourdon prospect confirmed.
• Gross 2Q24 production in Gabon was 21,184 bbl/d, very close to our expectations (21.5 mbbl/d). 2Q24 production was negatively impacted by 21 days of planned maintenance.• All the existing ESPs will be replaced with conventional ESPs. This should address the electrical problems that have negatively impacted production due to increased downtime at some producing wells.
• Changing an ESP is expected to last 2-3 weeks per well. During that period the production of this well will be shut down.
• The rig contract in Gabon has been extended until February 2025. This is important as this gives enough time to drill the Bourdon prospect (29 mmbbl gross prospective resources/~5 mmbbl net to Panoro WI) with an unrisked NAV of >NOK4.80 per share.
• We re-iterate our target price of NOK52 per share. In addition to drilling Bourdon, the other key newsflow will be the drilling of Akeng in Equatorial Guinea (180 mmbbl gross prospective resources/~22 mmbbl net to Panoro WI) with an unrisked NAV of NOK16.30 per share.
Valuation and forecast
Given the upcoming ESP replacements, we are now assuming 3Q4 gross production in Gabon of 30 mbbl/d gross (40 mbbl/d previously). Our gross production forecast of 40 mbbl/d in 4Q24 is unchanged. At US$80/bbl for Brent, we continue to estimate that the cumulative free cash flow over 2024-2026 will be ~US$330 mm. This represents >90% % of the current market cap. Our Core NAV and ReNAV are respectively NOK34 per share and NOK53 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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