Panoro Energy ASA (OSE: PEN): Rig contract terminated in EG: Inconsequential blip
• The rig contract in EG has been terminated by Trident Energy (the operator) on safety concerns with the Blow Out Preventers not working properly.• We understand that there are suitable rig(s) available that are being considered as potential alternatives. The three well drilling campaign (followed by the drilling of the high impact Akeng Deep prospect) could restart during 2Q24 (subject to an alternative rig being secured).
• The rig had only commenced drilling operations on 22 January and any cost implications are likely to be minimal. A by-product of these delays is that the FY24 capex programme will be more evenly spread over 2024 (it was previously expected to be very front loaded in 1H24).
• We are assuming only a one quarter delay for the production ramp-up in EG. This results in gross production in the country remaining at ~25 mbbl/d over 1H24. We continue to assume 38 mbbl/d gross production in EG at YE24.
• A one quarter delay in the production ramp-up in EG does not impact Panoro’s production guidance range of 11-14 mbbl/d. We now forecast 12.2 mbbl/d (12.7 mbbl/d previously) with the difference being deferred to 2025.
• We re-iterate our target price to NOK47 per share.
Valuation
Our Core NAV and ReNAV are unchanged at ~NOK31/sh and ~NOK47/sh. At US$80/bbl for Brent, we estimate that the cumulative free cash flow over 2024-2026 is greater than 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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