Panoro Energy ASA (OSE: PEN): Very good flow rate at new Dussafu well
• The DHIBM-3H well has started production at a gross stabilized oil flow rate of 6 mbbl/d (Panoro WI: 17.5%).• This is the first of six wells at the Hibiscus Ruche Phase I development.
• This is a very good flow rate. When Tortue started production in September 2018, three wells came on stream with aggregate production of 11-12 mbbl/d (3.5-4.0 mbbl/d per well). When the first two wells of Tortue Phase 2 were brought online, they added a total of ~10 mbbl/d (5 mbbl/d per well).
• The new gas lift compressor is expected to be fully operational around the end of the month, allowing the full potential of the well to be realized.
• Drilling will move to the second well of the campaign. Overall, the campaign is expected to add ~30 mbbl/d gross production by YE23/early 2024.
• Panoro continues to offer a combination of value, growth and dividend distribution. At the current share price, the minimum expected dividend to be declared in 2023 (US$20 mm assuming Brent is >US$80/bbl) represents a yield of ~7%. At US$100/bbl, this could increase to US$30 mm (~10% yield). The US$3 mm maiden has already been paid in March. We re-iterate our target price of NOK48 per share.
Valuation
We now forecast that Panoro will generate total free cash flow over 2023 2024 equivalent to ~75% of its current market cap (on our assumptions of ~US$92/bbl in 2023 and 2024). At Brent of US$85/bbl until YE24, the aggregate free cash flow over 2023-224 would represent >60% of the current market cap. Our core NAV and ReNAV stand at respectively ~NOK41 and NOK48 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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