AUCTUS ON FRIDAY - 12/07/2024
AUCTUS PUBLICATIONS________________________________________
PetroTal (PTAL LN/CN)C; Target price of £1.50 per share: Unrestricted cash position increased by >30% during the last quarter – 2Q24 production of 18,290 bbl/d was very near our forecasts of 18.5 mbbl/d but marginally below the company target of ~19 mbbl/d. A brief river blockade impacted production but production in June was 20,555 bbl/d. All regulatory approvals for the pilot to sell 100 mbbl of production through Ecuador have now been secured. Oil loading will commence shortly. This is important as this will add a new export route for 2-5 mbbl/d production, which mitigates the negative impact of the dry season. We forecast 16.8 mbbl/d production in 2024 within the company’s guidance of 16.5-17.5 mbbl/d. Overall Petrotal held working capital (being unrestricted and restricted cash plus receivables minus payables) of ~US$140 mm at the end of June. This represents an increase of ~US$17 mm compared to the working capital position at the end of March. During the period the company paid ~US$14.5 mm in dividends and share buybacks, implying that PetroTal has generated >US$30 mm of free cashflow during 2Q24 alone.
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Pulsar Helium (PLSR CN)C; Target price of C$1.80 per share: 2D seismic confirms resources and highlights deeper helium potential – The initial 1.1 km 2D seismic sweep survey shows a seismic reflector at the same depth where gas was intersected at the Jetstream #1 well. This is important as it supports the contingent resources estimated in the Competent Persons Report published at the time of the IPO. These resources had been estimated with limited reservoir and seismic data. Further reflectors were observed at depth, suggesting the presence of additional gas that had not been incorporated in the resources estimates. The 1.1 km 2D seismic will help with future seismic survey design. A further 20.4 km long 2D seismic line will commence in July that will help define the size of the prize. The line will be located ~150 m to the south of the 1.1 km line. A new resources report is expected to be published in late July. The results of the 20.4 km 2D seismic line will not be available in time to be incorporated into the updated resource report.
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Tethys Oil (TETY SS)C: target price of SEK100 per share: Production update in Oman – WI production from Blocks 3&4 in June was 7,864 bbl/d, up from 7,500 bbl/d in May. They key catalysts to the story remain (1) the results of the ongoing strategic review, (2) details on the development plan at Block 56 and (3) high impact drilling at Block 58.
Valeura Energy (VLE CN)C; Target price of C$9.30 per share: Improved outlook at Wassana. High net cash – 2Q24 production was 21.1 mbbl/d, which was very close to our expectations (21.3 mbbl/d). Production is expected to increase in 3Q24 with the start-up of production at Nong Yao C. Half of the planned drilling targets have already been drilled. At Wassana, the crack within a weld on one of MOPU’s three steel legs may be superficial and therefore may not indicate a risk to the structural integrity of the MOPU. If the upcoming underwater inspection confirms this view, production could restart in 3Q24. In any case, the worst case of Wassana production being potentially shut down for 18 months is now very unlikely as the company could instead fix the MOPU to restart production and keep the MOPU for the redevelopment of the field. FID for the redevelopment of Wassana is expected to be taken around YE24. Pending further visibility, we have not changed our forecasts for Wassana with no production until YE24. Net cash at the end of June 2024 was US$145 mm. While this includes a payment of ~US$11.4 mm for tax obligations associated with 2018/2019 that we were not carrying in our forecasts, the net cash is ~US$10 mm above our expectations. The story continues to be about strong free cashflow generation, reserves growth and exploration upside. We view the share price weakness as an opportunity.
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Zephyr Energy (ZPHR LN)C: target price of £0.12 per share: High impact well test operations have commenced – The production test on the State 36-2R LNW-CC well have commenced. The well is currently flowing both natural gas and condensate. The test is expected to last two weeks. A success could add reserves and production and derisk a much larger play across the company’s licence in the Paradox basin.
IN OTHER NEWS
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AMERICAS
Diversified Energy (DEC LN): Acquisition in USA – Diversified is acquiring 38 mmcfe/d production and 170 bcfe of PDP reserves (plus related facilities) in East Teas from Crescent Pass Energy for US$106 mm. The net purchase price represents a PV-20 calculation. The acquisition will be funded through a combination of ~2.4 mm new shares in Diversified, a senior bank debt facility and existing liquidity and borrowing capacity.
Galp Energia (GALP LS): Operations update in Brazil – 2Q24 production was 106 mboe/d.
Eni (ENI IM)/REP (SM): Discovery in Mexico – The Yopaat-1 EXP exploration well in Block 9 encountered ~300-400 mmboe of hydrocarbons in place. Eni holds 50% interest with Repsol holding the balance.
EUROPE
Aker BP (AKERBP NO): 2Q24 results – 2Q24 production in Norway was 444 mboe/d. The company now anticipates to produce 420-440 mboe/d (410-440 mboe/d previously). Net debt at the end of June was US$3.4 bn.
Angus Energy (ANGS LN): 2Q24 update in the UK – The company produced 6.48 mm therms of natural gas and 10,478 bbl of condensate in 2Q24. This equates to ~7 mmcf/d of day of natural gas and 115 bbl/d of condensates.
BlueNord (BNOR NO): 2Q24 results in Denmark – 2Q24 production was 24.5 mboe/d. 3Q24 and 4Q24 production is expected to be respectively 29-36 mboe/d and 44-50 mboe/d. Net debt at the end of June was US$1.3 bn.
OKEA Energy (OKEA NO): 2Q24 update in Norway – 2Q24 production was 38.4 mboe/d. Net cash at the end of June was ~NOK0.6 bn. A technical goodwill impairment on the Statfjord assets in the range of NOK100 - 140 mm is expected to be recognised in the quarter. This impairment is not tax deductible.
OMV (OMV AG): 2Q24 update – 2Q24 production was 338 mboe/d.
Repsol (REP SM): 2Q24 update – 2Q24 production was 589 mboe/d.
Var Energi (VAR NO): 2Q24 update in Norway – 2Q24 production was 287 mboe/d. The FY24 production guidance of 280-300 mboe/d has been re-iterated.
MIDDLE EAST AND NORTH AFRICA
DNO (DNO NO): Operating update in Kurdistan – Gross production in Kurdistan was ~80 mbbl/d in 2024 to date.
Tag Oil (TAO CN): Operating update in Egypt – The current T100 well oil production is 400 bbl/d, and associated gas-oil ratio is 150 standard cubic feet per barrel. Production rates represent approximately 130 bbl/d of oil per 100 metres of lateral horizontal length completed.
SUB-SAHARAN AFRICA
Afentra (AET LN): Operations update in Angola – 2Q24 WI production was 6.7 mbbl/d. Afentra held US$13.8 mm in cash at the end of June with US$46.4mm of net debt. The net debt excludes the June crude oil sale of US$37.6 mm, which is classified as a receivable.
PetroNor E&P (PNOR NO): Operations update in Congo – 2Q24 WI production was 4.7 mbbl/d.
EVENTS TO WATCH NEXT WEEK
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17/07/2024: OKEA (OKEA NO) – 2Q24 results
18/07/2024: Pharos Energy (PHAR LN) – 2Q24 update
Aker BP ASA engages in the exploration, development, and production of petroleum resources on the Norwegian Shelf. In addition, Co. has a separate Johan Sverdrup business unit to manage its interest.
Diversified Gas & Oil is an Appalachian Basin focused natural gas and crude oil operations company.
DNO is a Norwegian exploration and production company focused on the Middle East and North Africa. Co. holds stakes in oil and gas blocks in various stages of exploration, development and production, both onshore and offshore, in the Kurdistan region of Iraq, Yemen, Oman, the United Arab Emirates, Tunisia and Somaliland.
Eni is engaged in the oil and gas exploration and production, gas marketing operations, management of gas infrastructures, power generation, petrochemicals, oil field services and engineering industries. Co.'s operations are divided into three segments; Exploration and Production (oil and natural gas exploration and field development and production, as well as LNG operations), Gas and Power (supply, trading and marketing of gas and electricity, managing gas infrastructures for transport, distribution, storage, re-gasification, and LNG supply and marketing), and Refining and Marketing (supply of crude oil, refining and marketing of refined products). Co. maintains operations in 73 countries.
Galp Energia is a holding company. Through its subsidiaries, Co. operates in the following segments: exploration and production, with activities relating to exploration, development and production of hydrocarbons, particularly in Angola, Brazil and Mozambique; refining and marketing, which owns refineries in Portugal and also includes activities relating to the retail and wholesale commercialization of oil products; and gas and power, which covers the purchasing, commercialization, distribution and storage of natural gas and electric and thermal power production. As of Dec 31 2014, Co. had proved and probable reserves of 638.0 million barrels of oil equivalent.
Okea ASA is a Norway-based oil company engaged in the oil and gas exploration and production industry. The Company contributes to the value creation on the Norwegian continental shelf with development and operation systems through the utilization of the result of previous and ongoing exploration activities in order to bring undeveloped oil on stream in strategic cooperation with service companies. Its services do not involve the exploration for petroleum. The Company operates an office in Trondheim, Norway.
Repsol is an oil and gas company. Co. is engaged in all the activities relating to the oil and gas industry, including exploration, development and production of crude oil and natural gas, transportation of oil products, liquefied petroleum gas (LPG) and natural gas, refining, the production of a wide range of oil products and the retailing of oil products, oil derivatives, petrochemicals, LPG and natural gas, as well as the generation, transportation, distribution and supply of electricity. Co. operates in more than 40 countries. Co.'s operations are divided into four segments: Upstream, Downstream, LNG and Gas Natural Fenosa.
Tethys Petroleum is an oil and gas exploration and production company focused on projects in Central Asia. Through its subsidiaries, Co. is engaged in the exploration for, and the acquisition, development and production of, oil and natural gas resources in Kazakhstan, Tajikistan and Uzbekistan.
Valeura Energy is engaged in the exploration, development and production of petroleum and natural gas in Turkey and Western Canada. As of Dec 31 2010, proven gross reserves for light and medium oil was 116 thousand barrels (net reserves of 104 thousand barrels); proven gross reserves for heavy oil was 10 thousand barrels (net reserves of 9 thousand barrels); proven gross reserves for natural gas was 1,047 million cubic feet (net reserves of 938 million cubic feet); and proven gross reserves for natural gas liquids was 26 thousand barrels (net reserves of 19 thousand barrels).
Rose Petroleum is an oil and gas (O&G) and mining company with exploration assets and an operational crushing and flotation mill. Co.'s principal activities are the exploration and development of O&G resources together with the evaluation and acquisition of other mineral exploration targets, principally gold, silver, uranium and copper, and the development and operation of mines in Mexico. In Co.'s O&G division, the area of focus is on two unconventional oil and gas basins in the U.S.: the Uinta Basin and the Paradox Basin. In its mining division, Co. continues its milling operations through its subsidiary, Minerales VANE S.A. de C.V., which owns the SDA Mill in Mexico.
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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