AUCTUS ON FRIDAY -136/09/2024
AUCTUS PUBLICATIONS________________________________________
Chariot (CHAR LN)C; Target price £0.40 per share: Anchois-3 encounters gas in the appraisal targets but one of the exploration target is dry – The Anchois-3 well has 3 objectives. While the initial pilot hole encountered the targeted reservoirs at the Anchois Footwall prospect, they were interpreted as water wet. Our ReNAV for this prospect was £0.03/sh. The well was sidetracked in the B sands which are the main appraisal targets. Preliminary interpretation indicates the presence of gas in these sands. Our unrisked NAV for the 2C resources is £0.27/sh. We carry 75% probability of development. Drilling is ongoing towards the deeper targets. This includes the Anchois North Flank prospect (O sands) with an additional 2U Prospective Resources estimate of 213 bcf. Importantly the North Flank prospect is deeper than the Footwall prospect and part of a different structure separated by a fault. As a result, the fact that the Footwall prospect was water wet has limited impact on the risking of the North Flank prospect. Our unrisked NAV for North Flank is £0.07/sh with a 49% chance of success. A success at Anchois North Flank will also de-risk the nearby Anchois South Flank prospect with a 2U Prospective Resource estimate of 372 bcf with an unrisked NAV of £0.11/sh and 57% chance of success.As we remove Footwall from our ReNAV, we have changed our target price for Chariot to £0.40/sh. Further details on the well results are expected next week.
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Serica Energy (SQZ LN)C; Target price £2.90 per share: Cumulative free cash flow near market cap by YE27 if UK tax regime constrains investment – 1H24 production was 43.7 mboe/d, which is in line with our expectations. Net cash of ~US$143 mm at the end of June was also near our forecasts. The FY24 production is expected to be towards the bottom end of the guidance of 41-46 mboe/d, mostly due to more downtime than expected at the Triton hub. The summer maintenance lasted >61 days instead of scheduled 40 days. With further visibility on the UK fiscal regime expected at the end of October, the key takeaway from the announcement is Serica’s financial framework. Given the strength of the company’s balance sheet, Serica has declared an interim dividend of £0.09/sh (in line with last year). Assuming the worst case fiscal regime, Serica’s future investments in the UK will be very limited. Under such a scenario, Serica estimates that the UK business could generate >U$500-600 mm of cumulative free cash flow by YE27. This represents almost the current market cap of the company. On our commodity price scenario and production forecast, this could be achieved as early as YE26. This leaves ample room to continue to fund a generous dividend. By YE24, the company will have already returned ~US$130 mm to shareholders (dividends plus share buybacks) which represents >20% of the current market cap. We continue to value the company at ~£1.80 per share based on the worst case fiscal regime changes. This represents 50% upside to the current share price.
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Tethys Oil (TETY SS)C; Target price SEK100 per share: Production update in Oman – WI production from Blocks 3&4 in August was 7,740 bbl/d.
IN OTHER NEWS
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AMERICAS
Alvopetro Energy (ALV CN): Production update in Brazil – Sales volumes in August were 1,919 boe/d.
Equinor (EQNR NO): Exploration well not commercial in Canada – The Stika offshore exploration well did not encounter hydrocarbons in commercial quantities.
EUROPE
Equinor (EQNR NO): Discovery in Norway – An exploration well at the Lavrans prospect has encountered 13-25 mmboe recoverable resources.
Trillion Energy (TCF CN): Operation update in Turkey – The Akcakoca-3 was put in production at an initial flow rate of 4.28 mmcf/d increasing to 4.66 mmcf/d with a pressure of 645 psi.
FORMER SOVIET UNION
Cadogan Energy (CAD LN): 1H24 results – Production in Ukraine was 370 boe/d. The company held US$15.1 mm in cash at the end of June. Cadogan will invest in new power generation opportunities in Ukraine, totalling an installed capacity of around 10 MW.
MIDDLE EAST AND NORTH AFRICA
Energean (ENOG LN): 1H24 results – 1H24 production in Israel, Egypt, Italy and Greece was 146 mboe/d including 106 mboe/d in Israel. Production in August was 154 mboe/d including 115 mboe/d in Israel. Net debt at the end of June was US$2.9 bn. The FY24 production guidance has been narrowed from 155-175 mboe/d to 155-165 mboe/d with total capex of US$755-900 mm (US$660-805 mm previously).
SUB-SAHARAN AFRICA
Afentra (IVZ AU): 1H24 results – 1H24 WI production in Angola was 6,696 bbl/d. Net debt at the end of June was US$46.4 mm.
Noble Helium (MHE CN): Helium resources increase in Tanzania – Prospective resources (mid case) at the Western Margin of the North Rukwa basin are now estimated at 18 bcf.
EVENTS TO WATCH NEXT WEEK
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17/09/2024 – Jadestone Energy (JSE LN): 1H24 results
18/09/2024 – Longboat Energy (LBE LN): 1H24 results
18/09/2024 – Pharos Energy (PHAR LN): 1H24 results
18/09/2024 – Star Energy (STAR LN): 1H24 results
19/09/2024 – Cairn Energy (CNE LN): 1H24 results
19/09/2024 – Jersey Oil & Gas (JOG LN): 1H24 results
Alvopetro Energy is a resource company and is engaged in the exploration for, and the acquisition, development and production of, hydrocarbons in the Reconcavo, Tucano, Camamu-Almada and Sergipe-Alagoas basins in onshore Brazil. Co. develops producing hydrocarbons by appraising and developing existing discoveries and exploring in areas considered by management to be prospective for hydrocarbon resources. Co.'s assets consist of interests in three producing fields and 16 exploration blocks comprising 148,500 gross acres onshore Brazil.
Chariot Oil & Gas is an independent oil and gas exploration company focused offshore in West Africa with a portfolio of assets located in the under-explored regions of Namibia, Mauritania and Morocco.
Energean Oil & Gas PLC is an exploration and production (E&P) company that is focused on the Eastern Mediterranean region, where it operates in offshore Israel, Greece, the Adriatic and Egypt. The Company has 13 E&P licenses, and 16 wells. The Company has proven plus probable (2P) reserves of 50 million barrels (MMbbls) of oil and 6 billion cubic feet (Bcf) of gas and 2C resources of 22.9 MMbbls of oil and 11.5 Bcf of gas at its Prinos Basin and Katakolo fields, and its associate, Energean Israel, has 2C resources of 32.8 MMbbls of liquids and 2.4 trillion cubic feet (Tcf) of gas. The Company also has exploration potential in the other licences held in offshore Israel, Western Greece, and Montenegro.
Equinor is engaged in oil and gas exploration and production activities. Co. is primarily focused on exploration, development and production of oil and gas on the Norwegian continental shelf (NCS). Co.'s operations are organized into four segments. The Development and Production Norway and Development and Production International segments explore, develop, produce and extract crude oil, natural gas and natural gas liquids. The Marketing, Processing and Renewable Energy segment markets, trades, transports and processes oil and natural gas and renewable energy. The Other segment consists of global well and project delivery, research and develpoment, and business development.
Serica Energy is an independent oil and gas company with production, development and exploration licence interests in the U.K. Continental Shelf and exploration interests in Ireland, Morocco and Namibia. As of Dec 31 2016, Co. had proved plus probable reserves of 3.8 million barrels of oil equivalent, which consisted of 2.1 million barrels of oil and 10.40 billion cubic feet of gas.
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.
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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