EGY US/LN, HHR AU, GPRK US, PTAL LN/TAL CN, TETY SS, AET LN, ALV CN, BNOR NO, BOE LN, CNE CN, DEC LN, DNO NO, ECHO LN, ECHO LN, ENQ LN, FEC CN, FORZ CN, GENL LN, HBR LN, KOS LN/US, PXT CN, RBD LN, SENX LN, SNM CN, TAO CN, TLOU AU/LN, TXP LN

AUCTUS PUBLICATIONS
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GeoPark (GPRK US)C; target price of US$25 per share: Protecting shareholder returns as lower capex offsets delayed production – 1Q23 production of 36,578 boe/d had already been reported. The Indico 6 and Indico 7 wells in the CPO-5 block in Colombia are now expected to return to production in July (rather than May) when the definitive surface facilities are completed. The facilities are 60-65% complete and there is improved confidence that date can be achieved. These two wells represent ~2.4-3.3 mbbl/d net to GeoPark. As a result of this delay and combined with the shut-in production of approximately 400 bopd in Chile due to ongoing commercial negotiations with ENAP, the oil offtaker, GeoPark has reduced its FY23 production guidance from 39.5-41.5 mboe/d to 38.0-40.0 mboe/d which is very close to our previous forecast of 39.9 mboe/d. 2H23 production is expected to stand at 39-42 mboe/d. The negative impact on the FY22 cash flow is offset by a US$20 mm reduction in the FY23 capex guidance to US$180-200 mm. This mostly (75%) reflects more efficient operations and cost reductions but also (25%) a rescheduling of drilling in Ecuador with only 1-2 wells expected to be drilled in the country in 2H23. Overall GeoPark continues to expect to generate Free Cash Flow of US$120-140 mm in 2023 for Brent of US$80-90/bbl. As we update our production and capex forecasts and trim our Brent price assumptions from US$92/bbl to US$89/bbl in 2023, we have changed our target price to US$25 per share.
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Hartshead Resources (HHR AU)C: Target price of A$0.17 per share: completing farm in transaction – Harshead has completed the farm-out agreement with RockRose Energy for the divestment of a 60% equity interest in its UK Southern Gas Basin License P2607. The initial cash payment of over A$12 mm made by RockRose takes Hartshead’s cash balance to over A$35 mm.

PetroTal (PTAL LN/TAL CN)C; target price of £1.50 per share: Another strong quarter with continued high production – Production continues to be very high, averaging ~21 mbbl/d in April and ~21.14 mbbl/d so far in May. Production has exceeded 20 mbbl/d for over 74 consecutive days. We understand that April sales matched production, which demonstrates that the Brazil export route is working well. PetroTal continues to expect that ~270,000 bbl of oil will be exported in late 2Q23 at Bayovar, generating US$5-6 mm in net revenue. For the time being, PetroTal is not exporting new volumes through the ONP until there is a guarantee of payment and Petroperu’s credit lines function normally. Given the high production so far in 2Q23 (leading us to increase our forecast from 17 mbbl/d to 18.5 mbbl/d), the FY23 production guidance of 14-15 mbbl/d looks increasingly conservative. PetroTal has also highlighted an upside case of 17 mbbl/d for 2H23 depending on river levels. Under that scenario and using our forecasts for 2Q23, production could potentially average 16.5 mbbl/d in 2023. We conservatively assume only 15.1 mbbl/d. The story continues to be about significant free cash flow generation, production and reserves growth with generous shareholder returns through a share buyback programme of ~US$3 mm per quarter and a US$0.015 per share quarterly dividend (~11% annual dividend yield)..
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Tethys Oil (TETY SS)C: Target price of SEK120 per share: ~10% yield, stabilized production and very busy upcoming 6 months - The 1Q23 financials were in line with our expectations with net cash of ~US$40 mm at the end of March. 1Q23 production of 9,411 bbl/d had already been reported and is stable compared to 4Q22. The FY23 production guidance of 9-10 mbbl/d has been re-iterated. The company has declared a total distribution of SEK5 per share (SEK2 per share ordinary dividend + additional SEK3 per share mandatory redemption). This represents almost 10% dividend yield. In addition, Tethys has bought back US$2 mm in shares in 1Q23. On Block 56, the extended well test (EWT) has commenced and the AJ-2 well is now producing 350 bbl/d. Production testing at AJ-3 and AJ-4 is expected to start in May and June respectively. On Blocks 3&4, the exploration programme has yieldedpositive results in 1Q23 with the Elaf-1 well flowing oil to surface and the Rahbah-1 well now being tested. The Jari 1 well, which could unlock significant resources in a new area of the block, has encountered oil. Like other wells in the area, the reservoir needs to be stimulated. Tethys’ shares continue to provide investors with a combination of dividend yield with very high impact exploration. The total unrisked NAV of the drilling programme until YE23 is ~SEK275 per share.
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VAALCO Energy (EGY US/LN)C; target price of US$9 per share: Good operational performance in Egypt – 1Q23 WI production stood at 23,152 boe/d (18,306 boe/d NRI) in line with expectations and guidance (WI: 22.5-23.8 mboe/d). As indicated by the company previously, 1Q23 sales were below 4Q22 (1.2 mmbbl in 1Q23 vs ~1.4 mmbbl in 4Q22). A lifting in Gabon originally planned for March was delayed until April. The company anticipates much higher NRI sales in 2Q23 (1.4-1.6 mmbbl). Even with the late lifting and low NRI sales in 1Q23, VAALCO held ~US$52 mm in cash at the end of March (up from US$37 mm at YE22) after having distributed US$6.7 mm in dividends and bought back US$4.5 mm in shares during the quarter. Egypt is performing well with WI production reaching 11,165 bbl/d at the end of April and 11,811 boe/d in early May. This compares with 9,673 bbl/d in January and reflects the contribution from 5 new wells (+1,071 bbl/d) and production optimization (+660 bbl/d). Drilling efficiency has also increased dramatically with new wells being drilled in less than 15 days (~38 days in 2022). VAALCO continues to receive payments for its Egyptian production. Total receivables (including Gabon) at the end of March stood at ~US$98 mm, down from ~US$139 mm at YE22 (including US$100 mm for Egypt). During 1Q23, the company sold an Egyptian cargo for US$28.5 mm and collected an additional US$19.5 mm from sales in Egypt. Egyptian receivables were ~US$78 mm (including ~US$51 mm of historical receivables) at the end of March. With further buybacks in 2Q23 (US$3 mm) and a dividend yield over 6.5%, the shares continue to offer a combination of value, distribution and growth.
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IN OTHER NEWS
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AMERICAS

Alvopetro Energy (ALV CN): 1Q23 results – 1Q23 production in Brazil was 2,767 boe/d. The company held US$20.9 mm in working capital surplus and no debt at the end of March.

Canacol Energy (CNE CN): 1Q23 results – 1Q23 realized gas sales in Colombia were 185.6 mmcf/d. Net debt at the end of March was US$460 mm.

Diversified Energy (DEC LN): 1Q23 update in USA – 1Q23 production was 139 mboe/d with an exit rate of 145 mboe/d.

Echo Energy (ECHO LN): Divestment in Argentina – Echo is selling 65% of the company’s current 70% Working Interest in Santa Cruz Sur to Selva Maria Oil and Interoil Exploration and Production for a cash consideration of up to £1.725 mm, an award of an option to purchase a producing Columbian portfolio and the issue of equity in Echo Energy at 0.065 p per share (a more than 100% premium to the closing price on 5 May). The cash payment includes an initial payment of £0.85 mm, payment in kind of £0.4 mm via transfer of Interoil shares upon completion and £0.5 mm contingent payment of reaching 4-6 mboe/d production.

Frontera Energy (FEC CN): Exploration well encounters oil in Guyana but operations interrupted on operational issues – The Wei-1 well, on the Corentyne block, has encountered multiple oil-bearing intervals in formations of Maastrichtian and Campanian ages. A comprehensive logging campaign in the Maastrichtian interval indicated the presence of medium sweet crude oil of 24.9 API. Operations were interrupted when a wireline fluid sampling tool became stuck in the well and was not recovered. The well is now expected to cost US$175-185 mm.

Parex Resources (PXT CN): 1Q23 results – 2Q23 to date estimated average production is approximately 55,000 boe/d and Parex is on track to meet the lower end of FY23 production guidance of 57,000 to 63,000 boe/d. Parex had a working capital surplus of US$30 mm at the end of March. A dividend of C$0.375 per share has been declared (C$0.25 per share in 4Q22). The VIM-43 exploration well had reached TD. Based on initial assessment, the company is likely to case and test the well in the coming weeks.

Touchstone Exploration (TXP LN/CN): 1Q23 results – 1Q23 production in Trinidad was 2,139 boe/d. Natural gas production from the Coho-1 well averaged net volumes of 5.1 mmcf/d. Net debt at the end of March was US$23.9 mm.

ASIA PACIFIC

EnQuest (ENQ LN): Update in Malaysia – EnQuest has signed an agreement with PETRONAS to provide additional gas from the Seligi field through the existing PM8E PSC facilities until the end of 2025. This agreement is expected to increase EnQuest's gas production by around 25 mmcf/d per day (50 mmcf/d gross), initially from associated gas.

EUROPE

BlueNord (BNOR NO): 1Q23 results – 1Q23 production in Norway was 26.6 mboe/d. Net debt at the end of March was US$790 mm.

Harbour Energy (HBR LN): 1Q23 update – 1Q23 production was 202 mboe/d. The FY23 guidance of 185 200 mboe/d with US$1.1 bn capex has been re-iterated. Net debt at the end of March was US$0.2 bn (US$0.7 bn at YE22).

Neptune Energy: 1Q23 results – 1Q23 production was 142.1 mboe/d. Net debt at the end of March was US$1.5 bn.

Reabold Resources (RBD LN): Investment in Italy – Reabold is acquiring 3.1% of LNEnergy Limited for £0.25 mm. Reabold has the option to increase its interest in LNEnergy to 25% for an aggregate cash and equity consideration of £3.8 mm. LNEnergy's primary asset is an option over a 90% interest in the Colle Santo gas field, onshore Italy in the Abruzzo region with 65 bcf of 2P reserves.

Serinus Energy (SENX LN): 1Q23 results – 1Q23 production in Tunisia and Romania was 691 boe/d. Serinus held US$2.7 mm in cash at the end of March.

FORMER SOVIET UNION

Block Energy (BOE LN): FY22 results – FY22 production in Georgia was 450 boe/d. Post year-end production reached 620 boe/d. The company held US$0.45 mm in cash at YE22.

MIDDLE EAST AND NORTH AFRICA

DNO (DNO NO): 1Q23 results – 1Q23 net production was 89,400 boe/d, of which Kurdistan contributed 70,900 bbl/d, North Sea 14,800 boe/d and West Africa 3,700 boe/d. 1Q23 gross production in Kurdistan was 94.7 mbbl/d, including 49.5 mbbl/d at Peshkabir and 44.4 mbbl/d at Tawke. DNO has scaled back spend in Kurdistan, including drilling. The number of active rigs at the Tawke license will drop from four at the start of 2023 to none in the second half of the year. The production guidance for Kurdistan has been withdrawn. In 2023, North Sea net production is projected to average 12,000-13,000 boe/d, while West Africa is projected to deliver an additional 3,500 boe/d net to DNO. DNO held net cash of US$344 mm at the end of March.

Forza Petroleum (FORZ CN): 1Q23 update in Kurdistan – 1Q23 WI production was 8.3 mbbl/d. Production during April was limited to a minimal volume necessary to maintain operational readiness for a restart of production operations. Substantially all production remains shut in. Forza Petroleum has suspended its work program for the balance of 2023. Forza Petroleum forecasts US$24.1 mm of capital expenditure for 2023, down from US$68.3 mm.

Genel Energy (GENL LN): 1Q23 update in Kurdistan – 1Q23 production was 26 mbbl/d. The company is looking to distribute US$0.12 per share in dividends. Genel held US$229 mm in net cash at the end of March. Due to the closure of the Iraq-Turkey Pipeline and resulting impact on production, Genel’s production guidance of 27 29,000 bbl/d is no longer valid. New guidance will be issued once the pipeline reopens and investment plans are confirmed. Genel now expects capital expenditure to be below US$100 mm (previous guidance US$100 125 mm). Payments totalling US$80 mm are outstanding relating to production from October 2022 to January 2023, with US$110 mm of total sales invoices submitted up to and including March 2023.

ShaMaran Petroleum (SNM CN): 1Q23 results – 1Q23 net production in Kurdistan was 14.9 mbbl/d. In light of the closure of the ITP, capex is planned to be cut by over 50% of the original budget until production and payments are resumed. The FY23 production guidance is suspended.

TAG Oil (TETY SS): Operation update in Egypt – The Abu Roash “F” formation at the BED 1-7 well unloaded to surface under natural flow and cleaned up ~40% of the injected fracture fluid with significant presence of 23 deg API oil. Net cumulative oil produced during the short flowback was in excess of 500 bbl. According to the company, the production results confirm the economic feasibility of this resource play.

SUB-SAHARAN AFRICA

Afentra (AET LN): Update in Angola – The acquisition of 4% in Block 3/05 and 3/05A has completed. The net consideration of US$17 mm is offset by Afentra inheriting US$16.6 mm worth of crude oil inventory. Net production from the Block in April was 760 bbl/d. The licence for Block 3/05 has been extended to YE40. The acquisition of an interest in this block is expected to complete in June. At YE22, WI 2P reserves on Block 3/05 were estimated at 4.3 mmbbl with 1.7 mmbbl of 2C contingent resources.

Kosmos Energy (KOS LN): 1Q23 results – 1Q23 production was 58.8 mboe/d, including 33.6 mboe/d in Ghana, 15.9 mboe/d in the Gulf of Mexico and 27.2 mbbl/d in EG. Gross production at Jubilee is expected to reach over 110 mbbl/d by YE23 (72.2 mbbl/d in 1Q23). Net debt at the end of March was US$2.1 bn. First gas at Tortue continues to be expected in 4Q23.

Tlou Energy (TLOU AU/LN) : Raising equity for Botswana power – Tlou is raising ~A$10.65 mm of new equity priced at A$0.035 per share. Funds raised will go towards the development of Tlou's power projects, including: drilling of CBM gas production wells; construction of transmission line and substations to connect the Lesedi project to the electricity grid; land purchase and construction of an operations and generation facility.