Panoro Energy ASA (PEN:OSE; 1PZ:FRA) recently announced that a drilling contract has been awarded for the Noble Venturer drill ship to recommence infill drilling at the Ceiba Field and Okume Complex in Equatorial Guinea (EG) in June 2024. The drilling campaign will now comprise two infill wells due to limitations arising from the shallower water depth at one of the planned infill well locations. The third infill well is planned to be deferred for a possible drilling campaign in the future.
Auctus Advisors analyst Stephane Foucaud, in a research report published on April 24, 2024, noted that "This allows production in EG to return to growth. In addition, the rig will then drill the high impact Akeng Deep ILX exploration on Block S with 180 mmbbl gross prospective resources."
Panoro Energy reported its year-end 2023 (YE23) working interest (WI) reserves, with Gabon estimated at approximately 17 mmbbl, flat compared to YE22. The reserves addition associated with the Hibiscus South discovery and the increased size of Hibiscus offset the FY23 production (1.1 mmbbl) and lower oil price assumptions, according to the Auctus Advisors report.
In EG, the YE23 WI reserves were estimated at approximately 11.7 mmbbl, down from 14.2 mmbbl at YE22, reflecting FY23 production (1.3 mmbbl), lower oil price assumptions, and adjustments to decline curves on specific wells due to lower field performance.
"Overall and including the acquisition of a further interest in the Tunisian assets, the company has replaced ~70% of its FY23 production," Foucaud stated.
Foucaud reiterated Auctus Advisors' target price of NOK47 per share for Panoro Energy. "Our unrisked NAVs for the Akeng and Bourdon prospects are ~NOK16/sh and NOK5/sh respectively. Key upcoming newsflow includes production ramp-up at Dussafu," the analyst added.
Auctus Advisors' Core NAV and ReNAV for Panoro Energy stand at approximately NOK28 per share and NOK48 per share, respectively. "At US$85/bbl for Brent, we estimate that the cumulative free cash flow over 2024-2026 is greater than the current market cap. High oil prices could also support higher overall shareholder distributions," Foucaud noted.
Panoro Energy's strategic plans include restarting drilling in EG, which is expected to boost production growth. The company's recent milestones include the acquisition of a further interest in its Tunisian assets and the replacement of approximately 70% of its FY23 production through reserves additions.
With a target price of NOK47 per share, Auctus Advisors sees a potential total return of 68% for investors in Panoro Energy. Foucaud noted that the company's strong free cash flow generation and the possibility of higher shareholder distributions, supported by high oil prices, make it an attractive investment opportunity in the oil and gas sector.
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Disclosures for Auctus Advisors, Panoro Energy, April 24, 2024
Panoro Energy ASA (“Panoro” or the “Company”) is a corporate client of Auctus Advisors LLP (“Auctus”). Auctus receives, and has received in the past 12 months, compensation for providing corporate broking and/or investment banking services to the Company, including the publication and dissemination of marketing material from time to time.
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Author The research analyst who prepared this research report was Stephane Foucaud, a partner of Auctus.
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