Edison Investment Research is terminating coverage on Diversified Gas & Oil (DGOC), Vermilion Energy (VET) and Circle Property (CRC). Please note you should no longer rely on any previous research or estimates for these companies. All forecasts should now be considered redundant.
Companies: Vermilion Energy Inc.
Vermilion Energy’s geographically diverse portfolio spreads geopolitical and pricing risk across different economies. The company has grown both organically and inorganically, and has delivered on environmental, social and corporate governance (ESG) objectives, being highly rated across multiple ESG rating platforms. Notwithstanding this, Vermilion has been affected by COVID-19 and has had to reassess its strategy on cash returns to shareholders. The board suspended the dividend, appointed Lorenzo Donadeo and Curtis Hicks as executive chairman and president of the company respectively, and created an executive committee. The committee’s mission is to reinstate Vermilion’s core business principles and restore investor confidence in this diverse, flexible operating company. We have updated our valuation using FY21e metrics, resulting in a blended valuation of C$9.6/share. However, the valuation remains highly sensitive to commodity price assumptions.
Vermilion Energy recently reported Q120 production of 97.2kboed and fund flows from operations of C$170m. Even though the company has not observed a direct impact on its operations from COVID-19, results were already affected by the pandemic effects on global energy demand and current low commodity prices. In March, the board reduced the monthly dividend by 50% to C$0.115/share and announced a C$80–100m reduction to the annual capital budget. Subsequently, Vermilion suspended the monthly dividend as a further measure to preserve cash. In light of Q120 results and the current measures implemented, in addition to revised short-term commodity prices expectations, our updated valuation decreases to C$8.8/share from C$9.7/share (down 8%).
Vermilion Energy has recently reported record annual production of 100.3kboed and fund flows from operations (FFO) of C$908m for FY19. Key drivers to increased production include a full-year contribution from the Spartan assets acquired in May 2018. However, following recent macroeconomic headwinds such as the impact of the coronavirus and the Russia/Saudi Arabia price war, Vermilion updated its capex guidance and production estimates for the year. These significantly affect results; hence management additionally announced a dividend cut to C$0.02/share per month. In light of these recent events, in addition to short-term commodity prices expectations, our updated valuation decreases to C$9.7/share from C$38.3/share (down 75%).
Vermilion Energy’s geographically diverse portfolio spreads geopolitical and pricing risk across different economies. The company has grown both organically and inorganically through a series of new country entries, with a solid track record of hitting guidance targets. Additionally, management has delivered on environmental, social and corporate governance (ESG) objectives, being highly rated across multiple ESG rating platforms. Notwithstanding this, Vermilion has been affected by the current negative sentiment around Canadian E&P equities, which has dragged down its share price. This decrease results in a highly attractive dividend yield of c 14%, which we believe is sustainable for the coming years under most oil price scenarios. Based on a blended approach of fundamental and market methodologies, our valuation is C$38.3/share, although this remains highly sensitive to commodity price assumptions.
VET’s Q2 FFO and production came in slightly below consensus, primarily owing to weaker oil production in France caused by downtime at a nearby refinery, and timing of its Australian oil sales. Strong test rates were reported from VET’s first operated exploration wells in Germany (8.8 mmcf/d restricted) and Croatia (15.0 mmcf/d), while test results from 4x new wells in Hungary were mixed. VET has also expanded its European presence again, signing contracts for 50% WI stakes in 580k acres in Ukraine.
Vermilion has reported Q219 FFO (fund flows from operations) of C$222.7m, 4.8% below consensus of C$233.8m and 8.2% below our forecast of C$242.5m despite a 14% increase in FFO y-o-y. Key drivers of the miss versus our forecast include reduced production in France due to a refinery outage which had a post-tax FFO impact of C$11m and an inventory build in Australia which had an impact of C$8m. At 103.0kboed, production was 1.2% ahead of our forecast despite the outage in France, driven by new wells contributing in the US (production +21% q-o-q) and Australia (+14% q-o-q). Guidance for FY19 production remains 101–106kboed (with the mid-point implying 19% y-o-y growth) and Vermilion’s capex budget of C$530m remains unchanged. Our last published valuation was C$47.5/share, based on a blend of FY19 P/CF, EV/EBIDAX and multiple of FCF plus five-year NAV growth. We note that there has been a material de-rating in the Canadian large-cap E&P sector which currently trades at an average 2.7x FY19e P/CF versus 3.8x at the time of our last Vermilion publication.
Vermilion Energy offers a geographically diverse production base, the ability to fund an 8.1% dividend yield and a forecast FY19 c C$530m capital programme, all achievable even at realised commodity prices c 3% below our base case (WTI US$56.1/bbl, Brent US$62.8/bbl). We adjust our FY19 and FY20 forecasts to reflect lower short-term commodity price expectations (based on the latest EIA forecasts of 12 March 2019). EIA’s FY19 WTI moves from US$64.9/bbl to US$56.1/bbl (-14%), driving down our forecast FY19 FFO from C$1,200m to C$982m (-18%), comfortably above the $954m we estimate is required to cover dividend, maintenance and growth capex. Our valuation falls from C$54.5/share to C$47.5/share, based on a blend of P/CF, EV/EBIDAX, DDM, and FCF (plus growth) multiples. The valuation remains highly sensitive to commodity price assumptions. We provide a sensitivity to these key inputs in this note.
Vermilion has reported Q418 FFO of C$222.3m, 6.7% ahead of consensus C$208.3m and in line with our estimate of C$222.2m. At 101.6kboed, production was 2.7% ahead of our forecasts, with FFO/share 1.1% ahead at C$1.46/share. Guidance for 2019 production of 101–106kboed (with the mid-point implying 19% y-o-y growth) and the capex budget of C$530m remain unchanged. ROCE in 2018 was 9% compared to a five-year average of 4%. Our last published valuation was C$54.5/share, based on a blend of FY19 P/CF, EV/EBIDAX and multiple of FCF plus five-year NAV growth.
Vermilion’s investor day highlighted its self-funded growth and income business model. Management’s commitment to providing shareholders a sustainable dividend is supported by a deep and diverse portfolio of assets resilient to a volatile commodity price environment. Project inventory supports a recycle ratio of over 2.5 times and the short-cycle nature of growth capex means spend can be rapidly diverted to projects that offer the highest returns or are curtailed. Our base case valuation falls to C$54.5/share (from C$57.9/share), largely driven by a global E&P sector de-rating. The share price is well supported by an 8.2% yield, which we believe is fully covered (in addition to growth capex) at c 20% below our base case commodity price forecasts for FY19.
Vermilion Energy (VET) reported Q2 fund flows from operations (FFO) of C$193m, in line with consensus estimates and a 23% increase q-o-q. The acquisition of Spartan drove a 15% q-o-q increase in production to 80.6kboed, c 1% ahead of consensus, which includes volumes from Spartan after close of the C$1.4bn acquisition on 28 May 2018. We increase our expectations for FY18 FFO from C$887m to C$946m (+7%) and FY19 FFO from C$1,104m to C$1,208m (+9%), reflecting higher oil price expectations for H218 and 2019. We use EIA short-term WTI price projections of US$66/bbl in 2018 and US$62/bbl in 2019. Our valuation increases from C$53.8/share to C$57.9/share as a result.
Vermilion reported 2Q18 production of 80,625 boe/d and cash flow of C$193 mm, which was in line with expectations. The company closed the Spartan Energy acquisition in 2Q18.
Vermilion’s acquisition of Spartan Energy has closed, and as such, we are off research restriction. We view the acquisition favourably noting that Vermilion was able to add another strong asset that can generate free cash flow to its portfolio. The Spartan acquisition satisfies Vermilion’s production and dividend growth model. The Spartan acquisition is immediately accretive to Vermilion with cash flow per share growth of 4% in 2018e (seven months of the year) and 12% in 2019e. With the acquisition, Vermilion has increased its capital budget to C$430 mm (previously C$325 mm) and production guidance to range between 86,000 boe/d and 90,000 boe/d (previously 75,000 to 77,500 boe/d).
On 16 April 2018 Vermilion announced the proposed acquisition of Spartan Energy, a south-east Saskatchewan producer with estimated 2018 production of c 23kboed (91% oil) for a consideration of C$1.4bn, funded through C$1.23bn in Vermilion shares and the assumption of c C$175m of debt. The deal was priced at a 5% premium to Spartan’s closing price and is recommended by its board. In this note we incorporate Spartan’s asset base into our Vermilion forecasts and valuation based on the planned 15 June 2018 transaction closing date. We estimate the acquisition to be 9% accretive to cash flow per share in 2019 and 10% in 2020. Our valuation rises from C$48.2/share to C$/53.8/share as a result.
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AMTE Power, a developer and manufacturer of lithium-ion battery cells for specialist markets, announced its intention to seek admission to trading on AIM. Admission is expected to take place during March 2021. The Company intends to raise approximately £7m by way of a placing of new ordinary shares in the capital of the Company. Timing TBC. Samarkand Group Limited, the cross-border eCommerce technology and retail group opening up the world's largest market for brands and retailers, intends to IPO on the Apex Segment Aquis Stock Exchange Growth Market. Admission is targeted for March 2021. Cellular Goods a UK-based provider of premium consumer products based on biosynthetic cannabinoids announced its intention to join the main market (standard) this Spring. Target valuation £20m raising c. £8m “to finalise the development and launch of a range of the Company's premium-quality consumer products based on biosynthetic cannabinoids, which is fully compliant under UK law.” NextEnergy Renewables to launch an IPO on the Main Market. NREN is a differentiated renewables investment Company that aims to capture the most attractive private renewables and energy transition infrastructure investment opportunities globally. Targeting a £300m raise. NREN is targeting total returns of 9-11 per cent. per annum (net of all fees and expenses but including the Target Dividend and capital appreciation) . The Company's target dividend yield for the first full financial year to 31 December 2022 is 5.5 pence. Due Early March 2021. Auction Technology Group is considering an IPO on the Main Market. The Group operates six world-leading online Marketplaces and proprietary global auction platform technology for curated online auctions. In FY20 the Group delivered pro forma revenue of £52.3m, supported by notable underlying year-on-year growth from both Standalone ATG Group and Standalone Proxibid Group (12.4 per cent. and 40.4 per cent., respectively). For the same period, the Group delivered a strong profitability performance of £22.3m pro forma Adjusted EBITDA representing a pro forma Adjusted EBITDA margin of 42.6 per cent. Expected March 2021. Digital 9 Infrastructure launch an initial public offering on the Specialist Fund Segment of the Main Market of the London Stock Exchange, by way of an initial placing and offer for subscription for a target issue £400m. Digital 9 Infrastructure plc is a newly established, externally managed investment trust. The Company will invest in a range of digital infrastructure assets which deliver a reliable, functioning internet. The IPO Prospectus is expected to be published in March 2021. Team PLC announced their plans for an AIM IPO. Team owns Theta Enhanced Asset Management Ltd, trading as Team Asset Management. This is a Jersey-based active fund manager providing discretionary and advisory portfolio management services to private clients, trusts and charities. Assets under management were GBP291m in November, up from GBP140m in December 2019 . The Company is seeking to raise no less than £5 million. The Placing will be priced on a pre-money valuation for the Company of £7 million. Targeting March Admission. Virgin Wines UK Plc recently set out their plans for an AIM IPO. Virgin Wines is a direct-to-consumer online wine retailer that sells products to retail customers in the UK through two subscription schemes and a pay-as-you-go offering. The Group also sells a range of beers and spirits and operates a B2B sales channel for corporates. Deal details TBC but media reports suggest a £100m valuation. Targeting 2nd March Admission Fix Price announces its intention to float on the Main Market of the London Stock Exchange. Fix Price is one of the leading variety value retailers globally and the largest in Russia, with more than 4,200 stores. Fix Price has revenues of RUB 190.1bn, RUB 142.9bn and RUB 108.7bn for 2020, 2019 and 2018, respectively. Adjusted EBITDA for the same years was RUB 36.8bn, RUB 27.2bn and RUB 14.2bn, respectively. The Offer would consist of an offering of GDRs by certain existing shareholders of the Company. Great Point Entertainment Income Trust PLC announced its prospectus has been approved by the FCA. Great Point Entertainment Income Trust PLC is a newly established, externally managed closed-ended investment company. The Company will provide project finance to content makers and commissioners in the global television and film production industry via senior loans secured against pre-sold intellectual property (IP) rights. GPEIT's investment objective is to provide Shareholders with dividend income and modest capital growth through exposure to media content finance. According to media reports, Deliveroo, are expecting to release their IPO plans on 8th March. The company raised more than $180m in January with a valuation of more than $7bn.
Companies: SBI OCI IDOX ROL JAN BSE PXS SHED TSG KDNC
Following our recent update, we have provided some further clarification regarding our financial forecasts, outlining our changes whilst upgrading our year end cash forecasts. Our revised cash forecasts are US$20.0m for FY21E and US$17.7m for FY22E (in advance of Echo FID). Furthermore, despite the challenging macro-environment, Trinity is highly geared towards increases in the oil price, with a US$60/bbl average realised oil price increasing our FY21E, closing cash expectations further to US$23.7m. Below we present a FY22E scenario whereby we assume that the capex involved in the Echo development does not come into play until a Final Investment Decision (FID), leaving the Company with a YE22E cash position of US$17.7m. Our forecasts reflect the current asset base and at this stage do not capture any upside for the extensive opportunity set.
Companies: Trinity Exploration & Production Plc
Bluebird Merchant Ventures (BMV LN) – Funding proposed through digital token linked to gold Empire Metals* (EEE LN) – Empire complete acquisition of Eclipse gold project Condor Gold* (CNR LN) – Drilling underway on the Cacao Vein Cornish Metals* (CUSN LN) – Osisko converts its note to a royalty Orosur Mining* (OMI LN) – High-grade gold intersections received at Anza Phoenix Copper* (PXC LN) – £2m debt facility to accelerate the Empire project Rambler Metals and Mining* (RMM LN) – New non-executive appointment to strengthen the board Tertiary Minerals* (TYM LN) – Lucky Copper Project drilling
Companies: CUSN OMI BMV CNR EEE PXC RMM TYM IRR
i3 Energy has provided an interim update the highlights of which are: • Production is exceeding expectations with lower declines than modelled resulting in stable production from November 2020 to January 2021 averaging 9,150 boe/d (41% liquids) – about 1,000 boe/d greater than expected by the forecasts of the company's competent persons' reports at the time of its relisting. • Based on the futures curves for oil & gas, the company anticipates net operating income for 2021 (revenue minus royalties, operating costs, transportation and processing) of approximately CAD $35m (US $27.6m). • Maintenance capital expenditure guidance in conjunction with the net operating income amounts to CAD$3m. • i3 Energy completed an 80 hour flow-test on a horizontal Falher well located on its Noel acreage in Northeast British Columbia. The flow test ran for a sustained period at 4,200 mcf/d (700 boe/d) on a 1/4” choke. The well is expected to be brought on production at approximately 500 boepd during the second quarter of 2021, following tie-in. This well was not included in the company's 2P reserve estimates. The result represents a materially value enhancing development. Both the net income guidance and maintenance capital guidance excludes the potential contribution of the Noel acreage. • The Company continues to progress the legal process to allow it to declare a dividend in Q1 2021. As previously disclosed, the Company aims to distribute up to 30% of free cash flow as a dividend to shareholders. • The company indicated that discussions continue with a potential farm-in partner for the Serenity discovery and terms are being negotiated. The recent strengthening in commodity prices has reinvigorated activity within i3's virtual data room, and additional parties previously contacted during early 2020 have now re-engaged with the company. The company indicated that the market will be updated if and when an agreement is reached. (see Table 1 for asset scale/value estimates in relation to the company's North Sea assets).
Companies: i3 Energy Plc
AMTE Power, a developer and manufacturer of lithium-ion battery cells for specialist markets, announced its intention to seek admission to trading on AIM. Admission is expected to take place during March 2021. The Company intends to raise approximately £7 million by way of a placing of new ordinary shares in the capital of the Company. Timing TBC. Samarkand Group Limited, the cross-border eCommerce technology and retail group opening up the world's largest market for brands and retailers, intends to IPO on the Apex Segment Aquis Stock Exchange Growth Market. Admission is targeted for March 2021. Cellular Goods a UK-based provider of premium consumer products based on biosynthetic cannabinoids announced its intention to join the main market (standard) this Spring. Target valuation £20m raising c. £8m “to finalise the development and launch of a range of the Company's premium-quality consumer products based on biosynthetic cannabinoids, which is fully compliant under UK law.” NextEnergy Renewables to launch an IPO on the Main Market. NREN is a differentiated renewables investment company that aims to capture the most attractive private renewables and energy transition infrastructure investment opportunities globally. Targeting a £300m raise. NREN is targeting total returns of 9-11 per cent. per annum (net of all fees and expenses but including the Target Dividend and capital appreciation) . The Company's target dividend yield for the first full financial year to 31 December 2022 is 5.5 pence. Due Early March 2021. Auction Technology Group is considering an IPO on the Main Market. The Group operates six world-leading online Marketplaces and proprietary global auction platform technology for curated online auctions . In FY20 the Group delivered pro forma revenue of £52.3 million, supported by notable underlying year-on-year growth from both Standalone ATG Group and Standalone Proxibid Group (12.4 per cent. and 40.4 per cent., respectively). For the same period, the Group delivered a strong profitability performance of £22.3 million pro forma Adjusted EBITDA representing a pro forma Adjusted EBITDA margin of 42.6 per cent. Expected March 2021. Digital 9 Infrastructure launch an initial public offering on the Specialist Fund Segment of the Main Market of the London Stock Exchange, by way of an initial placing and offer for subscription for a target issue £400m. Digital 9 Infrastructure plc is a newly established, externally managed investment trust. The Company will invest in a range of digital infrastructure assets which deliver a reliable, functioning internet. The IPO Prospectus is expected to be published in March 2021. 4basebio UK Societas is a specialist life sciences group focused on therapeutic DNA for gene therapies and DNA vaccines and providing solutions for effective and safe delivery of these DNA based products to patients. The Company has been divested from 4basebio AG , a German company listed on the Prime Standard segment of the Frankfurt Stock Exchange . No capital to be raised on Admission. Anticipated market capitalisation on AIM Admission: £14.53m.
Companies: SAR PAF PTRO NEXS TYM BOD CLX FAB ODX DUKE
AMTE Power, a developer and manufacturer of lithium-ion battery cells for specialist markets, announced its intention to seek admission to trading on AIM. Admission is expected to take place during March 2021. The Company intends to raise approximately £7m by way of a placing of new ordinary shares in the capital of the Company. Timing TBC. Samarkand Group Limited, the cross-border eCommerce technology and retail group opening up the world's largest market for brands and retailers, intends to IPO on the Apex Segment Aquis Stock Exchange Growth Market. Admission is targeted for March 2021. Cellular Goods a UK-based provider of premium consumer products based on biosynthetic cannabinoids announced its intention to join the main market (standard) this Spring. Target valuation £20m raising c. £8m “to finalise the development and launch of a range of the Company's premium-quality consumer products based on biosynthetic cannabinoids, which is fully compliant under UK law.” NextEnergy Renewables to launch an IPO on the Main Market. NREN is a differentiated renewables investment Company that aims to capture the most attractive private renewables and energy transition infrastructure investment opportunities globally. Targeting a £300m raise. NREN is targeting total returns of 9-11 per cent. per annum (net of all fees and expenses but including the Target Dividend and capital appreciation) . The Company's target dividend yield for the first full financial year to 31 December 2022 is 5.5 pence. Due Early March 2021. Digital 9 Infrastructure launch an initial public offering on the Specialist Fund Segment of the Main Market of the London Stock Exchange, by way of an initial placing and offer for subscription for a target issue £400m. Digital 9 Infrastructure plc is a newly established, externally managed investment trust. The Company will invest in a range of digital infrastructure assets which deliver a reliable, functioning internet. The IPO Prospectus is expected to be published in March 2021. Team PLC announced their plans for an AIM IPO. Team owns Theta Enhanced Asset Management Ltd, trading as Team Asset Management. This is a Jersey-based active fund manager providing discretionary and advisory portfolio management services to private clients, trusts and charities. Assets under management were GBP291m in November, up from GBP140m in December 2019 . The Company is seeking to raise no less than £5 million. The Placing will be priced on a pre-money valuation for the Company of £7m. Targeting March Admission. Virgin Wines UK Plc recently set out their plans for an AIM IPO. Virgin Wines is a direct-to-consumer online wine retailer that sells products to retail customers in the UK through two subscription schemes and a pay-as-you-go offering. The Group also sells a range of beers and spirits and operates a B2B sales channel for corporates. Deal details TBC but media reports suggest a £100m valuation. Targeting 2nd March Admission Fix Price announces its intention to float on the Main Market of the London Stock Exchange. Fix Price is one of the leading variety value retailers globally and the largest in Russia, with more than 4,200 stores. Fix Price has revenues of RUB 190.1bn, RUB 142.9bn and RUB 108.7bn for 2020, 2019 and 2018, respectively. Adjusted EBITDA for the same years was RUB 36.8bn, RUB 27.2bn and RUB 14.2bn, respectively. The Offer would consist of an offering of GDRs by certain existing shareholders of the Company. Great Point Entertainment Income Trust PLC announced its prospectus has been approved by the FCA. Great Point Entertainment Income Trust PLC is a newly established, externally managed closed-ended investment company. The Company will provide project finance to content makers and commissioners in the global television and film production industry via senior loans secured against pre-sold intellectual property (IP) rights. GPEIT's investment objective is to provide Shareholders with dividend income and modest capital growth through exposure to media content finance. According to media reports, Deliveroo, are expecting to release their IPO plans on 8th March. The company raised more than $180m in January with a valuation of more than $7bn.
Companies: CCS OKYO SML BEG SBIZ GDP SGM SEN AMO KZG
The Calabar power station, which accounts for the majority of Savannah’s Nigerian gas sales, has entered a new power supply agreement with the Republic of Togo, with more in discussion, raising the prospect of meaningful increases in Savannah’s gas supplies to the plant. These additional volumes will come at negligible additional cost, leveraging the bottom-line impact. The recently signed Mulak Energy gas sales agreement demonstrates this, boosting our 2022 earnings by 8% and our risked-NAV and price target by 6% to 55p/sh.
Companies: Savannah Energy Plc
AUCTUS PUBLICATIONS Bahamas Petroleum Company (BPC LN)C: Target price of 1.90p: Looking beyond the Bahamas - The Perseverance #1 well encountered oil, validating the structural model and the petroleum system, but did not encounter oil in commercial quantities. While the drilling results were disappointing for the B North prospect, the company believes that the presence of (1) oil in good reservoirs and (2) a good seal derisk the B South prospect and the C structure and could improve the profile of the assets vis-à-vis a potential farm partner. BPC is initiating a formal farm out process. With a further £2 mm drawn on the convertible facility, BPC has ~US$15 mm in cash. Following the payment of pending invoices associated with Perseverance #1, we estimate the cash will drop to US$6-7 mm, which is enough to fund the appraisal programme in Suriname and Trinidad, including the redrill of the 11 mmbbl Saffron appraisal well. This is a very material well with an unrisked value of ~1p per share. Our unrisked NAV for Suriname is ~0.5p per share. We have reduced our Core NAV from ~2p to 1.5p as we incorporate the company’s cash position and the updated share count. We treat the drawn convertible as debt. Our new ReNAV of ~1.9p excludes the Bahamas and the wells in the SW peninsula. Our new target price has been set at this level. GeoPark (GPRK US)C; Target price increased from US$20 to US$24 per share: Large reserves increase at CPO-5. Better visibility on exploration resources –The highlights of the YE20 reserves report are (1) the large increase of high value WI 2P and 3P reserves at CPO-5 in Colombia (up from respectively 9.5 mmbbl at YE19 and 14.9 mmbbl to 21.1 mmbbl (x2.2) and 50.1 mmbbl (x3.3) at YE20) and (2) the independent estimates of ~400-900 mmbbl (Pmean-P10) net unrisked prospective resource across the company’s assets in Colombia and Ecuador, confirming the large potential upside within the asset base. The large reserves increase at CPO-5 reflects a re-interpretation of the data for the Indico and Mariposa reservoirs. The 400-900 mmbbl net unrisked prospective resources include 120-270 mmbbl at CPO-5, 110-210 mmbbl on other Llanos blocks, 150-300 mmbbl in the Putumayo and 14-29 mmbbl in Ecuador. We note that the potential resources size at CPO-5 could be larger than the current net 2P reserves at Llanos-34. The reserves increase and large exploration resources at CPO-5 showcase GeoPark’s very good understanding of the geology and demonstrate the logic of the acquisition of Amerisur by GeoPark. We are increasing our Target price from US$20 to US$24 per share as we incorporate the additional reserves at CPO-5 which more than compensates for the reserves reduction at Platanillo. Panoro Energy (PEN NO)C; Target price increased from NOK23 to NOK30 per share: Moving up league – Panoro is acquiring a 14.25% WI in Ceiba/Okume (EG) and an additional 10% in Dussafu Marin (Gabon) for an initial consideration of U$140 mm. An additional contingent consideration of US$40 mm could be payable over multiple years if oil price remains high and if certain operational targets are achieved. The acquisition is transformative as it x4 the FY21 production (+6.9 mbbl/d), x3 2P reserves (+25 mmbbl), and x8 2C resources (+29 mmbbl), turning Panoro is a much more material company. Boosting Panoro’s interest Dussafu increases the company’s exposure to the 2Q21 exploration drilling programme at the Greater Hisbiscus area with the potential to add ~19 mmbbl (WI) to the 2P reserves category with an unrisked value of >NOK12 per share. The acquisition is being funded through a US$70 mm equity raise priced at NOK15.50 per share and US$90 mm of new debt (7.5% interest). The acquisition was agreed a few months ago when Brent was only ~US$45/bbl. With Brent now at >US$60/bbl the transaction has only become more accretive. Our ReNAV for the acquired assets is ~US$320 mm. When factoring the new equity issue, our Core NAV and ReNAV are increased from respectively NOK14 and NOK23 to NOK21 and NOK30 per share and our EV/DACF multiples for 2021 and 2022 are almost divided by 2. PetroTal (PTAL LN)C; Target price of £0.50 per share: US$100 mm capital programme in 2021 - PetroTal is confirming a US$100 mm capex programme in 2021 to produce an average of 11.8 mbbl/d in 2021, exiting 2021 at 18.6 mbbl/d. 4Q21 production is expected to be 16.6 mbbl/d, increasing from 9.2 mbbl/d in 1H21. We have adjusted our FY21 production estimates to reflect the company’s latest guidance. Our FY21 operating cash flow estimate of ~US$90 mm reflects US$52.5/bbl for Brent. At US$57.5/bbl and 15.3 mbbl/d production in 2022, we forecast FY22 operating cash flow of US$170 mm, which represents 90% of the company’s current market cap. At a Brent price of ~US$65/bbl, FY21e and FY22e operating cash flow would jump to respectively ~US$150 mm and ~US185 mm. At the current share price, EV/DACF multiples are only 2.7x in 2021 and 0.8x in 2022. At US$65/bbl, our Core NAV would be £0.68 per share and EV/DACF multiples would only be 1.3x for 2021 and 0.4x in 2022. For each US$5/bbl increase in Brent price, our Core NAV increases by ~£0.10 per share. IN OTHER NEWS ________________________________________ AMERICAS Frontera Energy (FEC CN): Exploration update in Guyana – A total of 32 prospects on the Corentyne block and the Demerara block have been estimated to hold 6,089 mmboe unrisked prospective resources net to Frontera. The fluid content considered for the prospects is mainly oil (64%), natural gas (28%) and the remainder condensate (8%). The first prospect (Kawa-1) is expected to be drilled in 1H21. Pantheon Resources (PANR LN): Drilling results in Alaska – The Talitha #A well has encountered oil in all the target horizons. Four distinct oil-bearing zones have been identified. The current plan is to test the Shelf Margin Deltaic, Basin Floor Fan (two separate zones) and the Kuparuk zones. Testing all zones is critical to determine ultimate commerciality. Royal Dutch Shell (RDSA/B LN): Selling Canadian assets – Shell is selling its Duvernay shale light oil position in Alberta to Crescent Point Energy for a total consideration of US$707 mm. The consideration is comprised of US$550 mm in cash and 50 million Crescent Point shares (valued at US$157 mm) . The transaction includes the transfer of approximately 450,000 net acres in the Fox Creek (Kaybob) and Rocky Mountain House (Willesden Green) areas, along with related infrastructure, currently producing around 30,000 boe/d. EUROPE ENI (ENI IM): 4Q20 results – ENI reported adjusted net profit of EUR66 mm for the period with 1,713 mboe/d production. ENI held 6.9 bn boe of proven reserves at YE20, representing a replacement ratio of 43%. Repsol (REP SM): 4Q20 results – Respol reported 4Q20 adjusted net earnings of EUR0.4 bn with production of 628 mboe/d and FY20 capex of US$10 bn. Repsol is also launching a share buy back programme for 2.58% of its share capital. MIDDLE EAST AND NORTH AFRICA DNO (DNO NO): Reserves update in Kurdistan and Norway – YE20 Tawke license gross 2P reserves stood at 394 mmbbl (400 mmbbl at YE19) and 3P reserves at 605 MMbbls (641 MMbbls in 2019). At YE20 the Baeshiqa license in Kurdistan held 2C resources of 43 mmbbl. WI 2P reserves in Norway were 64 mmboe at YE20. The Company’s North Sea 2C resources totalled 120 mmboe. Genel Energy (GENL LN): Reserves update in Kurdistan – YE20 WI 2P reserves were 117.2 mmbbl (YE19: 123.8 mmbbl) with 143.4 mmbbl 2C contingent resources (YE19: 152 mmbbl). Gross 2P reserves on the Tawke field were 245 mmbbl while Peshkabir held 125 mmbbl. Taq Taq and Sarta were estimated to hold respectively 33 mmbbl and 34 mmbbl gross 2P reserves at YE20. Sarta continues to be estimated to also hold 258 mmbbl gross 2C contingent resources. Gulf Keystone (GKP LN): Reserves update in Kurdistan – YE20 gross 2P reserves at Shaikan were 505 mmbbl (YE19: 578 mmbbl) with 2C contingent resources of 293 mmbbl (YE19: 239 mmbbl). The 2P Triassic and Cretaceous reserves of 47 mmbbl were reclassified as gross 2C contingent resources. ShaMaran Petroleum (SNM CN): Reserves update in Kurdistan – YE20 gross 2P reserves at Atrush were 109.9 mmbbl (YE19: 108.5 mmbbl). FY21 gross production guidance has been set at 39-44 mbbl/d with gross capex of US$53.2 mm. SUB-SAHARAN AFRICA BWE Energy (BWE NO): 4Q20 results – 4Q20 gross production at Dussafu in Gabon was 13.5 mbbl/d. FY21 gross production is expected to be 14.8-15.9 mbbl/d. BWE held US$120.6 mm in cash at YE20. FAR (FAR AU): Indicative offer from Lukoil – Lukoil has made a non binding conditional offer to acquire 100% FAR at A2.2c per share in cash. The Lukoil proposal values FAR at A$220 mm. FAR is in default to cash calls in Senegal amounting to US$44 mm. FAR has until mid July 2021 to remedy the defaults. PetroNor E&P (PNOR NO): Equity raise and acquisition in Congo – PetroNor is raising US$50-60 mm of new equity including US$32-42 mm in cash and the balance through the issue of equity as in-kind consideration for the acquisition of Symero. As a result of the acquisition and a court ruling in Congo related to parts of MGI indirect share in the PNGF Sud licence, PetroNor’s net interest in PNGF Sud increases from 10.5% to 16.83%. Net production from PNGF Sud will increase from 2,385 bbl/d to 3,850 bbl/d and YE20 net 2P oil reserves from 9.9 mmbbl to 15.9 mmbbl. EVENTS TO WATCH NEXT WEEK ________________________________________ 22/02/2021: Kosmos Energy (KOS LN/US) – 4Q20 results 22/02/2021: President Energy (PPC LN) – 4Q20 results 25/02/2021: Panoro Energy (PEN NO) – 4Q20 results
Companies: BPC DNO ENI FAR FEC GPRK PEN PANR TAL REP RDSA SNM
Anglo American (AAL LN) – Iron ore performance underpins 2020 EBITDA Horizonte Minerals (HZM LN) – Araguaia granted power-line licence Norilsk Nickel (MNOD LI) – Water inflow triggers partial suspension of operations in 2 Siberian mines Impala Platinum (IMP JSE) – Gross profit rises 263% in HY ended December 31st
Companies: GMKN AAL HZM IMP
Trifast has released a good trading update, continuing the operational momentum from the interim results and improved growth in Q4 2020. The Group indicates that “trading levels continue to strengthen” with 5% revenue growth in the four months to the end of January. At current revenue run rates, the Group expects FY21 revenue to be slightly ahead of current consensus. With a renewed restocking cycle and good operating leverage, we see upside risks to our conservative earnings forecasts, partly offset by increasing challenges
Companies: Trifast plc
AMTE Power, a developer and manufacturer of lithium-ion battery cells for specialist markets, announced its intention to seek admission to trading on AIM. Admission is expected to take place during March 2021. The Company intends to raise approximately £7 million by way of a placing of new ordinary shares in the capital of the Company. Timing TBC. Samarkand Group Limited, the cross-border eCommerce technology and retail group opening up the world's largest market for brands and retailers, intends to IPO on the Apex Segment Aquis Stock Exchange Growth Market. Admission is targeted for March 2021. Cellular Goods a UK-based provider of premium consumer products based on biosynthetic cannabinoids announced its intention to join the main market (standard) this Spring. Target valuation £20m raising c. £8m “to finalise the development and launch of a range of the Company's premium-quality consumer products based on biosynthetic cannabinoids, which is fully compliant under UK law.” Kanabo Group (RTO by Spinnaker Opportunities SOP.L) on the main market (standard). Raising £6m, enlarged mkt cap £23.4m. Kanabo focuses on the distribution of Cannabis-derived products for medical patients, and non-THC products for CBD consumers . Due 16 Feb. NextEnergy Renewables to launch an IPO on the Main Market. NREN is a differentiated renewables investment company that aims to capture the most attractive private renewables and energy transition infrastructure investment opportunities globally. Targeting a £300m raise. NREN is targeting total returns of 9-11 per cent. per annum (net of all fees and expenses but including the Target Dividend and capital appreciation) . The Company's target dividend yield for the first full financial year to 31 December 2022 is 5.5 pence. Due Early March 2021. Auction Technology Group is considering an IPO on the Main Market. The Group operates six world-leading online Marketplaces and proprietary global auction platform technology for curated online auctions . In FY20 the Group delivered pro forma revenue of £52.3 million, supported by notable underlying year-on-year growth from both Standalone ATG Group and Standalone Proxibid Group (12.4 per cent. and 40.4 per cent., respectively). For the same period, the Group delivered a strong profitability performance of £22.3 million pro forma Adjusted EBITDA representing a pro forma Adjusted EBITDA margin of 42.6 per cent. Expected March 2021. Digital 9 Infrastructure launch an initial public offering on the Specialist Fund Segment of the Main Market of the London Stock Exchange, by way of an initial placing and offer for subscription for a target issue £400m. Digital 9 Infrastructure plc is a newly established, externally managed investment trust. The Company will invest in a range of digital infrastructure assets which deliver a reliable, functioning internet. The IPO Prospectus is expected to be published in March 2021. Cordiant Digital Infrastructure to admit its shares on the Specialist Fund Segment of the Main Market of the London Stock Exchange . Targeting a £300m raise. Cordiant invests in global infrastructure and real assets, running infrastructure private equity and infrastructure private credit strategies through limited partnership funds and managed accounts. Due 16 Feb. 4basebio UK Societas is a specialist life sciences group focused on therapeutic DNA for gene therapies and DNA vaccines and providing solutions for effective and safe delivery of these DNA based products to patients. The Company has been divested from 4basebio AG , a German company listed on the Prime Standard segment of the Frankfurt Stock Exchange . No capital to be raised on Admission. Anticipated market capitalisation on AIM Admission: £14.53m. Due 17 Feb Cornish Metals (TSX-V: CUSN) intends to list on AIM. The Company is proposing to raise £5m by way of private placement of new Common Shares to advance the United Downs copper-tin project. The Company expects that Admission will become effective 16 February 2021. The Company's Common Shares will continue to be listed and trade on the TSX-V in Canada. Raising £8.2m. £18.7m mkt cap.
Companies: OHG MDZ PEG IQE RBN WHR HMI ANIC KOD GMR
Base Resources* (BSE LN) – Kwale North Dune mineral resource increase GoldStone Resources* (GRL LN) – Homase fully permitted. SP Angel appointed broker to Goldstone Horizonte Minerals (HZM LN) – £18m raised to progress the Araguaia ferronickel project Trans-Siberian Gold (TSG LN) – Rodnikova Scoping Study
Companies: BSE GRL HZM TSG
Report on Techcrunch that IROKO, a Nigerian-based media company, could file to go public in the next 12 months on the London Stock Exchange (LSE) Alternative Investment Market. Founded by Jason Njoku and Bastian Gotter in 2011, IROKO boasts the largest online catalogue of Nollywood film content globally. According to this report, the media company will raise between $20 million and $30 million valuing the company at $80 million to $100 million. AMTE Power, a developer and manufacturer of lithium-ion battery cells for specialist markets, announced its intention to seek admission to trading on AIM. Admission is expected to take place during March 2021. The Company intends to raise approximately £7 million by way of a placing of new ordinary shares in the capital of the Company. Timing TBC. Samarkand Group Limited, the cross-border eCommerce technology and retail group opening up the world's largest market for brands and retailers, intends to IPO on the Apex Segment Aquis Stock Exchange Growth Market. Admission is targeted for March 2021. Cellular Goods a UK-based provider of premium consumer products based on biosynthetic cannabinoids announced its intention to join the main market (standard) this spring. Target valuation £20m raising c. £8m “to finalise the development and launch of a range of the Company's premium-quality consumer products based on biosynthetic cannabinoids, which is fully compliant under UK law.” Kanabo Group (RTO by Spinnaker Opportunities SOP.L) on the main market (standard). Raising £6m, enlarged mkt cap £23.4m. Kanabo focuses on the distribution of Cannabis-derived products for medical patients, and non-THC products for CBD consumers . Due 16 Feb. NextEnergy Renewables to launch an IPO on the Main Market. NREN is a differentiated renewables investment company that aims to capture the most attractive private renewables and energy transition infrastructure investment opportunities globally. Targeting a £300m raise. NREN is targeting total returns of 9-11 per cent. per annum (net of all fees and expenses but including the Target Dividend and capital appreciation) . The Company's target dividend yield for the first full financial year to 31 December 2022 is 5.5 pence. Due Early March Auction Technology Group is considering an IPO on the Main Market. The Group operates six world-leading online Marketplaces and proprietary global auction platform technology for curated online auctions . In FY20 the Group delivered pro forma revenue of £52.3 million, supported by notable underlying year-on-year growth from both Standalone ATG Group and Standalone Proxibid Group (12.4 per cent. and 40.4 per cent., respectively). For the same period, the Group delivered a strong profitability performance of £22.3 million pro forma Adjusted EBITDA representing a pro forma Adjusted EBITDA margin of 42.6 per cent. Digital 9 Infrastructure launch an initial public offering on the Specialist Fund Segment of the Main Market of the London Stock Exchange, by way of an initial placing and offer for subscription for a target issue £400m. Digital 9 Infrastructure plc is a newly established, externally managed investment trust. The Company will invest in a range of digital infrastructure assets which deliver a reliable, functioning internet. The IPO Prospectus is expected to be published in March 2021. Cordiant Digital Infrastructure to admit its shares on the Specialist Fund Segment of the Main Market of the London Stock Exchange . Targeting a £300m raise. Cordiant invests in global infrastructure and real assets, running infrastructure private equity and infrastructure private credit strategies through limited partnership funds and managed accounts. Due 16 Feb 4basebio UK Societas is a specialist life sciences group focused on therapeutic DNA for gene therapies and DNA vaccines and providing solutions for effective and safe delivery of these DNA based products to patients. The Company has been divested from 4basebio AG , a German company listed on the Prime Standard segment of the Frankfurt Stock Exchange . No capital to be raised on Admission. Anticipated market capitalisation on AIM Admission: £14.53m. Due 17 Feb Cornish Metals (TSX-V: CUSN) intends to list on AIM. The Company is proposing to raise £5m by way of private placement of new Common Shares to advance the United Downs copper-tin project. The Company expects that Admission will become effective 16 February 2021. The Company's Common Shares will continue to be listed and trade on the TSX-V in Canada. Raising £8.2m. £18.7m mkt cap.
Companies: CCS UKOG PTD SFE STAR ATYM AVG PHD CGNR SNX
The trading update covers Trifast’s Q3 period and up to date, prior to its March year-end, and signals that FY revenues should be slightly ahead of market expectations. It also commits to reinstating dividends at the FY results. As such, we are upgrading revenues by 3% and EPS by 7.3%. We maintain our price target at 175p, which offers decent upside to current levels. The shares have been subdued of late but still offer good recovery prospects.
Union Jack Oil (UJO) has announced the convening of a General Meeting of the company on 10 March 2021. In a shareholder circular issued on 19 February 2021, the company has proposed the adoption of new articles of association and in particular, a 200 for 1 proposed consolidation of the company’s share capital. This will reduce the number shares in issue from c.19.8 billion to approximately 99.1 million. The company anticipates that this action could reduce volatility and improve liquidity of the shares while also increasing the marketability of UJO to a wider range of potential investors.
Companies: Union Jack Oil Plc
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