SP Angel Morning Energiser: 06/03/24

Majors farm-in to frontier exploration

Stifel FirstEnergy Morning Research Package

Birchcliff Energy (BIR-TSX); BUY, C$4.60 ― Reports unaudited Q4 results & 2019 reserves | Bonterra Energy (BNE-TSX); HOLD, C$4.75― Rolling out 2020 guidance and 2019 year-end reserves | Mullen Group (MTL-TSX); HOLD, C$8.50― An OFS company no more | Pine Cliff Energy (PNE-TSX); HOLD, C$0.15― 2020 guidance and 2019 year-end reserves | Precision Drilling (PD-TSX); BUY, C$3.75― FCF yields of 31% in 2020e and 2021e | TC Energy (TRP-TSX); BUY, C$79.00― In-line quarter, but a bit more growth capital

3Q19 results were challenging but in line, 2x Pekisko oil wells on the docket for 4Q19e

 Pine Cliff reported 3Q19 results headlined by volumes of 19,033 boe/d, slightly below GMPFE’s forecast of 19,762 boe/d, as voluntary price related shut-ins took hold.  2019e production guidance was modestly revised to within the range of 19,000-19,250 boe/d, from 19,250-19,750 boe/d previously.  3Q19 AFFO was reported to be -$3.9 mm (-$0.01/sh), which was better than our call of -$5.2 mm (-$0.02/sh), in a quarter where average AECO 5A gas prices was a mere $0.90/mcf.  Capital spending

1Q19 results slightly behind, yet highest FFO since 2Q17

Pine Cliff reported 1Q19 results which included production of 18,741 boe/d that was inline, and FFO of $6.8 mm, or $0.02/sh, that modestly trailed expectations.

Announces 4Q18 results, light oil well success

The headline grabber from this release was its successful Pekisko oil well that came online in January at a restricted IP30 rate of 410 boe/d (including 238 bbl/d 30° API oil), which virtually doubles corporate oil production. Management has identified 19 further oil locations within the Pekisko/Basal Quartz oil trends of its Central Alberta core region.

Reports 3Q18 in line, revised 2018e guidance includes drilling oil well in 4Q18

Pine Cliff reported 3Q18 results that were largely in line, as production and FFOPS of 19,603 boe/d and $0.01/sh, respectively, tracked consensus expectations.

No surprises from 2017YE results

4Q17 production of 21,489 boe/d (95% gas) had been pre-released in mid-February with its reserve report. This results in 2017 annual production of 21,408 boe/d. Cash flow in the quarter of $3.8mm ($0.01/shr) was also in line with our estimate of $4.2mm ($0.01/shr). This resulted in annual cash flow of $28.7mm ($0.09/shr) compared to our estimate of $29.1mm ($0.09/shr). Capex during the quarter was $3.1mm, which was below 4Q17 cash flow during a challenging quarter for natural gas prices. For t

2017YE reserves and 2018 guidance

With no major acquisitions this year, Pine Cliff’s reserves fell 5% on a PDP basis to 50mmboe, 5% on a 1P basis to 51.1mmboe and 5% on a 2P basis to 67.2mmboe. PDP makes up 98% of 1P reserves and 74% of 2P reserves. Based on 4Q17 production of 21,489 boe/d, this represents a 1P RLI of 6.5 years and a 2P RLI of 8.6 years. Reported BT NPV10 of $171.6 mm ($3.44/boe) for PDP, $176.9mm ($3.46/boe) for 1P and $240.1mm ($3.57/boe) for 2P. On a 2P basis, this is down $106.8mm or 31% YoY largely due to w

Resolves Liquidity Concerns, Announces 2Q16 Results

Pine Cliff announced a private placement with Alberta Investment Management Corporation (AIMCo) that brought in $30 mm of proceeds that will be used to term out a portion of the Company’s outstanding debt, thus eliminating any near-term liquidity concerns that were associated with the stock. Concurrently the Company announced its credit facility has been reduced to $85 mm, with the Company having eliminated its Syndicate exposure by $100 mm since the beginning of the year. Second quarter results

ANNOUNCES 2Q16 RESULTS, CONCLUSION OF BANK LINE REVIEW, CLOSING OF A PRIVATE PLACEMENT

Impact - slightly positive as while second quarter results were modestly behind expectations, resolution of the borrowing base redetermination and private placement to term out a portion of the Company's outstanding debt should remove any liquidity concerns and provide the near term financial flexibility to continue to focus on the operational side of the business while managing through the current period of low commodity prices

ANNOUNCES ISSUANCE OF INSIDER SUBORDINATED DEBT, SALE OF NON-CORE ASSETS, AND EXTENSION OF BORROWING BASE REDETERMINATION

Impact - slightly positive as the debt issuance terms out a portion of the Company's outstanding debt and coupled with the asset sale will increase near-term financial flexibility as the Company continues to work through its bank line redetermination

2Q16e Quarterly Preview

Some Recovery on Segmented Cash Flow Generation Over Q1 Though Still Down 56% Y/Y. In aggregate, the Intermediate, Mid, and Small Cap groups are expected to generate 2Q16e cash flow of $1,281 mm, $183 mm, and $53 mm, or $1.517 billion in total, that while depressed relative to the same period last year (~$2.647 billion combined), is up 17% sequentially from the prior quarter, largely on the strength of crude oil price recovery in the period. Severely weak natural gas pricing picture markedly rev

Pine Cliff Energy Sells Royalty Assets, Shores up Balance Sheet in Midst of Credit Facility Review

Pine Cliff announced the sale of its royalty assets as well as the sale of its investments in public companies, bringing in combined proceeds of ~$30 mm, which will be used to pay down debt thus increasing the Company’s financial flexibility as work on the Company’s borrowing base redetermination continues.

ANNOUNCES $25 MM DISPOSITION OF ROYALTY ASSETS

Impact: Positive. Proceeds from these transactions will help provide financial flexibility as work on the Company's borrowing base re-determination continues.

MANAGEMENT UPDATE

We recently had the pleasure of hosting the Pine Cliff Management team to provide an update on the Company's operations post the 1Q16 release, which was the first full quarter following the acquisition of Conoco's Ghost Pine and Viking assets in December 2015. Recall the acquisition effectively doubled the Company's production base while also adding a new core area. The integration has gone well so far with Management noting results to date have been better than expected in terms of the decline

Jubilee Metals - Operational Update Q3 FY2024

Jubilee today reports its Q3 and third quarter operational results from its expanding operations in Zambia (copper) and South Africa (chrome and PGM). South Africa is on a growth trajectory with record chrome production of 409kt in the quarter (Q2 FY2024 381kt) and a monthly record in March of 145kt and production YTD of 1.13Mt (0.94Mt). Jubilee is well underway to its annual target capacity of 2,1Mt/yr especially with the new 300kt/yr chrome plant at Thutse expected to be operational in August

Trinity Exploration and Production - Reserves Reduction but Solid Core Business

Trinity has announced a c28% reduction to its 2P reserves following a YE23 review. Despite the decrease in the Company’s 2P reserves, Trinity’s core business remains robust, with a reserves/production ratio of >12.5 years at YE23. Whilst there is significant potential for growth within the current portfolio, this will be difficult to unlock from the current balance sheet and we believe further financing will be required. We update our target price to 76p (from 202p), a c85% premium to the curren

Morning Note – 16 April 2024

I3 Energy (I3E LN) - Canada royalty assets sale

I3 has announced the sale of the majority of its royalty interests in Canada, for US$24.8m cash. This allows the company to fully repay amounts drawn on its debt facility and create a working capital surplus, giving I3 significant additional funding flexibility going forward

Valeura Energy (TSX: VLE): Three exploration wells deliver three discoveries

• The Nong Yao-13 exploration well in the new Nong Yao D area that was targeting multiple zones has encountered >30 feet of new oil play across several new shallow intervals which have not been produced elsewhere on the concession. These reservoirs are believed to be recurring across the Nong Yao D area. • The drilling result confirms that oil has successfully migrated into this area of the block (a factor that was seen to be a risk in the Nong Yao D area) and open the opportunity for further a

NextSource Materials - Initiation

NextSource is uniquely positioned to build a leading vertically integrated position, ex China, in the supply of Lithium-ion battery anode material which is essential for the Energy Transition. The company is commissioning phase 1 of its world-class Molo graphite mine in Madagascar and is in the final permitting process for its first Battery Anode Facility (BAF) to be located in Mauritius. The company is backed by Vision Blue, established by Sir Mick Davis, former CEO of Xstrata. On our calculat

Morning Note – 15 April 2024

DEC FY23 Results Update

DEC reported FY23 results which were in line with expectations and announced the acquisition of joint venture assets from Oaktree along with an updated capital allocation framework.

Oil & Gas - Cavendish sector note

Chariot, Energean, Touchstone Exploration, Longboat Energy, Hartshead Resources, BP, Helix Exploration, PetroTal, Pantheon Resources, Caspian Sunrise, Petrofac, DNO ASA, Valeura Energy, Aker BP, Var Energi Source: FactSet, weekly change 08/04/24-12/04/24 Oil rose as Israel braced for a possible attack from Iran, a development that would threaten major disruptions in a region that accounts for a third of the world’s crude output. An assault is expected to come as soon as the next 48 hours, which

Union Jack Oil (UJO LN) - Wressle update

Union Jack has released an update on its Wressle asset, reporting maturing production from Wressle-1, alongside progress for significant further development activities on the field going forward.

SP Angel . Morning View . Copper prices hold higher as China processing fees fall below $0/t amid low feedstock availability

PROGRESSIVE: Pharos Energy: Delivering on operations and balance sheet

Pharos Energy reported FY23 results on 27 March. Group net production of 6,508 boepd (FY22: 7,166 boepd) was in line with guidance, assisted by successful development drilling in Vietnam and exploration successes in Egypt. Pharos’s strong cash generation resulted in a stronger balance sheet, with net debt reduced to US$6.6m (from US$28.9m at the end of 2022) and cash balances totalling US$32.6m. This left the group free to return more cash to shareholders, including a 10% increase in dividends,

Union Jack Oil+ (UJO, House Stock at 23p) - Wressle update

Clean Power Hydrogen - New customers and licensees circling…

CPH2 has released FY23 results with the company completing the period with a slightly lower cash outflow from operations and a higher cash balance than forecast. Looking ahead, with a new and improved technical and engineering team, the company has committed to completing Factory Acceptance Testing of its first MW scale electrolyser, the 0.5MW MFE110, within the next three months. In our view, this will be a major milestone for the company which will demonstrate that its unique technology can be

Hunting (HTG LN) - Q1 2024 trading update

Hunting has released its Q1 trading statement, reporting a strong period for OCTG and Subsea, steady growth in Advanced Manufacturing, and a softening in Perforating Systems.