AUCTUS PUBLICATIONS Panoro Energy (PEN NO)C: Better deal than expected in EG – Increasing our target price from NOK30 to NOK34 per share – The acquisition of Tullow’s EG asset has now closed and Panoro has paid a final consideration of US$89 mm in line with the initial price announced earlier (US$90 mm). Panoro has also sold a 903 mbbl cargo in EG associated with historical production in 2H20 and 1Q21 for US$59 mm net to Panoro (after royalty). This amount corresponds to Panoro’s net entitlement production (ie after distribution of government share of profit oil) with historical opex and capex already captured within the final consideration paid last week. This first cash flow effectively implies that 65% of the consideration paid at the end of March has been paid back a few days later. We are increasing our Core NAV from ~NOK21 to ~NOK24 per share and our ReNAV from ~NOK31 to ~NOK34 per share. The first Greater Hibiscus appraisal well is expected to be spudded in 2-3 weeks. This well is targeting 19 mmbbl prospective resources net to Panoro WI, potentially doubling the company’s reserves in Gabon. Our unrisked value for this well is ~NOK12 per share. PetroTal (PTAL LN)C; Target price of £0.60 per share: 1Q21 update – delivering on expectations – 1Q21 production was 7.3 mbbl/d, in line with guidance of 7-8 mbbl/d, with production negatively impacted by downtime at the 4H well. A pump has been replaced at the 4H well that has since been producing ~2,300 bbl/d vs 1,872 bbl/d prior to the pump failure. Production at the end of March had been restored to 8,275 bbl/d. The company continues to expect production to reach 18-19 mbbl/d by YE21. Following the repayment of US$7 mm payables since YE20 and US$16 mm to Petroperu to settle the derivative liability, the company has ~US$76 mm in cash (in line with our expectations). Of this amount, US$23 mm have been set aside for acquisitions (US$20 mm) and for the hedges that have been put in place (US$3 mm), leaving US$53 mm of “unrestricted liquidity”. PetroTal expects to receive ~US$36 mm from Petroperu as true-up payments for 2019/2020 sales. The company is delivering on its plans and the spudding of the first well of the 2021 programme should send a strong message that production is materially increasing again. The shares continue to trade at less than half our estimate of the value of the company based on its 2P reserves only (£0.41 per share @ Brent of US$60/bbl flat). Our Core NAV represents 3.5x the current share price. Pharos Energy (PHAR LN)C; Target price increased from £0.50 to £0.60 per share: All eyes on farm-in partner in Egypt – The new fiscal terms in Egypt are expected to be ratified in 3Q21 and a farm in partner is expected to be announced in 2Q21 (with completion of the transaction in 2H21). These are key milestones triggering the return to drilling in Egypt and allowing production in Egypt to triple to 12 mbbl/d. We are very confident Pharos will secure a partner given the renewed interest of the industry for Egypt (Cairn being the latest entrant with the acquisition of onshore assets from Shell). Once ratified the new terms are expected to be back dated to Nov 2020, resulting in a material positive impact on Pharos’ balance sheet . The company has put in place a working capital facility with the National Bank of Egypt, the size of which would immediately increase on ratification. At current oil prices, we believe that Pharos would likely have enough financial resources to start a two rig drilling programme until the farm out transaction completes. As we roll forward our DCF to YE21 and incorporate lower G&A (following salary reduction and ongoing head office headcount reduction), we are increasing our target price from £0.50 to £0.60 per share. Our Core NAV of £0.36 per share (£0.28 per share) reflects our view of what the company could fund with its own balance sheet once the new terms in Egypt are ratified. Securing a farm in partner would unlock £0.18 per share of value in Egypt, increasing recovery factor a further £0.11 per share. Including the contingent resources in Vietnam, our unrisked NAV for the company’s reserves plus contingent resources is >£0.80 per share. Tethys OIl (TETY SS)C; Target price of SEK85 per share: Production update in Oman – Production from Blocks 3&4 in March 2021 was 11,508 bbl/d. This is in line with our expectations and previous months. IN OTHER NEWS ________________________________________ AMERICAS 88 Energy (88E LN/AU): Drilling update in Alaska – Multiple prospective zones at the Merlin-1 well were identified on logs with indicated good mobility across most of these zones. The well experienced technical problems with equipment and poor hole conditions were encountered. During testing of the lowest zone, good communication was not able to be re-established with the reservoir. Potential formation damage could have contributed to this issue. Moving to the next shallowest prospective zone, wellbore condition issues prevented a test as the tool became stuck. The tool was freed but the risk of returning to that zone was deemed too high. It is now too late in the season to initiate flow testing operations and the forward program will consist of plugging the well. The well may be re-entered in the future, if warranted, in order to drill a side track and conduct a flow test. Alvopetro Energy (ALV CN): Production update in Brazil – March sales volumes were 2,383 boe/d, including natural gas sales of 13.7 mmcf/d. BP (BP LN): Exiting Brazilian assets – BP is exiting exploration activities in the Foz do Amazonas basin. ASIA PACIFIC Total (FP FP): Cancelling gas projects in Myanmar – Total has cancelled its ultra-deepwater Block A-6 project. EUROPE Hurricane Energy (HUR LN): Reserves update in the UK – Lancaster 2P reserves are estimated at 7.1 mmbbl. A further 37.9 mmbbl 2C contingent resources has been estimated including 34.7 mmbbl classified as “Development Unclarified”. Lincoln is expected to hold 18.5 mmbbl 2C net to Hurricane (“Development Unclarified”) while Hurricane is estimated to also hold 25.5 mmbbl 2C contingent resources at the Warwick Crest discovery (“Development Unclarified”). IGas Energy (IGAS LN): FY20 results – FY20 production in the UK was 1,907 boe/d. FY21 production is expected to be 2,150-2,350 boe/d. At YE20, IGas held 17 mmboe 2P reserves (16 mmboe at YE19). YE20 net debt was ~£10 mm. OMV (OMV AG): 1Q21 update – 1Q21 production was 495 mboe/d. Prospex Energy (PXEN LN): Environment approval received for Italian development – The full environmental approval for the development of the Selva Malvezzi Gas-Field in northern Italy has been received from the Italian Government. Prospex holds a 17% interest in the Podere Gallina licence which holds the Selva gas field. The field has gross 2P gas reserves of 13.3 bcf and is expected to start production in mid-2022 with a maximum rate of 5.3 mmcf/d. Repsol (REP SM): 1Q21 update – 1Q21 production was 639 mboe/d. Royal Dutch Shell (RDSA/B LN): 1Q21 update – 1Q21 production is expected to be 3,320-3,435 mboe/d. FORMER SOVIET UNION Block Energy (BLOE LN): 1Q21 update in Georgia – By YE21, Block aims to drill two wells, each targeting initial production of 600 boe/d, and spud a third well. As of 31 March 2021, the Company had US$6.8 mm in cash. Caspian Sunrise (CASP LN): Operational update in Kazakhstan – 1Q21 production was 1,322 bbl/d. Domestic oil prices are US$7.27/bbl. Enwell Energy (ENW LN): Update in Ukraine – 1Q21 production was 4,576 boe/d. At the end of March, Enwell held US$60.9 mm in cash. MIDDLE EAST AND NORTH AFRICA United Oil & Gas (UOG LN): Discovery in Egypt – – The ASD-1X exploration well encountered a total of at least 22 m net oil pay interpreted across a number of reservoirs, including the Abu Roash C, Abu Roash E, Lower Bahariya and Kharita Formations. SUB-SAHARAN AFRICA Eni (ENI IM): Light oil discovery in Angola – Eni has made a light oil discovery in Block 15/06, in Angola’s deep offshore at the Cuica exploration prospect located inside the Cabaça Development Area. The discovery has a size estimated between 200 and 250 mmboe in place. Qatar Petroleum: Acquiring exploration assets in Namibia - Qatar Petroleum is acquiring a 45% participating interest in the PEL 39 exploration license pertaining to Block 2913A and Block 2914B, from Shell. EVENTS TO WATCH NEXT WEEK ________________________________________ 15/04/2021: Serica Energy (SQZ LN): 4Q20 results
Companies: 88E ALV BP/ ENI ENI HUR OMV OMV PEN PEN TAL PHAR REP REP RDSA TETY TETY FP
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
While there are quite a few changes since the last strategy update in mid-2019, the company has been updating on its restructuring for a year, leaving few surprises for the strategy day. The biggest takeaway is on the upstream production, which is set to decline by 1-2% p.a. over the coming decade. This results from the lower spending plan and the new strategy, which appears less radical than BP’s (but more than Total’s).
Companies: Royal Dutch Shell Plc Class A
AUCTUS PUBLICATIONS Bahamas Petroleum Company (BPC LN)C: Uncommercial exploration well in the Bahamas – The Perseverance #1 well encountered oil, validating the structural model and the petroleum system, but did not encounter oil in commercial quantities. The well drilled a majority of the potential reservoirs of interest. Tethys Oil (TETY SS)C; Target price increased from SEK75 to SEK85 per share: 120% reserves replacement, special dividend, entering busiest exploration drilling period in Tethys’ history - For the 9th year in a row, Tethys has increased its reserves in 2020 with the 2P reserves replacement ratio of 120% highlighting the quality of the company’s assets. YE20 2P and 3P reserves are respectively 26.9 mmbbl and 37.9 mmbbl (~+3% versus YE19 for both 2P and 3P reserves). The increase reflects the conversion of contingent resources into reserves at Blocks 3 & 4. Tethys has declared a core dividend of SEK2 per share plus a special distribution of SEK2 per share. The FY21 capex programme of US$47 mm includes (1) US$32 mm on Blocks 3 & 4 with infrastructure upgrades and development and exploration drilling and (2) US$5 mm at Block 56 to drill up to three wells in the Al Jalmud area. The drilling programme will target different structures analogous to the producing fields on Block 6. Pending further details we have assumed 3 mmbbl gross prospective resources per structure. With the shares offering a combination of high dividend yield (~7%), support from a share buy back programme, value and reserves and exploration upside, we are increasing our target price from SEK75 to SEK85 per share. Please click here for the full PDF note IN OTHER NEWS ________________________________________ AMERICAS 88 Energy (88E AU/LN): Raising new equity – 88 Energy Limited is raising A$12 mm of new equity at a price of A$0.008 (equivalent to 0.45p). The price represents a discount 27% to the previous day closing price. The proceeds will be used to fund upcoming drilling in Alsaka, President Energy (PPC LN): Reserves update in Argentina and the USA – YE20 2P reserves were 24.3 mmboe, down from 26.4 mmboe at YE19. The company also held 33.3 mmboe of 2C contingent resources. In Paraguay, undiscovered in place resources have been estimated at >536 mmbbl. Trinity Exploration (TRIN LN): Operating update in Trinidad – FY21 production guidance has been set at 2,900 - 3,100 bbld/ with capex of US$6.0 - US$8.0 mm. EUROPE Equinor (EQNR NO): 4Q20 results and US assets divestment – Equinor reported a net adjusted loss of US$0.55 bn in 4Q20 with 2,043 mboe/d production. FY20 capex amounted to US$7.8 bn. The proved reserves replacement ratio was negative 5% in 2020. Equinor is also selling its interests in the Bakken field in the US states of North Dakota and Montana with 48 mboe/d net production to Grayson Mill Energy, backed by EnCap Investments, for a total consideration of ~US$900 mm. FY21 production is expected to be ~2% above FY20 with US$9-10 bn capex per year in 2021 and 2022. For the period 2020–2026, production growth is expected to come from new projects resulting in around 3% CAGR. Equinor has declared a quarterly dividend of US$0.12 per share, up 9% compared to 3Q20. IGas Energy (IGAS LN): Trading and reserves update in the UK – FY20 net production averaged 1,907 boe/d with opex of ~ US$33/boe. The company anticipates net production of between 2,150-2,350 boe/d and operating costs of ~US$32/boe in 2021. YE20 2P reserves have increased to 17.1 mmboe (16.1 mmboe at YE19). Cash balances as at YE20 were £2.4 mm with net debt of £12.2 mm. MOL: Dry hole in Norway - Wildcat well 2/9-6 S on production licence PL 617 was dry. Royal Dutch Shell (RDSA/B LN): Strategy update – Production is expected to decrease by 1-2% per year. The company plans to retain annual capex of US$19-22 bn per year and will target divestments of ~US$4 bn per year. Net debt is expected to be reduced to US$65 bn while the company targets total shareholder distributions of 20 30% of cash flow from operations. This includes a progressive dividend policy to increase dividends by ~4% per year. Total (FP FP): 4Q20 results – Total reported 4Q20 adjusted net earnings of US$1.3 bn with production of 2,841 mboe/d and FY20 capex of US$10 bn. FY21 production is expected to be stable compared to FY20 with net capex of US$12 bn. 4Q20 dividend has been set at EUR0.66 per share in line with previous quarter. MIDDLE EAST AND NORTH AFRICA DNO (DNO NO): 4Q20 results and acquisition of Kurdish assets – YE20 WI 2P reserves were 332 mmboe, (plus contingent resources of 152 mmboe) down 13 mmboe from YE19. 4Q20 WI production was 93 mboe/d including 77.7 mboe/d in Kurdistan and the balance in Norway. FY21 gross production from the Tawke licence is expected to be >100 mbbl/d. DNO forecasts capex of US$700 mm in 2021. YE20 net debt was US$473 mm. DNO is acquiring ExxonMobil’s 32% interest in the Baeshiqa license in Kurdistan, doubling DNO’s operated stake to 64%. The Company currently estimates gross license contingent resources from three of the tested zones in the two existing wells ranging from 12 mmbbl to 156 mmbbl. EVENTS TO WATCH NEXT WEEK ________________________________________ 18/02/2021: Repsol (REP SM) – 4Q20 results 19/02/2021: ENI (ENI IM) – 4Q20 results 19/02/2021: BWE Energy (BWE NO) – 4Q20 results
Companies: DNO RDSA 88E BPC EQNR TETY TETY FP
AUCTUS PUBLICATIONS PetroTal (PTAL LN/TAL CN)C; Target Price: £0.50: Successful US$100 mm bond raise opens new horizons – PetroTal has raised ~US$100 mm through a 3 year senior bond issue with a fixed coupon of 12% per year and a borrowing limit of US$125 mm. ~US$20 mm will be used to repay the US$16.6 mm derivative liabilities to Petroperu (formalized in November) and the US$2.9 mm government pandemic loan, while US$20 mm are earmarked to make acquisitions. The balance will be invested in the Bretana field to accelerate production, along with funds to secure a hedging programme. We had incorporated the bond issue in our forecasts that are based on a US$100 mm capex programme for 2021. The programme includes a total of four new producing wells and one disposal well. Drilling is expected to restart in March. With ~11.5 mbbl/d production in 2021 increasing to >16 mbbl/d (we assume cautiously 15 mbbl/d) in 2022, we continue to forecast respectively ~US$90 mm and US$170 mm operating cash flow (pre finance costs) in 2021 and 2022. This implies EV/DACF multiples of 2.2x in 2021 and 0.6x in 2022. There are multiple sources of upside that the company will now pursue: (i) The 3P reserves at Bretana represent ~100% upside to the 2P case. (ii) The Constitucion prospect (70 mmbbl) on Block 107 is expected to be drilled in 1Q22 or 2Q22. A success at Constitucion would also derisk larger prospects on the licence. (iii) PetroTal has also identified a total of ~115 mmbbl prospective resources at various prospects and leads on Block 95. Valeura Energy (VLU LN/VLE CN)C: Initiating Coverage - Valeura is a Toronto and London listed ~US$40 mm market cap cash shell. The firm holds ~US$31 mm in cash and, in 1Q21, is expected to complete the divestment of its legacy producing asset for US$15 mm in cash. Valeura’s management team is very well-rounded with diverse transaction and operational experience and commercial acumen. The company attracted Equinor as a 50/50 partner for its deep gas Turkish assets where Valeura operated the drilling of multiple wells. Valeura is now looking to leverage its ~US$45 mm pro forma cash and listed equity to make acquisitions of undervalued assets or companies with producing assets and exploration upside within Eastern Europe, North Africa and the Middle East. Valeura is differentiated from other acquirers on three other counts. (i) It offers quality equity paper listed on the LSE main market and the TSX that can be used as a currency. (ii) It holds much more cash than many other shells. This is important because private equity sellers will require a degree of cash consideration alongside shares. Holding cash rather than having to rely on the market to access cash reduces execution risk. It also allows Valeura to target larger transactions combining the cash on the balance sheet with funds from other sources including debt and potentially further equity raises, depending on value accretion. (iii) Valeura’s shares trade near cash value which ought to result in fewer arguments regarding relative value. Wentworth Resources (WEN LN)C; Target price: £0.40: Looking beyond the 2P reserves: proved developed reserves up by ~50% - The gross field YE20 2P reserves of 445.3 bcf at Mnazi Bay are unchanged compared to YE19 when adjusted for 2020 production. However, the field’s gross proved developed reserves at YE20 of 191 bcf have increased ~50% year on year. Adding back 23 bcf of production in 2020 suggests 87 bcf has been converted from proved undeveloped reserves to the developed category. This derisking of proved reserves reflects the lower sands being put in production, as these reserves had been previously classified as “behind pipe”. The independent auditor’s after tax NPV10-15 of US$98-117 mm for Wentworth’s interest in the field represent 2.5-3.0x the current EV of the company. The shares continue to trade at EV/DACF multiples of 2.9x in 2021 and 2.2x in 2022. IN OTHER NEWS ________________________________________ AMERICAS Alvopetro (ALV CN): Production update in Brazil - January sales averaged 1,923 boe/d. Maha Energy (MAHA-A SS): Reserves update and FY21 outlook – At YE20, the company held ~45 mmbbl of oil and 20 bcf of natural gas of 2P reserves in Brazil, USA and Oman. Maha also holds ~22 mmbbl contingent resources in Oman. Maha expects to produce 4.0-5.0 mboe/d in 2021 with US$26 mm capex. Parex Resources (PXT CN): Reserves update in Colombia – 4Q20 production was 46,642 boe/d. Parex held 194 mmboe of 2P reserves at YE20 (-2% vs YE19). ASIA PACIFIC Jadestone Energy (JSE LN): Trading update in Australia/Vietnam and New Zealand – Jadestone had net cash of US$82.0 mm at YE20. The completion of the acquisition of the New Zealand asset is expected to take place in 1H21. EUROPE ADX Energy (ADX AU)C: Upsized Equity raise – ADX is raising A$3 mm of new equity from its shareholders at a price of A$0.006 per share. In addition, participating shareholders will be granted one option for every two subscribed shares to acquire new shares at a strike price of A$0.08 per share. Aker BP (AKERBP NO): 4Q20 results – 4Q20 production in Norway was 223.1 mboe/d, with US$1.73 bn capex for FY20. YE20 net debt was US$3.6 bn. FY21 production guidance has been set at 210-220 mboe/d with total capital spend of USD 2.2-2.3 bn. The company anticipates a dividend for 2021 of US$450 mm (up from US$425 mm in 2020). BP (BP LN): 4Q20 results – Adjusted net profit for 4Q20 was US$115 mm. FY20 production was 3,473 mboe/d with US$12 bn capex. The organic reserves replacement ratio was 78% for the year. Including acquisitions and divestments, the total reserves replacement ratio was -5%. DNO (DNO NO): Discovery in Norway – DNO has made a 45-70 mmboe discovery at the Røver Nord prospect in the Norwegian North Sea license PL923 in which the Company holds a 20% WI. EnQuest (ENQ LN): Acquisition of UK assets – EnQuest is acquiring 26.69% WI in Golden Eagle from Suncor. The transaction adds production of ~10 mboepd, ~18 mmbbl of net 2P reserves and ~5 mmbbl of net 2C resources. FY21 opex for the acquired asset is ~US$5/boe. The effective date of the transaction is 01/01/2021. The initial consideration is US$325 mm, with an additional contingent consideration of up to US$50 mm depending on oil price. EnQuest plans to finance the transaction through a combination of a new secured debt facility and an equity raise of up to US$50 mm. FY20 production was 59,116 boe/d with capex of ~US$130 mm. Gross production at Kraken was 37,518 bbl/d. YE20 net debt was US$1,280 mm. FY21 production is expected to be between 46,000 boe/d and 52,000 boe/d; Kraken gross production is expected to be between 30,000 bbl/d and 35,000 bbl/d. Lundin Energy (LUNE SS): Dry hole in Norway – The 7219/11-1 exploration well on the Bask prospect in production licence 533B was dry. OKEA Energy (OKEA NO): 4Q20 results – 4Q20 production in Norway was 16,171 boe/d. At YE20, OKEA held NOK2,400 mm in debt and had NOK 871 mm in cash. OKEA expects go produce 15.5-16.5 mboe/d in 2021 with NOK0.6-0/7 bn. OMV (OMV AG): 4Q20 results – 4Q20 production was 472 mboe/d. The company expects to produce 480 mboe/d in 2021 with cape of US$2.7 bn. Royal Dutch Shell (RDSA/B LN): 4Q20 results – Shell reported 4Q20 adjusted net earnings of US$0.4 bn with production of 3,371 mboe/d and FY20 capex of US$18 bn. FY21 production guidance has been set at 3,300 3,500 mboe/d. 1Q21 dividend has been increased by 4% from 4Q20 to US$0.1735 per share. FORMER SOVIET UNION Caspian Sunrise (CASP LN): Operational update in Kazakhstan – The company currently produces 1.2-1.5 mbbl/d. Domestic oil prices in Kazakhstan are currently only US$6/bbl. Nostrum Oil & Gas (NOG LN): Operating update and reserves downgrade Kazakstan – FY20 sales volumes were 21,514 boe/d. Net debt is expected not to exceed US$1.1 bn at YE20. YE20 2P reserves are estimated at 39 mmboe (down 91 mmboe compared to YE19). The revisions in reserves are mainly due to the downgrade of reserves attributed to the development of the Biyski-Afoninski West & North-West reservoirs to the contingent resources category. FY21 production guidance has been set at 17,000 boe/d, corresponding to a sales volume of 16,000 boe/d. MIDDLE EAST AND NORTH AFRICA BP (BP LN): Divesting assets in Oman – BP is selling a 20% participating interest in Oman’s Block 61 to PTTEP for US$2.6 bn. Following completion of the sale, BP will remain operator of the block, holding a 40% interest. United Oil & Gas (UOG LN): Trading update – FY20 WI in Egypt production was 2,195 boe/d. At YE20, the company held US$2.1 mm in cash. 1H21 production in Egypt is forecast to average between 2,300 and 2,500 boe/d for 1H21 with US$5.3 mm capex. SUB-SAHARAN AFRICA Seplat Petroleum (SEPL LN): Update in Nigeria – Seplat ‘s Joint Venture, the ANOH Gas Processing Company, has raised US$260 mm in debt to fund the completion of its ANOH Gas Processing Plant. Construction cost is now expected to be no more than US$650 mm, inclusive of financing costs and taxes, below the original projected cost of US$700 mm. EVENTS TO WATCH NEXT WEEK ________________________________________ 09/02/2021: Tethys Oil (TETY SS) – 4Q20 results 11/02/2021: DNO (DNO ASA) – 4Q20 results 11/02/2021: Royal Dutch Shell (RDSA/B LN) – Strategy day
Companies: NOG CASP RDSA ADX AKERBP ALV BP/ DNO ENQ JSE LUNE MAHAA OMV PXT TAL SEPL WEN
The company announced another dividend increase, despite difficult results. We would also point out the slight increase in the gearing level and net debt still above the company’s target. While a more optimistic view on macro definitely helps, it seems that management is trying to raise the distribution closer to its peers, after cutting it the most in Q1.
Panoro Energy (PEN NO)C; Target Price: NOK23.00: BW Energy (BWE NO) provides update in Gabon – BW indicated that 4Q20 gross production from the Tortue field was ~13,500 bbl/d, as an 11 day downtime took place in October for the annual maintenance program and to comply with Gabonese production allocations to meet OPEC quotas. A drilling contract for one development well (DTM-7H) and one exploration well has been recently awarded. There is also the option for another exploration well subject to the results of the drilling campaign. Pharos Energy (PHAR LN)C; Target Price: £0.40: Raising US$11.7 mm of new equity – Pharos has raised US$11.7 mm of new equity price at 19.25 p per share. The proceeds will be invested in Egypt to arrest production decline and boost production ahead of securing a farm in partner. IN OTHER NEWS ________________________________________ AMERICAS ExxonMobil (XOM US): Dry hole in Guyana – The Hassa wildcat on the Stabroek block was dry. Gran Tierra Energy (GTE LN/CN): Transaction to divest shares in PetroTal terminated – Gran Tierra, has terminated the purchase agreement with Remus Horizons regarding the proposed sale of 218,012,500 common shares in the capital of PetroTal. In a separate announcement Gran Tierra reported that 109 mm shares with private purchasers for US$14.8 mm Kosmos Energy (KOS US/LN): Discovery in the US Gulf of Mexico – The Winterfell well on the Green Canyon Block 944 encountered ~26 meters of net oil pay in two intervals in the sub-salt Upper Miocene. The well de-risks prospectivity in several neighbouring blocks held by Kosmos, with approximately 100 mmbbl of gross potential within Kosmos' acreage position. Pantheon Resources (PANR LN): Acquisition of acreage in Alaska - Pantheon Resources is acquiring 10.8% WI in each of the 16 leases in the 44,463 acre Talitha Unit from Otto Energy. The consideration consists of 14,272,592 shares of Pantheon. Upon completion of the acquisition, Pantheon will own a 100% WI in the Talitha Unit. Predator Oil & Gas (PRD LN): Operation update in Trinidad – The Pilot CO2 EOR results support pre-injection desktop production plateau forecasts of 243 -547 bbl/d from the Herrera #2 Sand. The CO2 sequestration potential is confirmed. At WTI oil price of US$50/bbl, projected EBITDA net-backs for the P50 and P10 pre-Pilot CO2 EOR production profiles at plateau production are estimated to be in the range US$15 – 25/bbl. Trinity Exploration & Production (TRIN LN): Operating update in Trinidad – 4Q20 production was 3,206 bbl/d. Trinity held net cash of US$17.5 mm at YE20. Westmount Energy (WTE LN): Acquiring further interest in Guyana explorer – Westmount has purchased 287,500 common shares in JHI for an aggregate cost of C$718,750. Westmount holds a total of 5,651,270 shares in JHI, representing ~7.7% of the issued common shares in JHI. Drilling operations at the first well in the Canje drilling campaign, Bulletwood-1, are ongoing, with completion of the well anticipated around mid to late February. Additional Canje drilling will follow-on in 1H21. EUROPE Aker BP (AKERBP NO): Trading update in Norway – Aker BP produced 223.1 mboe/d in 4Q20. FY20 capex was US$1.3 bn, exploration spend was US$246 mm and abandonment spend was US$178 mm. YE20 net debt was US$3.6 bn. Cairn Energy (CNE LN): Trading update – FY20 net production at Catcher and Kraken was just over 21,000 bbl/d, in line with guidance. FY20 cash capex was US$160 mm. FY21 net production is estimated to be 16,000 – 19,000 bbl/d with capex of US$85 mm (including US$10 mm at Kraken and Catcher). At YE20 Cairn held US$570 mm in cash with no drawn debt. In 2021, Cairn is planning to drill an exploration well on Block 10 in Mexico and there is an optional drilling opportunity for an appraisal well of the Saasken discovery (Cairn 15% WI). In the UK, Cairn will participate in the Shell-operated Jaws exploration well on P2380 (Cairn 50% WI). In Côte d’Ivoire, Cairn has assumed Operatorship (90% WI) in blocks CI-301 and CI-302 from Tullow which has exited both licences. The JV has exited blocks CI-518, CI-519, CI-521 and CI-522 effective end December 2020. ExxonMobil (XOM US): Progress at selling UK assets – Media reports indicated that ExxonMobil has entered exclusive discussions with HitecVision/NEO Energy with regards to the divestment of Central and Norther North Sea assets. Repsol (REP SM): Trading update – 4Q20 production was 628 mboe/d. Norway: Exploration licence award – Norway has awarded 61 licences to 30 companies. Equinor, Aker BP, Lundin Energy, DNO, Neptune Energy, Wintershall DEA, OKEA Energy, Var Energy and Spirit Energy were awarded interests in respectively 17, 10, 19, 10, 6, 16, 4, 10 and 3 licences. Serica Energy (SQZ LN): Operating update in the UK North Sea – Estimated FY20 net production from Serica's interests in Bruce, Keith, Rhum (BKR) and Erskine averaged 23,800 boe/d. With regards to the R3 operations, the removal of the 2005 completion is taking longer than anticipated due largely to the unexpectedly poor condition of the equipment being recovered from the well. As a result, R3 operations are now expected to continue into March 2021. Union Jack Oil (UJO LN): Further acquisition of interests in UK asset – Union Jack Union is acquiring a 15% interest in PEDL253, containing the Biscathorpe project from Humber Oil & Gas, increasing its interest to 45%. The consideration consists of £0.5 mm in cash plus a contingent payment of £0.5 mm. FORMER SOVIET UNION JKX Oil & Gas (JKX LN): Operating update in Ukraine and Russia – FY20 production was 10,238 boe/d including 5,389 boe/d in Russia and the balance in Ukraine. JKX held US$24.5 mm in cash at YE20. IG146 was completed to the Devonian in Ignativske (Ukraine) and encountered 2.6 m of net hydrocarbon bearing thickness. After initially testing of the IG146 well at an oil rate of 497 bbl/dd and a gas rate of ~200 boe/d in November the rate declined and the well is currently producing 35 boe/d. MIDDLE EAST AND NORTH AFRICA Apex International Energy: Discoveries in Egypt – The SEMZ-1X well discovered Bahariya oil with 17 feet of indicated pay and and tested at a rate of 100 bbl/d. The well will be fracced to maximize flow rate. The SEMZ-11X well encountered 65 feet of oil pay in the Cretaceous sandstones of the Bahariya and Abu Roash G formations. Testing of the Bahariya resulted in a peak rate of 2,100 bbl/d of oil and no water. DNO (DNO NO): Operating update – FY20 WI production was 95,100 boe/d including 17,300 boe/d in Norwar and the balance in Kurdistan. FY20 capex was US$515 mm increasing to US$700 mm in 2021. DNO held US$475 mm in cash at YE20. The KRG has put a plan in place to make payments towards DNO’s arrears (US$259 mm) such that if Brent prices exceed US$50/bbl in any month, the incremental revenue will be shared 50 50 between the KRG and the Tawke license partners. Energean (ENOG LN): Trading update – FY20 pro forma WI production was ~48.3 mboe/d with pro forma capital expenditure (including exploration expenditure) of US$558 mm. FY21 production is expected to be 35.0 40.0 mboe/d with capex of US$515 – 590 mm, Genel Energy (GENL LN): Operating update in Kurdistan – Gross operated production from the Tawke licence averaged 110,300 bbl/d in 2020, about evenly split between the Tawke and Peshkabir fields. FY20 production at Taq Taq was 9,670 bbl/d with a production rate of 8 mbbl/d at YE20. Sarta produced 520 bbl/d. The Sarta-3 well has produced at an average of ~5,500 bbl/d so far in 2021. Production from Sarta-2 is now expected in February. The 2021 appraisal drilling campaign is targeting a material portion of the 250 mmbbl of existing contingent resources, and prospective resources, in Jurassic formations. The Qara Dagh 2 well is expected to be spudded in 1Q21. FY21 WI Production is expected to be slightly above FY20 (31,980 bbl/d) with capex of US$150-200 mm. Genel held US$354 mm in cash (net cash of US$10 mm) at YE20. The KRG has submitted a reconciliation model for repayment of the receivable relating to the US$159 mm in unpaid invoices, whereby for each cent above a monthly dated Brent average of US$50/bbl, 0.5 cent per working interest barrel shall be paid towards monies owed. TransGlobe Energy (TGL LN): Operating update – Production averaged 12.4 mboe/d (including 11,178 boe/d in Egypt) in 4Q20 and 13.5 mboe/d during FY20. At YE20, TransGlobe held >US$30 mm in cash and had no net debt. SUB-SAHARAN AFRICA BW Energy (BWE NO): Equity raise – BWE has raised US$75 mm of new equity priced at NOK27 per share, representing a 9.5% discount to the previous day close. The net proceeds will be used for capital investments in the Dussafu licence in Gabon, development of the Maromba discovery in Brazil, new ventures and for other general corporate purposes. Total (FP FP) and Royal Dutch Shell (RDSA/B LN): Divestments in Nigeria – Oil Mining Lease (OML) 17 in the Eastern Niger Delta, and associated infrastructure, have been sold to TNOG Oil and Gas for a consideration of US$533 mm net to Shell (30% WI) and US$180 mm net to Total (10%). EVENTS TO WATCH NEXT WEEK ________________________________________ 27/01/2021: Tullow Oil (TLW LN) – Trading update 28/01/2021: Lundin Energy (LUNE SS) – 4Q20 results
Companies: AKERBP CNE DNO ENOG XOM GENL GTE JKX KOS PEN TAL PHAR REP RDSA SQZ FP TGL
Bahamas Petroleum Company (BPC LN)C; Target: 6.7p: Exploration well spudded in the Bahamas - Drilling of the Perseverance #1 well has commenced. The well is anticipated to take 45 - 60 days to complete. Perseverance #1 is targeting P50 prospective oil resources of 0.77 bnbbl, with an upside of 1.44 bnbbl. Our unriksed NAV for the well is 15.3p per share (ReNAV of 3.8p per share) assuming 0.77 bnbbl. These numbers also assume that BPC retains only 25% of the value of the discovery – retention of a higher stake increases this value pro rata. ________________________________________ AMERICAS Parex Resources (PXT CN): Share buyback programme – Parex is launching a buy back programme for up to 10% of its share capital. Westmount Energy (WTE LN): Update in Guyana – Westmount has acquired 250,000 shares in JHI Associates for US$0.4 mm. Westmount now holds ~ 7.2% of JHI. JHI’s main asset is a 17.5% carried interest in the Canje Block with ExxonMobil as operator. It is anticipated that the first well in the Canje drilling campaign, Bulletwood-1, will be spudded around YE20, with additional wells to follow-on in 1H21. ASIA PACIFIC Cairn Energy (CNE LN): Award in India in Cairn’s favour –The tribunal ruled unanimously that India had breached its obligations to Cairn under the UK-India Bilateral Investment Treaty and has awarded to Cairn damages of US$1.2 bn plus interest and costs. EUROPE ADX Energy (ADX AU)C: Access and Tariff Agreement with RAG in Austria – ADX has agreed terms with RAG to access RAG’s processing and transportation infrastructure in Upper Austria. This reduces development capex requirements and reduce the minimum size required for a discovery to be commercial. ConocoPhillips (COP US): Discovery in Norway - ConocoPhillips has discovered 75-200 mmboe at the Slagulge prospect in the Norwegian Sea. Royal Dutch Shell (RDSA/B LN): 4Q20 update – 4Q20 oil and gas production is expected to be between 3,175 3,290 boe/d. Serinus Energy (SENX LN): Operational update - The Moftinu–1008 well is expected to be spudded in January 2021. The Sancrai–1 exploration well located approximately 7 km to the south west of Moftinu is expected to be drilled in 2Q21. SSE Selling UK North Sea assets – SSE is selling a package of North Sea assets with 15,000 boe/d (FY21e) production to Viaro for £120 mm. SSE’s package includes non-operated stakes in 15 producing fields in three areas of the UK continental shelf, including 20% of Total’s Greater Laggan Area (GLA), west of Shetland. It has interests ranging from 22-50% in fields in the Bacton catchment area and 29-50% in the Easington area. The transaction between Viaro and SSE is made up of £25 mm in cash, payable at completion, with the remainder forming a loan repayable over three years. An additional £40 mm is payable depending on forward gas prices. SSE will pay 60% of the decommissioning costs. Viaro is selling its stakes in the Greater Brae Area to a company owned by the emirate of Fujairah in the United Arab Emirates for US$1. SUB-SAHARAN AFRICA Vaalco Energy (EGY LN/US): No pre-emption on acquisition of additional interests in Etame Marin – The other joint owners in the Etame Marin block have not exercised their pre-emptive rights to acquire Sasol’s 27.8% WI in the Gabonese licence. However, in Block DE-8 offshore Gabon, Perenco, has exercised its preferential rights and, as a result, Perenco is acquiring Sasol's 40% non-operated participating interest. The maximum future contingent payments by Vaalco under the acquisition agreement have been reduced from US$6 mm to US$5 mm. Savannah Energy (SAVE LN): Update in Nigeria – Gross production in the year-to-date period ended 30 November 2020 was 19.2 mboe/d. At the end of November, Savannah held US$96.6 mm in cash and had net debt of US$419.7 mm. Savannah has revised its FY20 administrative and operating costs guidance from US$68-72 mm to US$43-47 mm and its capex guidance from US$45 mm to US$8-10 primarily due to rescheduling of the capital expenditure programme and the deferral of drilling a new gas production well on the Uquo field. The contracted volumes to be delivered to Lafarge are reduced from 38.7 to 24.2 mmcf/d. In return for this reduction , the revised GSA includes an advance payment of US$20 mm and a prepayment structure over the period to 2027, which effectively results in a gas price of US$7.50/mcf on take-or-pay volumes during this period. EVENTS TO WATCH NEXT WEEK
Companies: SAVE EGY COP BPC ADX CNE PXT RDSA SEN
Right before the strategic update in February, the group announced another round of $3.5-4.5bn post-tax impairments. This is a combination of three ones (upstream / refining / LNG) for a total of $22bn for the year, at the top end of the guidance provided in Q2. The one in upstream is the most surprising as it concerns the Appomattox field, which came on stream last year.
Panoro Energy (PEN NO)C; Target price of NOK23.00: Delivering production growth in Tunisia – Gross production in Tunisia has averaged 4,850 bbl/d in October, up from ~4,000 bbl/d in 1Q20 following the restart of operational activities in 3Q20. The Guebiba-10 sidetrack has encountered net pay in both the Berino and shallower Douleb reservoirs. Initially bringing the Berino onstream will add a few 100s bbl/d from mid November. There are three other work-overs due in the next few months on the field and while gross production of 5,000 bbl/d now represents a new very solid base, there is also potential to quickly take gross production in Tunisia to 6,000 bbl/d. The potentially more important story of Guebiba-10 is the Douleb reservoir. While the net pay in the Douleb is smaller than at the Berino, the reservoir is of better quality and this formation, once opened (after the Berino is depleted), could generate 1.0-1.5 mbbl/d production from Guebiba-10 only. Panoro has already identified new Douleb well locations with an ongoing remapping of the field. The results of the remapping and the associated work programme should be available in 1H 2021 and could offer material opportunities for further production growth. Tethys Oil (TETY SS)C; Target price of SEK75.00: Taking control of Block 56 – Tethys is acquiring a further 45% interest in the exploration and production license covering Block 56 onshore Oman. The consideration consists of US$5 mm in cash and up to US$2 mm by way of a carry of future expenditure. The agreement further includes additional consideration in the case of a declaration of commerciality. The transaction will increase Tethys’ interest in Block 56 from 20% to 65%. Tethys is also assuming operatorship. Given that Tethys had undertaken drilling and testing activities earlier this year, we view this additional commitment as very encouraging. Block 56 has a lot of similarities to Blocks 3 & 4 and Tethys could add value by applying its knowledge of the geology of Blocks 3 & 4 to Block 56. Medco acquired Ophir Energy for >£400 mm in cash last year and, in the context of lower oil prices, we can understand Medco’s need to reduce its capital exposure to its diversified portfolio of assets. With Tethys now in control of operations, there could be more activity taking place on Block 56 in 2021 including seismic and perhaps further drilling. The share price has dropped to its lowest point in 2020, which represents a ~35% discount to our Core NAV. The core dividend represents >5% yield. Our unrisked NAV for the Thameen prospect, assuming 15 mmbbl resources, is SEK17 per year (~50% of the current share price). The current share price represents EV/DACF multiples of only 2.2x for 2020 and 1.9x for 2021. IN OTHER NEWS ________________________________________ AMERICAS BP (BP LN): Exiting Brazilian assets – BP is transferring the operatorship of a deep-water exploration block in the Foz do Amazonas basin off Brazil. Diversified Gas & Oil (DGOC LN): 3Q20 results and dividend increase– 3Q20 production in the USA was 107 mboe/d. Production from the legacy assets has been maintained at 69 mboe/d. Net debt at the end of September was US$730 mm. The company has declared a dividend for 3Q21 of US$0.04 per share up 7% versus 2Q20 dividend (US$0.0375 per share). Hess Corporation (HES US): Resources increase in Guyana – Gross resources encountered in Guyana have been increased from 8 bn boe to 9 bn boe. Maha Energy (MAHA-A SS): Strategy update – Maha plans to grow production to 15 mboe/d in Brazil, Oman and the USA over a five year horizon. President Energy (PPC LN): 1H20 results and update in Argentina – The LB-1001 well has now been tested with net pay 32% ahead of expectations. The company is expected to add ~1,030 boe/d of new gas production by the end of November including ~590 boe/d from the LB-1001 well. Production in 1H20 was 2,747 boe/d. Net debt at the end of June stood at US$11.3 mm. The exploration well EVN-x1 near the Estancia Vieja field encountered net pay of a total of 10 metres (including 7 metres of oil). These results provide support for the pre-drill projections of production of ~350 boe/d of gas and 188 bbl/d of oil. Westmount Energy (WTE LN): Drilling programme update in Guyana – Westmount holds small indirect interests in the ExxonMobil operated Kaieteur and Canje blocks, offshore Guyana. The Exxon Mobil drilling programme on both blocks has commenced, with the Tanager 1 well on the Kaieteur block currently drilling and a further two wells expected on the Canje Block over the next six to nine months. It is anticipated that the first well on the Canje Block, Bulletwood-1, will be spudded in November/December 2020. The Bulletwood-1 prospect is reported to be a 'Liza look-alike' confined channel complex and will target prospective resources of ~500 mmbbl of oil. The second well on the Canje Block will target either Sapote-1 in the east of the block or Jabillo-1, in the northwest of the block, which is reported as a billion-barrel class basin floor turbidite fan. The Tanager-1 well on the Kaieteur block (currently being drilled) targets unrisked gross prospective oil resource of 136 mmbbl to 452 mmbbl, with an aggregate chance of success 72%. EUROPE ADX Energy (ADX AU): 3Q20 update in Austria – 3Q20 production is Austria was 308 boe/d. ADX had A$2.1 mm in cash at the end of September. Aker BP (AKERBP NO): 3Q20 results – 3Q20 production in Norway was 201.6 mboe/d. The company maintains its FY20 production estimate and has narrowed the guidance range to 210-215 mboe/d from 205-220 mboe/d. Net debt at the end of September was US$3.64 bn. BP (BP LN): 3Q20 results – 3Q20 adjusted net profit was US$0.1 bn with overall production of 3,318 mboe/d (including Rosneft). 4Q20 production is expected to be slightly lower due to maintenance activities. ENI (ENI IM): 3Q20 results – 3Q20 production was 1,701 mboe/d. The company reported an adjusted net loss over the period of EUR 153 mm. The FY20 production guidance of 1.72-1.74 mmboe/d has been reiterated. Equinor (EQNR NO): 3Q20 results – 3Q20 adjusted net income was US$0.27 bn with 1,994 mboe/d production. Organic capital expenditures are estimated at ~US$8.5 bn for 2020 and ~US$10 bn for 2021, and ~US$12 bn annual average for 2022-2023. For the period 2019–2026, production is expected to grow by ~3% per year. IGas Energy (IGAS LN): Hydrogen MOU – IGas has signed a heads of terms with BayoTech, a manufacturer of modular hydrogen generation systems, to produce hydrogen IGas' existing gas resources. IGas has initially identified two of its existing sites, in the South East, where the gas resource can be reformed into hydrogen which will then be sold to local or national customers. Lundin Energy (LUNE SS): 3Q20 results – 3Q20 production in Norway was 157.5 mboe/d with free cash flow of US$164 mm. The FY20 production guidance increased from 157 mboe/d to 161-163 mboe/d with 4Q20 production targeting ~175 mboe/d. The company held US$3.7 bn net debt at the end of September. Neptune Energy: Small discovery in Norway – Well 6406/12-G-1 H (Fenja area) did not encounter reservoir rocks in either the primary or secondary exploration target. However, the well did encounter a total oil column of 38 m above the secondary exploration target in the lower part of the Intra-Melke Formation. The preliminary calculation of the 6406/12-3 A (Bue) oil discovery has now been reduced to between ~1.2 and 10 mmboe, while the estimate for the new oil discovery is between 3 and 10 mmboe. OMV (OMV AG): 3Q20 results – 3Q20 Adjusted net income was EUR80 mm with 444 mboe/d production. OMV expects total production to be between 450 mboe/d and 470 mboe/d in 2020 with total organic capex of EUR1.7 bn. Repsol (REP SM): 3Q20 resuts – 3Q20 adjusted net earnings were EUR7 mm with 616 mboe/d production. Royal Dutch Shell {RDSA/B LN): 3Q20 results – 3Q20 adjusted earnings were US$955 mm with 3,081 mboe/d production. 4Q20 production available for sales is forecasted to be 3,130-3,370 boe/d. Shell is increasing the 3Q20 dividend by 4%. Total (FP FP): 3Q20 results – 3Q20 adjusted net earnings were US$0.85 bn with 2,715 mboe/d production. Total is maintaining its quarterly dividend of EUR0/66 per share. FY20 production is expected to be ~2.9 mmboe/d with net investments of less than US$13 bn including US$2 bn in renewables and electricity. FORMER SOVIET UNION Epsilon Development: Discovery in Uzbekistan – Media reported indicated that Epsilon has discovered ~600 bcf of natural gas and 3 mmbbl of condensate at the Alouddin-4 well on the Kultak-Kamashinsky block. Overall, the company has discovered a total of ~1.4 tcf and 7 mmbbl of condensate since January. Nostrum Oil & Gas (NOG LN): 3Q20 update in Kazakhstan - Average sales volumes over the first 9 months of 2020 were 22,269 boe/d. FY20 production forecast has been increased to 21,000 boe/d, corresponding to sales volumes of 20,000 boe/d (19,000 boe/d previously). At the end of September, Nostrum held cash in excess of US$88 mm and net debt is expected not to exceed approximately US$1,074 mm. The upcoming reserves estimate may lead to a material downgrade in the company's Proven and Probable reserves. Petroneft (PTR LN): 1H20 results – 1H20 WI production in Russia was 783 bbl/d. The company held net debt of US$3.8 mm at the end of June. Zoltav Resources (ZOL LN): 1H20 results – 1H20 production in Russia was 24.3 mmcf/d for gas and 215 bbl/d for condensate. Zoltav has US$0.45 mm in cash at the end of June. MIDDLE EAST AND NORTH AFRICA Chariot Oil & Gas (CHAR LN): Potential debt funding for Moroccan offshore project – Chariot received a non-binding Expression of Interest Letter from Africa Finance Corporation for the provision of development debt finance for the Anchois Gas Discovery and the development of future discoveries from the wider prospect portfolio of the Licence. Chariot has also received a non-binding Expression of Interest for the provision of Reserves Base Lending for the development of the Anchois Gas Discovery with a Multinational Investment Bank. Both expressions of interest take into account an estimated capex of US$300-500 mm. Dana Gas: Selling Egyptian assets – Dana Gas is selling its Egypt onshore gas and condensate assets to IPR Energy for US$236 mm. The assets include 100% WI in the El Manzala, West El Manzala, West El Qantara and North El Salhiya onshore concessions and associated development leases. During 1H20, these concessions produced 30,950 boe/d, and contributed US$38 mm to the Company’s EBITDA. The consideration comprises (i) a base cash consideration of US$153 mm and (ii) contingent payments of up to US$83 mm subject to average Brent prices and production performance between 2020-2023 as well as the realization of potential third party business opportunities. DNO ASA (DNO NO): 3Q20 results – 3Q20 WI production was 97,900 boe/d, of which Kurdistan contributed 80,200 bbl/d and the North Sea 17,700 boe/d. DNO expects to exit the year with Kurdistan and North Sea production at 3Q20 levels. DNO held US$652 mm net debt at the end of September. Genel Energy (GENL LN): Update at in Kurdistan – 3Q20 gross production at the Tawke licence increased 12% versus 2Q20 to 113,700 bbl/d (50/50 split between the Tawke and the Peshkabir fields) following a campaign of quick turnaround, low cost well interventions and the startup of the Kurdistan region of Iraq’s first enhanced oil recovery project. Genel has received US$9.4 mm for crude sales in September. Gulf Keystone Petroleum (GKP LN): Payment in Kurdistan - Gulf Keystone has received a net payment of US$7.7 mm from the Kurdistan Regional Government for Shaikan crude oil sales during September 2020. ShaMaran Petroleum (SNM CN): Payment in Kurdistan – ShaMaran received a net payment of US$5.4 mm from the Kurdistan Regional Government for Atrush oil sales invoice entitlements for the month of September 2020. SUB-SAHARAN AFRICA Africa Oil (AOI SS/CN), Africa Energy (AEC SS/ AFE CN), Total (FP FP) and Impact Oil & Gas: Second gas and condensate discovery in South Africa – The Luiperd-1X deepwater exploration well on Block 11B/12B encountered 73 metres of net gas condensate pay over a mid-Cretaceous high-quality reservoir interval and did not encounter the water contact. The well will now be tested. The net pay encountered in the Luiperd target objective is much larger than the main reservoir at the Brulpadda discovery. The joint venture is now proceeding with development studies and will engage with authorities on the commercialization of gas instead of drilling another exploration well in this program. LEKOIL (LEK LN): 1H20 results - Otakikpo (Nigeria) production averaged 5,676 bbl/d over the period (2,271 bbl/d net to LEKOIL). Net debt at the end of June stood at US$15.6 mm. Seplat Petroleum (SEPL LN): 3Q20 results – Production in Nigeria over the first 9 months of 2020 was 50,653 boe/d including 100 mmcf/d for natural gas. There was a 77% uptime for the Trans Forcados Pipeline during the period and the produced liquid volumes from OMLs 4, 38 and 41 were subject to 8.6% reconciliation losses. Seplat was advised of production quota cuts of between 20%-30% across its assets in July and August. The cuts are expected to hold through January 2021. As a result, the FY20 production guidance is narrowed to 48-52 mboe/d (including 31-34 mbbl/d for liquid). The completion of the Amukpe-Escravos pipeline has been delayed again and the company now expects commencement of export of the initial permitted volume of 40 mbbl/d through the Escravos terminal in 2H21. First gas at the NOH project continues to be expected to occur in 4Q21. Seplat has declared an interim dividend of US$0.05 per share. Over the first 9 months of 2020, Seplat received a total of US$147 mm from NPDC towards the settlement of outstanding dollar-denominated cash calls and US$100 mm in Naira to offset Naira cash calls. Net debt at the end of September was US$480 mm. Victoria Oil & Gas (VOG LN): Update in Cameroon – 3Q20 gross sales rate were 4.7 mmcf/d of natural gas. During October 2020 weekday gas sales have occasionally exceeded 5 mmcf/d with a peak at 6.1 mmcf/d. One more thermal and power customer will be tied in shortly. Net debt at the end of June stood at US$12.5 mm. EVENTS TO WATCH NEXT WEEK ________________________________________ 03/11/2020: Tethys Oil (TETY SS) – 3Q20 results 03/11/2020: Genel Energy (GENL LN) – 3Q20 update 03/11/2020: Gran Tierra Energy (GTE LN/CN) – 3Q20 results 04/11/2020: GeoPark (GPRK LN) – 3Q20 results 05/11/2020: Frontera Energy (FEC CN) – 3Q20 results
Companies: AKERBP BP/ LUNE MAHAA RDSA TETY TETY AOI DGOC DNO ENI EQNR GENL HES NOG OMV PEN PTR REP SEPL SNM FP VOG
Since the group is in the middle of a major reorganization, the strong cash generation will help generate interest in the strategy update scheduled for 2021. The CFO stood at $10.4bn, vs $2.5bn in Q2, thanks to the oil price rebound, positive working capital movements and Shell cashing in on trading derivatives. Net debt was down by $4bn, enabling the group to announce a 4% increase in the quarterly dividend to $16.65cts.
Royal Dutch Shell (RDSB LN) – Shell raises its dividend following upbeat Q3 results | Diversified Gas & Oil (DGOC LN): Q3 2020 results, healthy dividend maintained | Gulf Keystone Petroleum (GKP LN): September 2020 payment received from the KRG | Lekoil* (LEK LN): Strategic Alliance Agreement signed with NAMCOR | Touchstone Exploration (TXP LN): Cascadura Deep-1 well spudded ahead of schedule | Zoltav Resources* (ZOL LN) H1 2020 results, strong operational progress
Companies: RDSA DGOC GKP LEK TXP ZOL
PetroTal (PTAL LN/TAL CN)C; Target price £0.45 per share: Resumption of production - PetroTal has recommenced production at Bretana with current production of 11 mbbl/d. This followed multiple agreements between the Peruvian government and local communities. Although the export pipeline is not open yet, Petroperu has been carrying out maintenance activities. The government is expecting the pipeline to be re-opened in time to receive Bretana’s oil production. Meanwhile PetroTal is also selling ~1.3 mbbl/d to Iquitos. We view the resumption of production as an important step, demonstrating the support of the local communities. This is encouraging for the forthcoming re-opening of the export pipeline. We have factored in our forecasts the delays associated with the prolonged shut-in with only one development well to be drilled in 4Q20 boosting production from December. With an inventory of eight new oil wells to develop the 2P reserves, we anticipate the company to ramp-up development activities in 2021. We are currently assuming FY21 cash capex of US$40 mm (including the repayment of payables) to grow production to ~14 mbbl/d by YE21 (12.5 mbbl/d in average over 2021). Assuming production of just ~10 mbbl/d during 4Q20, this would lead to FY20 operating cash flow (before working capital movement) of ~US$30 mm (including ~US$15 mm in 4Q20), resulting in EV/DACF multiples of ~4x in 2020. On only ~12.5 mbbl/d production in 2021, we estimate EV/DACF of ~1x at US$48/bbl. Our Core NAV for the company at a Brent price of US$45/bbl (flat, no escalation) and 12.5 mbbl/d production in 2021 (declining thereafter) is £0.25 per share, representing >120% upside to the current level. At US$50/bbl for Brent, our Core NAV would be £0.35 per share (x3.5 current level). IN OTHER NEWS ________________________________________ AMERICAS Bahamas Petroleum (BPC LN): Update in Trinidad and the Bahamas and US$12 mm placing– Drilling at the Perseverance #1 well in the Bahamas is expected to start in late 2020. The well is targeting recoverable P50 prospective oil resources of 0.77 bn bbl with an upside of 1.44 bn bbl. In Trinidad, the work programmes look to increase production from 400-450 bbl/dd to 500 bbl/d by YE20 and to 2,500 bbl/dd by YE21. In a separate statement, BPC indicated that the unrisked NPV10 of the Perseverance prospect is estimated at >US$2.5 bn at US$40/bbl. Bahamas Petroleum has also raised US$12 mm of new equity priced at 2p per share representing 30% discount to the previous close. The transaction to divest 100% WI in the Inniss-Trinity asset will not complete and BPC will retain the asset. Echo Energy (ECHO LN): 1H20 results – 1H20 production in Argentina was ~2,150 boe/d. The company held US$1.2 mm in cash at the end of the period with a loan of US$24.2 mm. Occidental Petroleum (OXY US): Selling Colombia onshore to Carlyle - Occidental Petroleum is selling its onshore assets in Colombia to Carlyle for US$825 mm. The Colombia assets sale includes the company’s operations and working interests in the Llanos Norte, Middle Magdalena and Putumayo Basins. Total (FP FP): Exiting Foz do Amazonas in Brazil – Total is transferring to Petrobras its equity interest in five exploration blocks in the Foz do Amazonas Basin, located 120 kilometers offshore Brazil. EUROPE Cairn Energy (CNE LN): 1H20 results – 1H20 net oil production was 22.4 mbbl/d. The company held US$84 mm in cash at the end of June and no debt. FY20 net production guidance has been set at 21-23 mbbl/d in the upper range of the previous guidance of 19-23 mbbl/d with US$135 mm capex. The company plans to pay a US$250 mm special dividend following the divestment in Senegal. A ruling on the India tax dispute continues to be expected after the summer. Equinor (EQNR NO): Discovery in Norway - Equinor has encountered 13-38 mmboe recoverable resources at the Swisher prospect in PL 248 C. Lundin Energy (LUNE SS): Increasing reserves at Norway field – The gross 2P reserves at the Greater Edvard Grieg Area have been increased by ~50 mmboe) to 350 mmboe due to the continued outperformance of the field. The expected plateau production period from the Greater Edvard Grieg Area has been extended by a further year to late 2023. Royal Dutch Shell (RDS A/B LN): 2Q20 update – 2Q20 production is expected to be 2,970-3,110 mboe/d. Total (FP FP): Maintaining dividend distributions – Total announced that its dividend is supported at Brent price of US$40/bbl. This is in stark contrast to BP and Shell that have materially reduced distributions. FORMER SOVIET UNION Block Energy (BLOE LN): Update in Georgia - Block has shut-in the West Rustavi field's production at wells WR 16aZ and WR-38Z to conserve gas resources until the gas sales pipeline is complete late in 2020. The company held US$2.3 mm in cash at the end of June. Enwell Energy (ENW LN): Ruling overturned in Ukraine – A previous ruling that had found that the Svystunivsko-Chervonolutskyi exploration licence had not been awarded regularly has been overturned in favour of Enwell by the Appellate Administrative Court. Petroneft (PTR LN): FY19 results – FY19 gross production in Russia was 1,614 bbl/d. The company held ~64 mmbbl WI 2P reserves at YE19. At YE19, Petroneft held US$0.3 mm in cash with current debt of US$4.3 mm. MIDDLE EAST AND NORTH AFRICA Gulf Keystone Petroleum (EKP LN): Receives payment from the KRG – Gulf Keystone has received net payment of US$9.8 mm for Sales at Shaikan in August. ShaMaran Petroleum (SNM CN): Receives payment from the KRG – ShaMaran has received net payment of US$6.8 mm for sales at Atrush in August. United & Gas (UOG LN): 1H20 results – WI production in Egypt from the end of February to the end of June averaged 1,975 boe/d, increasing from 1,709 boe/d on the 1st of March to 2,716 boe/d on the 30th of June. 2H20 WI production is forecasted at 2,300 boe/d. The company held US$1.3 mm at the end of June. SUB-SAHARAN AFRICA Savannah Energy (SAVE LN): Update in Nigeria – Average gross production in the year-to-date period ended 31 August 2020 was 20.4 mboe/d. At the end of August, the group held US$84.7 mm in cash (including US$34.9 mm set aside for debt service) with net debt of US$426.8 mm. The company forecasts FY20 production of 21 23 mboe/d with capex of US$45 mm. Vaalco Energy (EGY US/LN): Operating update in Gabon – 3Q20 net production is estimated at 4,370 bbl/d at the midpoint of the FY20 guidance. The company expects to have US$37 mm in cash at the end of 3Q20. A 3D seismic campaign will be run in 4Q20.
Companies: BPC CNE EQNR GKP LUNE OXY PTR TAL RDSA SAVE SNM EGY FP
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Wickes to demerge from Travis Perkins and list on the Main Market. Expected 28 April. Advance Energy to complete an RTO on AIM indirectly acquiring up to 50% of Carnarvon Petroleum Timor which holds a 100 per cent. working interest and is the contractor under the Buffalo PSC, offshore Timor-Leste. Carnarvon Petroleum Timor is a subsidiary of ASX listed company, Carnarvon Petroleum Limited. The net proceeds of the Placing of approximately £20.01m (approximately US$27.51mm) will be used to fund the Acquisition. Due 19 April. NFT Investments plc is an investment company that specialises in non-fungible tokens (NFT). Has applied for admission to the Access segment of the AQSE Growth Market. No funds being raised. Due 16 April. Thor Explorations (TSXV:THX) seeking a secondary listing on AIM. The Company is targeting Admission during Q2 2021. Segun Lawson, President & CEO, stated: “Thor Explorations has advanced significantly, in both project development and capitalisation since the acquisition of Segilola in 2016. This year, the Company is well positioned to achieve two major milestones with the commencement of gold production at Segilola in Nigeria and a maiden resource at Douta in Senegal, as well as continuing to progress our highly prospective Nigerian exploration portfolio on the Ilesha Schist belt.” MAST Energy Developments (MED) is to IPO on the Standard List on 14th April 2021 under the ticker MAST. The company has raised £5m giving a market capitalisation on listing of c. £23m. MED is currently a 100% subsidiary company of AIM quoted, Kibo Energy*. MED was established to acquire and develop a portfolio of flexible power plants in the UK and become a multi-asset operator in the rapidly growing Reserve Power market. PensionBee has confirmed its intention to float on the High Growth Segment of the Main Market of LSE. The online pension provider had approximately 130,000 Active Customers and £1.5bn of assets under administration, in each case as at 28 February 2021. The Offer will comprise new Shares raising gross proceeds of approximately £55m and existing Shares to be sold by certain existing small minority shareholders of up to £5m. None of the founders, directors or members of senior management of PensionBee are selling any existing Shares. Expected in April. Imperial X (AQSE:IMPP) to join the Main Market (standard). It is also proposed that on Admission to the Official List, the Company will change its name to Cloudbreak Discovery Plc. With effect from Admission, Imperial X will hold equity positions and royalties in a variety of projects in the natural resources sector across multiple jurisdictions, primarily in the Americas and Africa. The Company is proposing to raise up to £1.5m by way of placing of new Ordinary Shares to support further prospect acquisitions. Current Mkt cap £4.7m Expected April 2021. Proposed move to AIM from the main market (standard) by Emmerson (EML.L) to provide Emmerson with access to a market and environment which is more suited, in the Board's view, to the Company's current size and strategy ahead of pivotal period for the Company with the commencement of mine construction at the Khemisset Potash Project expected by end of 2021. Follows recent award of Mining Licence granting Emmerson exclusive right to develop and mine the potash deposit and £5.5m raise to fund ongoing project development work. 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. 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.
Companies: GOOD FIH SRT NFC RFX ARCM ACRL EQLS ORPH VRS
CAML’s Q1 2021 production rates of copper, zinc and lead were down slightly versus Q1 2020, but we believe output of all three metals remains on course to meet group guidance for 2021. The latter is in-line with production levels over recent years, which if achieved we believe would result in material earnings (and potentially dividend) growth this year given the rally in base metals prices over recent months relative to 2020 average levels. Our 2021 forecasts would put CAML on an EV/EBITDA multiple of under 5x and a compelling dividend yield of over 6%, the latter conservatively assuming a free cash flow pay-out ratio below that used to set the 2020 dividend. Given our estimates assume zinc and lead prices broadly in-line with current pricing levels and a copper price assumption that is some way below current spot, we believe the risks to our 2021 estimates lie to the upside.
Companies: Central Asia Metals Plc
Semper Fortis Esports* recently announced its intention to IPO onto the Access Segment of the Aquis Stock Exchange Growth Market. Semper is a multi-operational Esports organisation focusing on gaming technology solutions, brand enhancement and high growth team infrastructures. The company plans to raise £2.5m to develop their three core areas of establishing an esports team, forming partnerships with brands for sponsorship and B2B consultancy services. The Board are highly experienced in sports and corporate deal making (Keith Harris, former Chairman of The Football League), technology and electronic gaming (Nolan Bushnell, founder of the pioneering company, Atari), esports and game tech (Kevin Soltani and Jassem Osseiran) and as FD Max Deeley. Target Admission Date of 26 April. Darktrace plc. Announcement of Intention to Publish a Registration Document and Potential IPO on the main market of the London Stock Exchange. Darktrace was founded in 2013 with a mission to fundamentally transform the ability of organisations to defend their most critical assets in the face of rising cyber threats. Darktrace is a world-leading provider of AI for the enterprise, with the first at-scale in-the-enterprise deployment of AI in cyber security Timing TBA musicMagpie is a leader in re-commerce in the UK and US in the circular economy of consumer technology (including smartphones, tablets, consoles and personal computers), books and disc media (including CDs, DVDs and video games). Expected 28 April. Offer details TBA Wickes to demerge from Travis Perkins and list on the Main Market. Expected 28 April. Advance Energy to complete an RTO on AIM indirectly acquiring up to 50% of Carnarvon Petroleum Timor which holds a 100 per cent. working interest and is the contractor under the Buffalo PSC, offshore Timor-Leste. Carnarvon Petroleum Timor is a subsidiary of ASX listed company, Carnarvon Petroleum Limited. The net proceeds of the Placing of approximately £20.01m (approximately US$27.51m) will be used to fund the Acquisition. Due 19 April. NFT Investments plc is an investment company that specialises in non-fungible tokens (NFT). Has applied for admission to the Access segment of the AQSE Growth Market. No funds being raised. Due 16 April. Thor Explorations (TSXV:THX) seeking a secondary listing on AIM. The Company is targeting Admission during Q2 21. Segun Lawson, President & CEO, stated: “Thor Explorations has advanced significantly, in both project development and capitalisation since the acquisition of Segilola in 2016. This year, the Company is well positioned to achieve two major milestones with the commencement of gold production at Segilola in Nigeria and a maiden resource at Douta in Senegal, as well as continuing to progress our highly prospective Nigerian exploration portfolio on the Ilesha Schist belt.” PensionBee has confirmed its intention to float on the High Growth Segment of the Main Market of LSE. The online pension provider had approximately 130,000 Active Customers and £1.5bn of assets under administration as at 28 February 2021. The Offer will comprise new Shares raising gross proceeds of approximately £55m and existing Shares to be sold by certain existing small minority shareholders of up to £5m. None of the founders, directors or members of senior management of PensionBee are selling any existing Shares. Expected in April. Imperial X (AQSE:IMPP) to join the Main Market (standard). It is also proposed that on Admission to the Official List, the Company will change its name to Cloudbreak Discovery Plc. With effect from Admission, Imperial X will hold equity positions and royalties in a variety of projects in the natural resources sector across multiple jurisdictions, primarily in the Americas and Africa. The Company is proposing to raise up to £1.5m by way of placing of new Ordinary Shares to support further prospect acquisitions. Current Mkt cap £4.7m Expected April. Proposed move to AIM from the main market (standard) by Emmerson (EML.L) to provide Emmerson with access to a market and environment which is more suited, in the Board's view, to the Company's current size and strategy ahead of pivotal period for the Company with the commencement of mine construction at the Khemisset Potash Project expected by end of 2021. Follows recent award of Mining Licence granting Emmerson exclusive right to develop and mine the potash deposit and £5.5m raise to fund ongoing project development work. Due 27 April.
Companies: KIBO ROCK VRCI K3C TOU ADT PCA ATYM IOM MJH
2020 brought a new chapter in the corporate development of Shanta in our view. The company still produced 83koz at an AISC of US$841/oz as per guidance for the third year in the row and did it with a best-in-class safety record. However, they also resolved for growth through the commissioning of Singida and the delivery of a scoping study for the West Kenya Project. They added 14% to the capacity of the flagship NLGM operations (which we believe the market has missed), restored the balance sheet and removed the hedge book. Finally, a maiden dividend was declared. We prosecute the investment case whilst adjusting our forecasts to take into account company guidance and a gold price forecast of $1750/oz. We maintain our Target Price at 30p.
Companies: Shanta Gold Limited
AfriTin* (ATM LN) – By-product potential at the Uis tin mine Alba Mineral Resources (ALBA LN) – Phase 2 drilling underway at the Clogau St David's mine ITM Power (ITM LN) - First Green Hydrogen for Glasgow Project planned capacity doubled to 20MW
Companies: ATM ALBA ITM
The victory of Guillermo Lasso in the Ecuador elections derisks the SolGold investment case and materially increases the likelihood of a takeover bid in our view. Not only was Lasso the pro foreign direct investment candidate, which should get potential investors off the fence, but the clear win allows for a smooth transition. Combined with encouraging progress on the PFS re-scoping and exploration at Porvenir, we are lowering the discount to 20% from 30% on our valuation. This raises the price target to 44p or just 2.6 weeks of BHP’s spot FCF generation.
Companies: SolGold Plc
The UK market showed a continued recovery in the first quarter albeit the indices are still well short of their all-time peaks, unlike many of their international peers. The FTSE 100 has risen by 1,186 points (21.4%) since the end of October and the FTSE 250 by 4,304 points (25.0%). The comparable performance since the start of the year is less spectacular- the FTSE 100 has risen by 253 points (3.9%) and the FTSE 250 has risen by 1,070 points (5.0%). The factors behind the sustained rally are familiar. The belief that the roll-out of the vaccine and some relaxation of lockdown limitations will lead to a significant economic recovery, compared to the collapse seen in the first half of 2020, due to lockdowns. Indeed, the recent economic picture is becoming more optimistic than previous expectations. According to the ONS, the economy grew a little more than initially estimated in Q4 last year. This means GDP for 2020 as a whole contracted by 9.8%, revised up marginally but still the worst contraction on record. Markets, in general, have focused upon the potential scope and extent of the recovery. The sectors and stocks that have outperformed have been seen as ‘recovery’ plays with a rotation from stocks seen as ‘lockdown’ winners into those set to benefit from the ‘unlocking of society’ and/or exposed to the consumer. We expect 2021 will continue to be a “stock-picker’s” market. The sharp increase in the household savings ratio in Q4 highlights the scope for a recovery driven by expenditure. As further lockdown limitations are lifted, evidence of this growth will help to underpin the more optimistic outlook for Q2 and beyond.
Companies: AMYT ARBB BPC BAG BVC BEG BONH BLVN BRSD CML CWK CRPR EYE ECHO FDM FAR FA/ GPH GSF HUW INSE JDG KAPE KP2 MACF MPAC MNZS NESF NBI OTMP OBD PREM QFI RUA SCS SEN SOS SUR TON TOU TXP TGL TCN UEM VLS WYN
Anglo Asian Mining* (AAZ LN) - STRONG BUY – Quarterly production update and CY21 guidance Botswana Diamonds (BOD LN) – Moving to a further stage of drilling at Thorny River Capital Limited (CAPD LN) – Q1 2021 delivers strongest ever quarterly revenue GoldStone Resources* (GRL LN) – Update paves way for production ramp-up at Homase Kenmare Resources (KMR LN) - Q1 production rises on higher grade and production despite Covid-19 isolation for management and staff Rainbow Rare Earths* (RBW LN) – Temporary suspension of REE concentrate exports Serabi Gold* (SRB LN) –– Grade improvements drive higher Q1 gold production
Companies: CAPD AAZ BOD GRL KMR RBW SRB
Companies: ARG ADT UKOG PHAR UNG CYAN FA/ SNX VRE SHED
Diversified Gas & Oil (DGO) has announced that the Company's bank lending group has completed the semi-annual redetermination of the Company's senior secured credit facility and reaffirmed the existing US$425m borrowing base with no changes to pricing, covenants or other material terms. Despite a challenging market and a backdrop of many borrowing base reductions, DGO has once again proved the strength of its production-led long-life, low-decline business model. Elsewhere, the US Energy Information Administration (EIA), in its Short-Term Energy Outlook has forecast Henry Hub natural gas prices to average US$3.04/MMBtu for full-year 2021, a 50% increase on 2020, with gas prices forecast to further increase to US$3.11/MMBtu in 2022. We update our price target to 129p and reiterate our BUY recommendation.
Companies: Diversified Gas & Oil PLC
Arc Minerals* (ARCM LN) – Arc extends date for $5m payment from Golden Square by 120 days. Alba Mineral Resources (ALBA LN) – Structural review of Limerick Basin licence IronRidge Resources* (IRR LN) – Financial Controller appointed Power Metal Resources* (POW LN) – Drilling of potential magmatic feeder zone at the Molopo Farms Complex, Botswana Pure Gold Mining (PUR LN) – C$15m bought deal financing Tirupati Graphite (TGR LN) – Record Q1 sales support expansion of further capacities Versarien* (VRS LN) – Graphene lab makes £1.93m strategic investment in Company
Companies: PGM ALBA ARCM POW TGR VRS IRR
Report Highlights • In this report, we look at the gold royalty industry in relation to traditional gold mining companies and the commodity itself. As specialty financiers, royalty companies provide project financing to miners via various contracts, purchase third-party royalties, and even accumulate properties or property options of their own (with the intention of selling or optioning them to miners in the future for profit and/ or royalty agreements). • Outperformance vs. Gold Miners: In terms of share price performance and valuation multiples, the major gold royalty companies have largely outperformed the major precious metals miners. We believe that this is in large part due to differences in operating models and the relative strengths of the royalty model that minimize operating cost and CAPEX intensity, as well as risk and operating complexity. • Valuation Multiples Expansion and Returns to Scale: A phenomenon that has been well recognized in the mining royalty industry is the positive value accretion with scale. As royalty companies accumulate royalties and other holdings, they benefit from organic asset growth on royalties that comes at no additional cost, combined with de-risking benefits related to portfolio diversification. As a result, we have seen major royalty companies exhibit higher multiples as they grow their portfolios. • Small-Scale Gold Royalty Companies Poised for Growth: Due to the aforementioned effect, smaller royalty companies with the right equation and catalyst to drive royalty portfolio growth can see dramatic increases to their valuations. In this report, we will be examining Ely Gold Royalties Inc. (TSXV: ELY) as a benchmark example of this.
Companies: Wheaton Precious Metals Corp
Alba Mineral Resources (ALBA LN) – Waste dump sampling at the Clogau St David's mine Arkle Resources* (ARK LN) – Denial of rumours concerning a reverse takeover Castillo Copper (CCZ LN) – Historical data review highlights potential at Arya IronRidge Resources* (IRR LN) – Multiple high grade lithium intersections point to Eqoyaa resource growth potential KEFI Gold and Copper* (KEFI LN) – Phase 3 step out drilling extends Hawiah along strike and down dip Rambler Metals and Mining* (RMM LN) – Asset sales completed Vast Resources (VAST LN) – Baita Processing Manager appointment
Companies: ALBA ARK KEFI RMM VAST CCZ IRR
Jubilee operates several chrome-Platinum Group Metal (PGM) operations in South Africa and has recommissioned the copper (and cobalt circuits) at the ‘Sable' refinery in Kabwe, Zambia. Later it will construct a zinc-lead (vanadium) recovery plant at Kabwe in Zambia to process decade old tailings as part of a site clean-up. The company has a growth pipeline identified from new Raw Material projects in Zambia to supply copper units to the Sable Refinery. Jubilee also owns the Tjate PGM project in South Africa (currently on hold). The company model is to treat its own waste materials and to supplement these with 3rd party ores and wastes where possible. The past year was another year of progress, with material growth catalysts expected over the course of 2021. Jubilee has a high-margin business with cash on hand, and we see plenty of opportunities for Jubilee to capitalise on its robust business model and make further additions to its production portfolio. We see fair value at 21p/sh.
Companies: Jubilee Metals Group PLC
NFT Investments plc is an investment company that specialises in non-fungible tokens (NFT). Has applied for admission to the Access segment of the AQSE Growth Market. No funds being raised. Due 16 April. Thor Explorations (TSXV:THX) seeking a secondary listing on AIM. The Company is targeting Admission during Q2 2021. Segun Lawson, President & CEO, stated: “Thor Explorations has advanced significantly, in both project development and capitalisation since the acquisition of Segilola in 2016. This year, the Company is well positioned to achieve two major milestones with the commencement of gold production at Segilola in Nigeria and a maiden resource at Douta in Senegal, as well as continuing to progress our highly prospective Nigerian exploration portfolio on the Ilesha Schist belt.” MAST Energy Developments (MED) is to IPO on the Standard List on 14th April 2021 under the ticker MAST. The company has raised £5m giving a market capitalisation on listing of c. £23m. MED is currently a 100% subsidiary company of AIM quoted, Kibo Energy*. MED was established to acquire and develop a portfolio of flexible power plants in the UK and become a multi-asset operator in the rapidly growing Reserve Power market. PensionBee has confirmed its intention to float on the High Growth Segment of the Main Market of LSE. The online pension provider had approximately 130,000 Active Customers and £1.5bn of assets under administration, in each case as at 28 February 2021. The Offer will comprise new Shares raising gross proceeds of approximately £55m and existing Shares to be sold by certain existing small minority shareholders of up to £5m. None of the founders, directors or members of senior management of PensionBee are selling any existing Shares. Expected in April. Imperial X (AQSE:IMPP) to join the Main Market (standard). It is also proposed that on Admission to the Official List, the Company will change its name to Cloudbreak Discovery Plc. With effect from Admission, Imperial X will hold equity positions and royalties in a variety of projects in the natural resources sector across multiple jurisdictions, primarily in the Americas and Africa. The Company is proposing to raise up to £1.5m by way of placing of new Ordinary Shares to support further prospect acquisitions. Current Mkt cap £4.7m Expected April 2021. Proposed move to AIM from the main market (standard) by Emmerson (EML.L) to provide Emmerson with access to a market and environment which is more suited, in the Board's view, to the Company's current size and strategy ahead of pivotal period for the Company with the commencement of mine construction at the Khemisset Potash Project expected by end of 2021. Follows recent award of Mining Licence granting Emmerson exclusive right to develop and mine the potash deposit and £5.5m raise to fund ongoing project development work. 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. 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.
Companies: RCN NCCL PRIM ORR AVCT TLY RENX CMCL ARO
