Q3 earnings hit by non-recurring items

Q3: EBITDA USD 98m vs. Arctic at USD 109m and cons of USD 115m Impacted by non-recurring events on Sendje Berge and Yùum K’ak’ Náab Expects one FPSO FID in 2021 with +15% ROE and ~15years contract Despite the miss, the credit remains solid with adj. leverage of 2.1x

Deep value – 3years FCF equals m.cap

BWO is now running at an annual FCF of NOK 12-13 per share as it monetizes its USD 4.4bn order backlog. Moreover, BW Energy (owned 38.8%) is up 100% from trough and is currently valued at NOK 10 per BWO share. If however BW Energy moves towards our target, the 38.8% stake is valued at NOK 21 per BWO share. With an EBITDA coverage of 100%, 98% and 89% in 2020-22 and FCF 1.0x current m.cap over the same period, we rate the share Buy.

Continues its deleveraging

Q2: EBITDA USD 116m vs. Arctic at USD 120m and cons of USD 122m Impressive uptime of 99.4% despite several virus outbreaks NIBD/EBITDA now stands at 1.6x when adjusting for BW Energy Credit positive report and we find the bonds attractive vs peers

Q2: Solid – NOK 4/share in FCF

Q2: EBITDA USD 116m vs. Arctic at USD 120m and cons of USD 122m EBIT of USD 53m and net income of USD 30m – above consensus FCF per share after interest and lease USD 80m or NOK 4 per share Running at +NOK 16 in FCF per year – almost 50% of share price

BW Energy starting to become material

BWO delivered another strong quarter with EBITDA of USD 130m - 5% above consensus. Moreover, BW Energy (owned 38.8%) is up 70% from trough and is currently valued at NOK 9 per BWO share. If however BW Energy moves towards our target, the 38.8% ownership stake is valued at 21 per BWO share. We reiterate Buy and believe EV/EBITDA at ~3.0x, P/E at ~6.0x and FCF yield at ~35% is attractive. EPS estimates for 2021 and onwards are up following lower D&A.

Solid – FCF to improve as capex is reduced

EBITDA at USD 130m vs. consensus at USD 125 (5% above) Net profit impacted by USD 233m impairment related to idle FPSOs Q1 FCF of USD 87m (NOK 5 per share) is very solid USD 30m in remaining capex for 2020 (guidance) – FCF NOK 18/share

In a unique position

BWO is one of few companies where estimate risk following Covid-19 and the oil price drop is very low. The company has only two units that could be idle over the next 12 months which imply a EBITDA coverage in 2020-2022 of 100%, 95% and 83%. With USD 418m in liquidity and a FCF per year above current market cap, BWO has never been in a better financial position. We maintain Buy with a target price of NOK 55.

AXA, VAL, BWO, HLNG, DNO, SHLFDI, ++

AXA: Board rejects public offer of NOK 22/share Valaris: Amending the notes issued by Rowan BWO: PetroRio buys Tubarano Marelo oil field Höegh LNG: Cancellation and partial call of bonds LNG: Spot and TC dropping further Dry bulk: Baltic down for 12th straight session DNO: calls EGM to cancel treasury shares Shelf Drilling x-read: Foresight emerge as the lowest bidder in India Maha: January production volumes YA Holding receives SEK 10m capital injection

GMP FirstEnergy ― UK Energy morning research package

President Energy (PPC LN) (not covered): Update in Argentina | Jadestone Energy (JSE LN); HOLD, £0.60: Update in Australia | Ophir Energy (OPHR LN): Discontinuing Coverage | Soco International (SIA LN) (not covered): Operation update | EnQuest (ENQ LN); HOLD, £0.25: 1Q19 update | Panoro Energy (PEN NO) (not covered): 1Q19 results | Tethys Oil (TETY SS)1,6; BUY, SEK85: To repurchase shares | BW Offshore to spin off E&P business | Tullow Oil (TLW LN); REDUCE, £2.00: Acquisition in Nambia

GMP FirstEnergy ― UK Energy morning research package

BW Offshore (BWO NO) (not covered): Acquisition offshore Brazil | Eco (Atlantic) Oil & Gas (ECO LN/EOG CN) (not covered): Resources update in Guyana | Range Resources (RRL LN/RRS AU) (not covered): Restructuring and acquisition of education business

NextSource Materials - Initiation

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

Falcon Oil & Gas - Funding a Multi TCF Resource

Falcon has raised gross proceeds of US$8.9m via a placing and subscription at a price of 6p/share and the granting of overriding royalty interests. The net proceeds, together with Falcon’s existing cash resources (cUS$4.3m) will be used to fund Falcon’s net share of 2024 capex (cUS$9m) associated with the 40MMscf/d Shenandoah South Pilot Project, including the drilling, stimulation, and flow testing of two 10,000ft horizontal wells. The funds will also enable Falcon to fund its share of the cost

Initiation of Coverage - Critical raw materials for Europe’s green transition

Beowulf is advancing a portfolio of projects in Europe focussed on metals and minerals that are critical to enabling the continent’s transition to a greener economy. Awareness of Europe’s over-reliance on external supply sources for such vital raw materials is driving growing political support for ‘home-grown’ projects. Beowulf is strategically positioned to leverage this fast-evolving trend – its Kallak project in Sweden holds potential to deliver high-quality iron ore to lower the carbon-inten

i3 Energy - 2024 Guidance: Consolidation for Growth

i3 Energy announced that its 2024 guidance consists of expectations to drill 10.5 net wells (7.6 net wells in Central Alberta, 1.9 net wells in Simonette and 1.0 net wells in the Clearwater play) with 85% of capex allocated to the second half of the year. Total capex expenditure for the year is guided at $US 50.9m. The company indicated that it intends to commence pad drilling of its Montney acreage in Q1 2025 and we perceive the company is bulking up for that significant growth opportunity for

Morning Note – 22 April 2024

Trifast (TRI LN) - Trading conditions remain difficult but self-help initiatives coming through

Despite end market demand remaining difficult in several regions Trifast has announced that revenue and profitability will be marginally ahead of the guidance provided at the end of January. Self-help initiatives instigated during 2023 are starting to come through providing visibility on the majority of the £3.0m savings identified to come through in the current financial year (Mar FY25). Zeus estimates were in line with guidance of £230m revenue, £11.5m EBIT and £6.0m PBT. We leave forecasts un

Morning Note – 24 April 2024

Beowulf Mining (BEM LN) – Initiation Note – BUY – Supporting Scandinavia's Green Transition

Beowulf is an AIM/Spotlight-listed developer of two flagship assets; Kallak, a high-grade iron ore project in Sweden and the Grafintec Graphite Anode Materials Plant. The Company's Kallak North project has the potential to produce 2.5mtpa of high-grade, premium iron ore concentrate suitable for the growing green steel industry in Sweden. Additionally, Grafintec's Anode Material Plant Project is well positioned to serve the growing EV battery supply chain in Europe, whilst supporting EU plans

I3 Energy (I3E LN) - 2024 work programme and budget

I3 has released its work programme and budget for 2024, alongside providing guidance for the year. This represents a larger programme than 2023, with the focus now shifting to greater operational activity and production gains given the additional balance sheet strength achieved in recent months.

Morning Note – 25 April 2024

Sintana Energy Inc. (TSX-V: SEI): Constrained test rate of 14 mboe/d at Mopane-1X. 10+ bn boe in place confirmed.

• Multiple tests over multiple zones in multiple horizons were run at the Mopane-1X exploration well. The flows achieved during the well test reached the maximum allowed limits of 14 mboe/d. The flow rate was constrained by the size of the available surface facilities. • The AVO-1 horizon encountered at Mopane-1X and Mopane-2X are in the same pressure regime, suggesting that the entire area (8 km diameter) between the two wells is connected. Overall, in the Mopane complex alone, and before dril

Touchstone Exploration+ (TXP, House Stock at 44p) - Closing of expanded bank facilities

Jubilee Metals - Operational Update Q3 FY2024

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

LIBERUM: Ferrexpo: Production triples

SP Angel Morning View: Gold prices slide following profit taking as traders look to US data