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DNO GENL PEN TXP TLW
Auctus on Friday

Panoro Energy (PEN NO)C; NOK20.00 Target Price: Foot on the accelerator in Tunisia AMERICAS Diversified Gas & Oil (DGOC LN): Completing US acquisitions | Maha Energy (MAHA-A SS): 1Q20 results, reducing production guidance | Touchstone Exploration (TXP LN)C: New debt facility ASIA AND AUSTRALASIA China discovery estimated to hold 730+ mmbbl | Empyrean Energy (EME LN): Resources update in Indonesia | Jadestone Energy (JSE LN): 1Q20 results EUROPE Reabold Resources (RBD LN): Acquisition of further interests in West Newton in the UK | Neptune Energy: 1Q20 results | OKEA Energy (OKEA NO): Update in Norway MIDDLE EAST AND NORTH AFRICA DNO ASA (DNO NO): FY20 guidance | Genel Energy (GENL LN): Production update at Tawke in Kurdistan | ShaMaran Petroleum (SNM CN): Payment from Kurdistan SUB-SAHARAN AFRICA Orca Exploration (ORC.A/B CN): 1Q20 results – Gas deliveries in Tanzania were 56.3 mmf/d over the period. As at March 31 the Company held US$82.9 mm in working capital | Tullow Oil (TLW LN): No pre-emption by CNOOC in Uganda

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  • 29 May 20
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PANORO ENERGY
Panoro Energy ASA (PEN NO): Foot on the accelerator in Tunisia

• There were no surprises in the 1Q20 financials. • Panoro now produces 4,000 bbl/d (gross in Tunisia) and with the reopening of the country, work-over operations have restarted and production remains expected to reach 5,000 bbl/d very shortly. • Additional side-tracks have the potential to add a further 500 bbl/d. • The Salloum West 1 appraisal well is expected to be drilled in 4Q20. • Production in Gabon is stable and with the hooking-up of the DTM-6H and DTM-7H wells, BW Energy (the operator) expects gross production to increase from 16 mbbl/d in 2020 to 21 mbbl/d in 2021 with the next phase of development taking gross production to 34 mbbl/d in 2023 and 39 mbbl/d in 2024 (Panoro WI: 7.5%). • The overall offtake environment is returning to normal with the discount between physical prices and futures prices closing. Firepower and flexibility Panoro currently holds US$24 mm of cash (including ~US$10 mm of restricted cash). We forecast that even after the drilling of Salloum West and the repayment of debt obligations, the company will still hold ~US$14 mm of cash at YE20. The drilling programme in Tunisia can be accelerated or slowed down according to macro conditions. One of the few E&P names still with near term upside While the industry is eliminating exploration activities from its capex programme, Panoro is one of the few names that continues to offer near term exploration upside. Following the Salloum West appraisal well (Unrisked NAV of over NOK3.00 per share) in 2H20, a very high impact exploration well could be drilled in South Africa (Unrisked NAV of NOK15.00 per share). Our target price of NOK20.00 per share (based on our ReNAV) offers over 100% upside.

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  • 29 May 20
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88E AOI ECHO ENOG ENQ EQNR HUR LUPE SDX TLW
Auctus on Friday

88 Energy (88E LN/AU): Update in Alaska | Echo Energy (ECHO LN): Operation update in Argentina | Subsidies to the oil industry in Argentina | Energean Oil & Gas (ENOG LN): Neptune Energy not acquiring Edison UK and Norway | EnQuest (ENQ LN): 1Q20 update | Equinor (EQNR NO): Dry hole in Norway | Hurricane Energy (HUR LN): Problem with a well at Lancaster in the UK, FY20 production will be “substantially” lower than expected | Lundin Energy (LUP SS): Reduced FY20 production on guidance of Norwegian government curtailment |SDX Energy (SDX LN): 1Q20 results | Total (FP FP): Not buying Ghana from Occidental Petroleum

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  • 22 May 20
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AKERBP AOI CNE CNE DGOC EGY ENOG ENQ GENL GKP GPRK GTE HUR IOG JSE KOS LUPE MAHAA OKEA ORC.B PEN PHAR PMO PTAL PXT RRE SDX SEPL TETY TGL TLW TXP WRL
DEEP DIVE INTO E&P INDEBTEDNESS

In this note, we analyze the indebtedness of 35 international E&Ps publicly listed in the UK, Canada, Norway, Sweden and the USA. For each company, we look at (1) cash position, (2) level and nature of debt (including covenants), (3) debt service and principal repayment framework and (4) Brent price required from April to YE20 to meet all the obligations and keep cash positions intact. We also estimate YE20 cash if Brent were to average US$20/bbl from April to YE20. While the oil demand and oil price collapse are of unprecedented historical proportions and the opportunities to cut costs much more limited than in 2014, most companies (with a few exceptions) entered the crisis in much better position than six years ago, with stronger balance sheets and often already extended debt maturities. In addition, this time around, many E&Ps have already been deleveraging for 1-2 years and are not caught in the middle of large developments that cannot be halted. The previous crisis also showed that debt providers could relax debt covenants for a certain period as long as interest and principal repayment obligations were met. This implies that as long as operations are not interrupted and counterparties keep paying their bills (Kurdistan), the storm can be weathered by most for a few quarters. With (1) Brent price of about US$50/bbl in 1Q20, (2) reduced capex programmes, (3) material hedging programmes covering a large proportion of FY20 production at higher prices and (4) limited principal repayments in 2020, we find that most companies can meet all their costs and obligations in 2020 at Brent prices below US$40/bbl and often below US$35/bbl) from April until YE20 and keep their cash intact, allowing them to remain solvent at much lower prices for some time. In particular, Maha Energy and SDX Energy are cash neutral at about US$20/bbl. When factoring the divestment of Uganda, Tullow needs only US$9/bbl to maintain its YE20 cash equal to YE19. Canacol Energy, Diversified Gas and Oil, Independent Oil & Gas, Orca Exploration, Serica Energy and Wentworth Resources are gas stories not really exposed to oil prices and Africa Oil has hedged 95% of its FY20 production at over US$65/bbl.

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  • 19 May 20
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KOS GPRK DGOC GTE PXT TRIN TXP CPI PMO SENX VLU CASP GENL PHAR SNM TGL AOI EGY KOS
Auctus on Friday

GeoPark (GPRK US)C; Target: US$20 - Delivering more with less | Diversified Gas and Oil (DGOC LN): Acquisition in the US and US$87 mm equity raise | Gran Tierra Energy (GTE LN/CN): 1Q20 results| Parex Resources (PXT CN): 1Q20 results | Trinity Exploration and Production (TRIN LN): FY19 results | Touchstone Exploration (TXP LN/CN): 1Q20 results | Condor Petroleum (CPI CN): 1Q20 results | Premier Oil (PMO LN): 1Q20 update and FY20 production guidance reduction | Serinus Energy (SEN LN): 1Q20 update | Valeura Energy (VLU LN/VLE CN): 1Q20 results |Caspian Sunrise (CASP LN): Production update in Kazakhstan | Genel Energy (GENL LN): 1Q20 update | Pharos Energy (PHAR LN): 1Q20 results | ShaMaran Petroleum (SNM CN/SS): 1Q20 update in Kurdistan | TransGlobe Energy (TGL LN/CN): 1Q20 results | Africa Oil (AOI SS/CN): 1Q20 results | Vaalco Energy (EGY LN/US): 1Q20 results | Kosmos Energy (KOS LN/US): 1Q20 results

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  • 15 May 20
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Geopark
GeoPark Limited (GPRK US): Delivering more with less

As oil prices dropped to close to US$20/bbl, GeoPark has shut down 6.5-7.5 mboe/d of unprofitable production. At US$30/bbl, this production is expected to come back in July. While FY20 production guidance at US$25-30/bbl for Brent has been trimmed by 5-10% to 39 42 mboe/d, this is more than offset by a combination of much lower running costs and a reduced FY20 capex guidance. Overall, the company’s latest guidance suggests a US$25-40 mm improvement in free cash flow in 2020 at these low oil prices compared to previous expectations. In addition, G&A and G&G expenses are reduced by 35% 40% from previous guidance to US$50 mm. With US$165 mm in cash and access to over US$200 mm of undrawn facilities, the fundamentals of the company remain very strong in our view. The opex reductions (-50% at Platanillo, -25% at Llanos 34, -50% in Chile and -40% in Argentina) are mostly structural and would survive a rebound in oil price. This results in increased value for the producing assets. Overall, our Core NAV is increased from ~US$16 per share to almost US$18 per share, representing 2.5x the current share price. GeoPark’s portfolio has not changed and exploration in Putumayo and Ecuador will inevitably restart when oil price recovers. Our target price of US$20 per share reflects our ReNAV and represents 3x the current share price.

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  • 15 May 20
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