Latest Content

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.

  • 29 May 20
  • -
  • -
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.

  • 19 May 20
  • -
  • -
 

Auctus Advisors Research and Daily Commentaries

Research Tree offers Auctus Advisors research, providing ongoing coverage of 88 shares. We offer 22 reports from Auctus Advisors on Research Tree.

  • Research reports provided by Auctus Advisors

  • Companies covered by Auctus Advisors

  • Sectors covered by Auctus Advisors