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Auctus on Friday -13/11/2020

GeoPark (GPRK US)C; Target price of US$20.00: Drilling success at first well in CPO-5 campaign - The Indico 2 appraisal well encountered 161 feet of net pay and flowed ~ 5,500 bbl/d of 35.2 degrees API light oil, with a 0.1% water cut. This appears to be a relatively low risk appraisal well. The well pays back in less than three months. The Indico 2 well could add imminently 1.5 mbbl/d net production to GeoPark’s ~40 mbbl/d (as of the end of 3Q20), which bodes well for the FY21 production guidance of 40-42 mboe/d. GeoPark expects to spud a well at the Aguila prospect by the end of November. GeoPark will then drill 5-6 wells (including 3-4 exploration wells) at CPO 5 in 1H21. Upon success and depending on oil prices, GeoPark could potentially drill additional development, appraisal or exploration wells at CPO-5 during 2H21. Even after the recent share price appreciation, the shares trade at ~50% discount to our Core NAV and ~25% discount to our 2P NAV of ~US$11 per share. Our unrisked NAV for the 2021 drilling programme is ~US$9.00 per share (mostly associated with Colombia), which represents over 100% of the current share price. Tethys Oil (TETY SS)C; Target price of SEK75.00: Farming out exploration asset in Oman – Tethys is farming out 50% WI in Block 49 to EOG Resources. EOG will also have the option to assume operatorship of the Block and increase its interest to 85% for any operation relating to unconventional hydrocarbon resources. In return EOG will refund all costs incurred on the Block and fund the Thameen-1 exploration well, up to a combined amount of US$15 mm. The parties will retain 50% each of any operations relating to conventional hydrocarbon resources. We view this transaction as an endorsement of the quality of Tethys Oil’s asset. The Thameen prospect is expected to be spudded in December. IN OTHER NEWS ________________________________________ AMERICAS 88 Energy (88E LN): Resources update in Alaska – Total Prospective Resources of 1.77 bn boe have been estimated at the Ice Wine project. The Seabee formation is estimated to hold 1.4 bn bbl. Alvopetro Energy (ALV CN): Update in Brazil – Gas sales at the Caburé Project was 10.8 mmcf/d (plus 84 bbl/d of condensates) in October. The company held US$2.2 mm in working capital surplus at the end of September. Touchstone Exploration (TXP LN/CN): 3Q20 results – 3Q20 production in Trinidad was 1,310 bbl/d. The company had net debt of US$14.1 mm at the end of September. Drilling operations are ongoing at the Cascadura Deep-1 prospect. EUROPE Aker BP (AKERBP NO): Minor discovery in Norway – Exploration well 6607/12-4 on the PL 127 C licence encountered 3-6 mmboe (recoverable) at the Jurassic/Triassic primary target and 6-18 mmboe at the secondary Lower Cretaceous target. ConocoPhillips (COP US): Discovery in Norway – Wildcat well 6507/4-1 on licence PL 1009 has encountered 55 180 mmboe of recoverable resources in the Lange Formation (primary target), with moderate but uncertain reservoir quality. The gas/water contact was not encountered. Premier Oil (PMO LN) and Chrysaor: Operational update – Premier production from January to the end of October was 62.5 mboe/d with FY20 production guidance reduced from 65-70 mboe/d to 61-64 mboe/d on restrictions at Catcher. FY20 capex guidance is now US$325 mm (US$340 mm previously). Net debt at the end of October was US$2.05bn (up from US$1.97 bn at the end of June). Summer maintenance work at Catcher took longer than expected and production had to be shut down in early November due to a fire. Production is expected to restart next week. First gas at Tolmount remains on track for 2Q21. Chrysaor’s production averaged 175 mboe/d to the end of October. Chrysaor’s FY20 forecast remains unchanged at 170-180 mboe/d. The merger transaction between Premier and Chrysaor is expected to complete in 1Q21. Serinus Energy (SENX LN): 3Q20 results – Production over January to September was 2,415 boe/d including 1,841 boe/d in Romania and the balance in Tunisia. The production exit rate the end of September was 2,211 boe/d including 1,730 boe/d in Romania. The duration of the Satu Mare licence in Romania has been extended by one year until October 2021 with a commitment to drill two new wells. Serinus carried a working capital deficit of US$22.3 mm (including US$15.6 mm due to the EBRD) at the end of September. Valeura Energy 9VLE CN/VLU LN) : 3Q20 update – 3Q20 production in Turkey was 615 boe/d. The company held US$32.2 mm in working capital at the end of September. The company continues to evaluate inorganic opportunities, spanning Eastern Europe and the greater Mediterranean region. Valeura will only consider assets that would add both cash flow in the near term and opportunities for significant follow-on organic growth in the medium term. FORMER SOVIET UNION Zenith Energy (ZEN LN: Exiting Azerbaijan – The Contract Exploration Area of the 25-year Rehabilitation, Exploration, Development and Production Sharing Agreement has been terminated. MIDDLE EAST AND NORTH AFRICA Energean Oil & Gas (ENOG LN): Resources update in Israel – Gross 2P reserves at the Karish, Karish North and Tanin fields have been estimated at 3.5 tcf and 99.6 mmbbl of liquids. Approximately 241 mmboe of gross 2C resources associated with Karish North have been upgraded into the 2P category following approval of the Field Development Plan by the Israeli government. Liquids production from the fields is now expected to average 28 mbbl/d over a plateau period of approximately five years. Gross best estimate risked prospective resources across the Karish and Tanin leases and Block 12 are estimated at 2.2 tcf of gas plus 33.4 mmbbl of liquids. The Geological Probability of Success of these prospective resources ranges from approximately 15% to 79%. SUB-SAHARAN AFRICA Africa Energy (AEC SS, AFE CN): 3Q20 update in South Africa - The Gazania-1 exploration well on Block 2B is now expected to spud in 2Q21. At September 30, 2020, the Company had cash of US$39.1 mm and no debt. FAR Limited (FAR AU): Selling Senegal – FAR is selling its 13.67% stake in the Sangomar project offshore Senegal to ONGC for US$45 mm in cash. In addition ONGC will repay US$66 mm in working capital. There is also a contingent payment of up to US$55 mm if the oil price increases above US$58/bbl. Kosmos Energy (KOS US/LN): 3Q20 results – 3Q20 net production in Africa and the USA was 56,700 boe/d. FY20 production is expected to be 61,000 - 62,000 boe/d (62,000-70,000 boe/d previously) with US$140-150 mm capex. Net debt at the end of September was US$2.1 bn. Gross production rates at Jubilee averaged ~87,700 bbl/d during the quarter with FPSO uptime of around 98%. TEN production averaged ~49,600 bbl/d gross in 3Q20 with FPSO uptime of 98%. Production in Equatorial Guinea averaged ~33,000 bbl/dd gross. Victoria Oil & Gas (VOG LN): Positive update in Cameroon – The litigation with CHL regarding the payment of a royalty has been settled. Overall, Victoria will have to pay CHL a total of US$12.5 mm at a monthly rate of US$0.09 to US$0.1 mm. The fish that prevented production at the La-1089 well has now been removed. Following the perforation of two sand intervals in the Upper Logbaba formation, the well flowed 19 mmcf/d on test. The company believes that the full potential of the well is likely to exceed the capacity of the plant, which is 20 mmcf/d. EVENTS TO WATCH NEXT WEEK ________________________________________ 17/11/2020: Nostrum Oil & Gas (NOG LN) - 3Q20 results 18/11/2020: BWE Energy (BWE LN) - 3Q20 results 19/11/2020: SDX Energy (SDX LN) - Capital Markets Day


  • 13 Nov 20
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