PANORO ENERGY ASA (OSE:PEN) is expected to close on a deal to acquire an additional 40% interest in shares it does not currently own of its Tunisia Production Sharing contract that governs the partnership between Panoro and its joint venture partners in Tunisia.
This purchase will increase Panoro’s interest in the venture to 49%, while raising its stake in the Sfax Offshore Exploration Permit (SOEP) to 87.5%. This transaction will add 2.96M barrels of net 2P oil reserves and 800-900 barrels of oil to the company’s daily net production, raising Ponoro’s daily production level to over 10,000 barrels per day in 2023.
Stephane Foucaud of Auctus Advisors stated in a research report released on April 18, 2023 that Auctus is raising their target price for the company due to the news. “We are increasing our target price from NOK48 per share to NOK50 per share as we incorporate the impact of the acquisition. The shares continue to offer a combination of value, growth and dividend distribution,” Foucaud wrote, noting the valuation in Norwegian Kroner.
Review of Results
Foucaud presented the key points of Panoro’s latest reports.
Panoro will be paying an upfront cost of US$13.2M for the acquisition, including US$8.3M in company shares. These shares will be subject to lock-up periods, with half being locked up for 6 months after issue date and the remaining half locked up for 12 months after issue date. The company will also be paying an additional US$5M by the end of 2023.
Panoro will be taking on some debt in this deal, around US$4M in loan debt, but is expected to easily clear this amount by the end of Q4 2023 due to the assets it will gain.
Foucaud writes that, “We now forecast that Panoro will generate ~US$250 mm free cash flow in aggregate over 2023-2024,” if the Brent oil prices remain at US$85/bbl throughout the year. Even if the prices drop, she notes, the company can still expect to clear over US$210M.
Potential Risks
Acutus has not reported any potential risks with this merger and considers the stock to be a generally good investment.
Structure and Predictions
Foucaud’s research report shares recent target price information as well as current market data on the company:
- Price Target: NOK50
- Market Cap ($M): US$333
Panoro has 115M fully diluted shares outstanding. The company's cash reserves are CA$2.5M.
