Panoro Energy ASA's (PEN:OSE; 1PZ:FRA) net production in the Southern Gabon basin in Q2/23 met expectations and is expected to keep growing, reported Auctus Advisors analyst Stephane Foucaud in an Aug. 3 research note.
Compelling Return on Investment
Auctus reiterated its target price of NOK50 per share on the Norway-based energy company, currently trading at about NOK29.80 per share, Foucaud noted.
The return to target from the current price is an attractive 64%.
Gabon Gets Boost
The highlight of Panoro's Q2/23 production was Gabon, wrote Foucaud. The company's working interest share of Q2/23 Gabon production was 2,660 barrels per day (2.66 Mbbl/d) and was in line with expectations. The third Hibiscus Ruche well that Panoro put online during the quarter bumped working interest production up to 5.2 Mbbl/d. Gross production during Q2/23 was 30 Mbbl/d.
"Overall corporate working interest production has already reached levels of up to 11,000 barrels of oil equivalent per day (11 Mboe/d)," Foucaud reported. This encompassed production from Gabon, Equatorial Guinea, and Tunisia.
FY23 Guidance Updated
Average Q2/23 working interest production, however, was a miss, coming in at 8.093 Mboe/d versus Auctus' forecast of 9.055 Mboe/d.
Given this underperformance and the delayed restart of the oil and gas lift compressor at the Gabon oilfield, Panoro narrowed its full-year 2023 production guidance range to 9.5–10.5 Mboe/d from 9.5–11.5 Mboe/d.
Forecasts for Equatorial Guinea
Panoro experienced some "uptime issues" at its Equatorial Guinea asset during Q2/23, Foucaud reported. Consequently, Auctus reduced its working interest production estimate for the next two quarters, H2/23, by 1 Mbbl/d. It is now 3.8 Mbbl/d.
One well is expected to come online there in mid-Q1/24, followed by two more in Q2/24, all at Akeng Deep.
"When three new wells are onstream, we forecast about 5.4 Mbbl/d working interest production from H2/24 (38 Mbbl/d gross)," Foucaud wrote.
Heavy on Exploration
Looking to next year, Foucaud pointed out, Panoro's work plan for it will likely be exploration heavy given that phase one development at Hibiscus Ruche in Gabon is nearly done.
Along with the trio in Equatorial Guinea, Panoro is expected to drill one to two exploration wells in Gabon.
More Growth anticipated
At the end of the campaign, Foucaud purported, with six Hibiscus Ruche wells online (only three are on production now), the company will be "on track to reach [a] gross production plateau of about 40 Mbbl/d (7 Mbbl/d net to Panoro working interest) in Gabon and overall working interest corporate production of 13 Mbbl/d."
Cash Flow Expectations
Auctus forecasts Panoro could generate US$200 million (US$200M) in aggregate free cash flow in H2/23 and in 2024, assuming it does not spend any capital on exploration and assuming a Brent oil price at US$85 per barrel, noted Foucaud. This amount, US$200M, represents more than 50% of the explorer-developer's current market cap.
Assuming capex in 2024 is about the amount spent in 2023, the resulting free cash flow for Panoro will be about US$160M.
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- Doresa Banning ote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
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Disclosures for Auctus Advisors, Panoro Energy ASA, August 3, 2023
Panoro Energy ASA (“Panoro” or the “Company”) is a corporate client of Auctus Advisors LLP (“Auctus”). Auctus receives, and has received in the past 12 months, compensation for providing corporate broking and/or investment banking services to the Company, including the publication and dissemination of marketing material from time to time.
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Author The research analyst who prepared this research report was Stephane Foucaud, a partner of Auctus.
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Note prepared in good faith and in reliance on publicly available information Comments made in this note have been arrived at in good faith and are based, at least in part, on current public information that Auctus considers reliable, but which it does not represent to be accurate or complete, and it should not be relied on as such. The information, opinions, forecasts and estimates contained in this document are current as of the date of this document and are subject to change without prior notification. No representation or warranty either actual or implied is made as to the accuracy, precision, completeness or correctness of the statements, opinions and judgements contained in this document.
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