Panoro Energy ASA (PEN:OSE; 1PZ:FRA) added 7,600,000 barrels of oil (7.6 MMbbl) to its Proven and Probable (2P) reserves in 2024, a "much larger than expected" increase, reported Auctus Advisors Analyst Stephane Foucaud in an April 23 research note. Auctus raised its target price on the oil and gas explorer-developer to account for the new reserves.
111% Return Potential
The London, England-based energy company's new target price on Panoro is NOK49 per share, up from NOK47, noted Foucaud. Given Panoro is trading now at about NOK23.20 per share, the potential return for investors is 111%.
The analyst pointed out that the company's 2025 cash distribution yield this year is expected to surpass 14%.
Reserves Up 22% YOY
Panoro's net working interest 2P reserves at year-end 2024 (2024E) were 42,270,000 barrels of oil (42.27 MMbbl), up 22% year over year from 34.67 MMbbl, reported Foucaud. This addition also is higher than Auctus Advisors' estimate of 34.5 MMbbl that even included a 4 MMbbl addition in H1/24 to offset production last year. In 2024, Panoro achieved an organic reserve replacement ratio of 309%.
Two factors led to the company's added reserves beat. One was robust reservoir performance in Gabon, specifically working interest 2P reserves of 20.75 MMbbl at 2024E, compared to Auctus' 16.5 MMbbl forecast. Gabon outperformed due to improved recovery per well and lower decline rates.
The other contributor was the conversion of contingent resources to 2P reserves in Equatorial Guinea, where 2024E working interest 2P reserves totaled 16.3 MMbbl. Auctus' estimate, in comparison, was 10.1 MMbbl.
"We assume the drilling of infill wells in Equatorial Guinea from 2027 forward also will offset decline between 2027 and 2029," noted Foucaud.
Possible Production Hub
Containing an estimated roughly 4.4 MMbbl of recoverable resources net to Panoro's 17.5% working interest, Bourbon is set to be an anchor development for a new production hub, purported Foucaud. It would encompass four initial development wells and dedicated infrastructure.
Capex for a project of this size is about US$250–300 million, the analyst noted. Bourdon's development cost will be part of the overall license cost, and thus immediately recoverable via cash flow from current production.
Auctus lowered its estimate of recoverable volume at Bourdon to 4.4 MMbbl from 5.1 MMbbl but raised its forecasted chance of development there to 100% from 75%. The equity capital markets and advisory firm also lowered its Brent price assumptions for the period of Q2/25 to Q4/25 to US$66.70 per barrel (US$66.70/bbl) from US$73.30/bbl.
Update on Dussafu
In 2026 Panoro is expected to carry out exploration drilling at Dussafu and, to sustain the current production level, drill new development wells, all at Hibiscus. As such, development likely will not commence before 2027E.
"With Dussafu's high prospectivity, any new discovery in the area could add significant incremental value by leveraging Bourdon's future infrastructure, mirroring the approach taken with Tortue, Hibiscus and Ruche," wrote Foucaud.
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