E&P
Panoro divests Aje to PetroNor, implies better alignment of interest in license
21 October, 2019
Teodor Sveen-NilsenPhone : (+47) 24 13 36 06 Mobile : (+47) 95 74 36 26E-mail : [email protected]
SpareBank1 Markets acted as bookrunner and joint lead manager in connection with Panoro Energy’s Q3 and Q4 2018 Private Placements
Panoro has agreed to divest its 12% share in the Aje field to PetroNor at a consideration of USD 10m, plus a contingent payment. In addition, PetroNorwill enter a deal with Aje operator YFP to create a new holding company that in our view better will align interest in the license. On the back of ourbase case Aje valuation, which obvious was on the conservative side, the deal is made at close to EV/GAV 1.9x. We increase our Panoro target price toNOK 26 (from 24). For PetroNor we see 5% lower NAV. However, we acknowledge that there is a clear upside in relation to better aligned incentives inthe Aje partnership and gas project upside. Until we derisk any of the Aje resource upside potential, we keep Neutral and NOK 1.4/share target price forPetroNor.
• Panoro divest Aje to PetroNor: Panoro (Buy, tp NOK 24/share) has agreed to divest its 12% economic interest stake in the Aje field in Nigeria toPetroNor (Neutral, tp NOK 1.4). The consideration is USD 10m paid in PetroNor shares at closing, plus a contingent consideration of up to USD 25mbased on future Aje gas production volumes. PetroNor has the option to pay some of the consideration in cash if the share price is USD 0.13/share at thetime of closing. Last close was USD 0.11, based on NOK 1.0296/share and USD/NOK of 9.128. In addition, PetroNor will enter a deal with Aje operatorYFP to create a new holding company that will see PetroNor assume the lead technical and management role to develop the next phases of the project.that will see PetroNor assume the lead technical and management role to develop the next phases of the project.
• Implications for Panoro: For Panoro, the deal represents an exit from an asset that the partnership has struggled with operationally, in particular thequarters after first oil. On the basis of operational challenges and uncertain upside with the Aje gas project (partially due to the partnership group), wehave included Aje in our SOTP valuation at USD 5.3m (unrisked: USD 32m), implying EV/GAV of close to 1.9x. I.e., the deal is NAV accretive on ourestimates. We increase our SOTP valuation by NOK 0.6/share (3%). In addition, we adjusted our USD/NOK assumption to 9.1 (from 8.5), which increasesour SOTP valuation by a further 7%. In total, our SOTP valuation is up 10%. We increase our target price to NOK 26/share, up from NOK 24/share. Wesee further upside potential if the gas development triggers any contingent payment (up to USD 25m or NOK 3.8/share nominal value). On ourestimates, Panoro will hold around 8% of the post deal shares in PetroNor.
• Implications for PetroNor: For PetroNor, the deal is an important step for building a West African growth story. However, in our view, the most positiveaspect with the deal is a better alignment of interest in the partner group in the Aje licence. The deal is fully in line with the company’s strategy of statedgrowth strategy of acquiring assets that add production and material reserves and resources. If we include Aje at the similar valuation as we have usedfor Panoro and include ~89m news hares, our PetroNor SOTP valuation falls by 5%. That includes and adjustment of USD/NOK assumption to 9.1.However, we acknowledge that there is an obvious upside in relation to better aligned incentives in the partnership and gas project upside. We keepNeutral and NOK 1.4/share target price.
2
E&P
Panoro divests Aje to PetroNor, implies better alignment of interest in license
3
Panoro SOTP valuation & changes after Aje deal
Changes: Aje removed, share in PetroNor includes, FX adjstuedAsset Licence Operator Counrty Stake Net
mboe
USD/boe Unrisked
USDm
Prob. Risked
NOKm
Risked
NOK/sh
Old Change
Production
Tortue Dussafu EEA BWE Gabon 7.5% 3.8 14.4 54 100% 495 8.2 7.6 7%
Cercina & Cercina Sud (offshore) TPS TPS Tunisia 29% 2.6 11.4 30 100% 273 4.5 4.2 7%
Rhemoura (onshore) TPS TPS Tunisia 29% 0.2 15.6 3 100% 30 0.5 0.5 7%
Guebiba, El Hajeb (onshore) TPS TPS Tunisia 29% 1.9 14.7 28 100% 253 4.2 3.9 7%
Sum production 8.5 13.5 116 100% 1 052 17.4 15.3 13%
Discoveries
Ruche + Ruche NE Dussafu EEA BWE Gabon 7.5 % 2.1 8.1 17 70% 110 1.8 1.7 7%
Walt Withman Dussafu EEA BWE Gabon 7.5 % 0.6 8.0 5 20% 9 0.1 0.1 7%
Moubenga Dussafu EEA BWE Gabon 7.5 % 0.5 8.0 4 20% 7 0.1 0.1 7%
Hibiscus Dussafu EEA BW Energy Gabon 7.5 % 3.4 8.0 27 70% 172 2.8 2.7 7%
El Ain - Gremda (onshore) TPS TPS Tunisia 29% 0.1 15.3 2 80% 15 0.2 0.2 7%
Salloum Sfax Panoro Tunisia 53% 2.5 10.5 26 75% 178 2.9 2.7 7%
Ras El Beash / Jawahra Sfax Panoro Tunisia 53% 7.9 3.0 24 60% 130 2.1 2.0 7%
Cercina & Cercina Sud (offshore) upsides TPS TPS Tunisia 29% 0.6 5.7 3 60% 18 0.3 0.3 7%
Rhemoura (onshore) upsides TPS TPS Tunisia 29% 0.3 7.8 2 60% 11 0.2 0.2 7%
El Ain - Gremda (onshore) upsides TPS TPS Tunisia 29% 0.6 7.6 5 60% 25 0.4 0.4 7%
Guebiba, El Hajeb (onshore) upsides TPS TPS Tunisia 29% 0.2 7.3 1 60% 6 0.1 0.1 7%
Sum discoveries 18.7 6.2 116 63% 680 11.2 12.1 -7%
Exploration
Mupale Dussafu EEA BW Energy Gabon 7.5% 1.4 2.0 3 10% 3 0.0 0.0 7%
Espadon (Ruche updip) Dussafu EEA BW Energy Gabon 7.5% 0.5 2.0 1 10% 1 0.0 0.0 7%
Walt Whitman NW Dussafu EEA BW Energy Gabon 7.5% 0.3 2.0 1 10% 1 0.0 0.0 7%
Hibiscus North Dussafu EEA BW Energy Gabon 7.5% 1.0 2.0 2 10% 2 0.0 0.0 7%
Tortue SE Dussafu EEA BW Energy Gabon 7.5% 0.7 2.0 1 10% 1 0.0 0.0 7%
Walt W. String of Pearls Dussafu EEA BW Energy Gabon 7.5% 0.6 2.0 1 10% 1 0.0 0.0 7%
Prospect A Dussafu EEA BW Energy Gabon 7.5% 2.9 2.0 6 10% 5 0.1 0.1 7%
Prospect B Dussafu EEA BW Energy Gabon 7.5% 3.8 2.0 8 10% 7 0.1 0.1 7%
Prospect 18 Dussafu EEA BW Energy Gabon 7.5% 1.1 2.0 2 10% 2 0.0 0.0 7%
Tunisia exploration Sfax Panoro Tunisia 53% 90.3 1.0 90 10% 82 1.4 1.3 7%
Sum exploration 90.3 1.0 90 10% 82 1.7 1.6 7%
Overhead -28 100% -255 -4.2 -3.9 7%
Tax value Norway 4 10% 4 0.1 0.1 7%
PetroNor share 10 100% 89 1.5
Gross asset value 1 652 27.6 25.2 10%
Net cash (debt) -6 -53 -0.9 -0.8 7%
Net asset value 1 599 26.8 24.4 10%
Key assumptions: Oil price USD 65, 65, 70 for 2019e-2021e. 12% WACC
Source: Company data and SB1 Markets
4
PetroNor SOTP valuation & changes after Aje deal
Changes: Aje included, share count increased, FX adjstued
Asset Licence Operator Country Stake Net
mboe
USD/
boe
Un -
risked
USDm
Prob. Risked
NOKm
Risked
NOK/sh
Old Change
Production
Tchibouela PNGF Sud Perenco Congo 10.5% 5.0 13.3 66 100% 604 0.57 0.62 -8%
Tchendo PNGF Sud Perenco Congo 10.5% 2.0 13.8 28 100% 255 0.24 0.26 -8%
Litanzi PNGF Sud Perenco Congo 10.5% 0.3 17.5 5 100% 44 0.04 0.04 -8%
Tchibeli PNGF Sud Perenco Congo 10.5% 2.0 11.7 23 100% 214 0.20 0.22 -8%
Aje (prod + dvt) OML 113 YFP Nigeria 12.2% 20.0 1.6 32 16% 47 0.04 - -
Sum production 29.3 5.3 155 82% 1 164 1.10 1.14 -4%
Discoveries 20
Loussima PNGF Bis Perenco Congo 14.7% 2.1 5.1 11 60% 59 0.06 0.06 -8%
Loussima SW PNGF Bis Perenco Congo 14.7% 2.1 5.1 11 60% 59 0.06 0.06 -8%
Sum discoveries 4.2 5.1 22 60% 119 0.11 0.12 -8%
Exploration
ROP, Senegal ROP APCL Senegal 90% 100 2.0 200 5% 91 0.09 0.09 -8%
SOSP, Senegal SOSP APCL Senegal 90% 100 2.0 200 5% 91 0.09 0.09 -8%
A1, The Gambia A1 APCL The Gambia 100% 100 2.0 200 5% 91 0.09 0.09 -8%
A4, The Gambia A4 APCL The Gambia 100% 100 2.0 200 5% 91 0.09 0.09 -8%
Sum exploration 400 2.0 800 5% 364 0.34 0.37 -8%
Overhead and other -17 -156 -0.15 -0.16 -8%
Gross asset value 871 1 490 1.40 1.47 -5%
Net cash (debt) 11 103 0.10 0.11 -8%
Net asset value 882 1 594 1.50 1.57 -5%
Key assumptions: Oil price USD 65, 65, 70 for 2019e-2021e. 12% WACC
Source: Company data and SB1 Markets
Appendix 1: Our past Panoro update (published 11 October)
Appendix
5
Panoro’s share price performance YTD has been very strong. We believe there could be a material upside potential in a bull case scenario. We havelooked into a bull case scenario where we easily see values of NOK 50/share, which represent more than double of our current target price of NOK24/share.
• Strong performance YTD, still upside in a bull case: YTD 2019, Panoro has been among the absolute top performance in our E&P coverage universewith an increase of more than 60% measured in USD. However, the strong performance has largely been driven by company specific news and notmultiple expansion. We believe there could be a material upside potential in a bull case scenario.
• How to see NOK 50/share without using too much creativity: For a bull case where we see values of NOK 50/share, we see three factors that must bein place: 1) Increased Hibiscus resource estimate after reprocessed seismic and/or production test. 2) Discovery at exploration prospect B with 250mmboe gross resources. Industry rumours indicate that all prospects, and in particular prospect B, are significantly bigger than BWE’s pre-drill estimatessuggest. Official pre-drill estimate for prospect B is 50 mmboe gross. 3) Further positive reserve revision for Tortue. Historically, the Tortue reservoir hasperformed excellent. High performing fields tend to grow.
• Dussafu has historically showed great reserve development: Since BW Energy acquired Harvest’s stake in the Dussafu licence a few years ago, thelicence has showed an extraordinary positive development. Without BW Energy’s entry in the licences, we do not rule out that Dussafu still would havebeen a promising discovery without any development plan. In addition to an accelerated development plan and first oil in Q3 18, Dussafu has showed astrong development in 2P reserves, from 23.5 mmboe (gross) by January 2018 to above 60 mmboe by July 2019. That is after including the effect of 3.4mmboe production.
• Hibiscus discovery triggers more exploration and accelerated development: The Dussafu license has delivered world class exploration results with100% hit ration over the past few years. The recent announcement of the Hibiscus discovery confirmed the perspectivity of the area. Following theHibiscus success, we guess drilling of several of the identifies prospects in the license may be accelerated and that there also may be identified newexploration prospects. In addition, we guess the discovery may trigger change to the development plan for the entire area. The current base case is toproduce Ruch and Ruch North East from 2021/2022, which is included in our production profile from Q1 22. With Hibiscus high quality oil, we do notrule out that the partnership may be tempted to give priority to Hibiscus over Ruch North East. As there already is infrastructure (the Adolo FPSO) in thearea, a new discovery will most likely imply low development capex and high NPV/bbl compared to what we usually see offshore. The capacity of theFPSO is around 3x the current production from the licenses, which implies that there should not be any immediate capacity issues.
6
Panoro (Buy, NOK 24)
How to see Panoro in 50/share
• YTD 2019, Panoro has been among the absolute top performance in our E&P coverage universe with an increase of more than 60% measured in USD.
• However, the strong performance has largely been driven by company specific news and not multiple expansion.
• We believe there could be a material upside potential in a bull case scenario.
YTD performance E&P coverage universe (total return, USD)
7
Strong performance YTD, still upside in a bull case
PEN
• For a bull case where we see values of NOK 50/share, we see three factors that must be in place:
1. Increased Hibiscus resource estimate after reprocessed seismic and/or production test.
2. Discovery at exploration prospect B with 250 mmboe gross resources. Industry rumours indicate that all prospects, and in particular prospect B, are significantly bigger than BWE’s pre-drill estimates suggest. Official pre-drill estimate for prospect B is 50 mmboe gross.
3. Further positive reserve revision for Tortue. Historically, the Tortue reservoir has performed excellent. High performing fields tend to grow.
Panoro bull NAV*
8
How to see NOK 50/share without using too much creativity
0
10
20
30
40
50
60
Current NAV Hibiscus doubled
resources
Prospect B @ 250
mmboe gross
Positive Tortue
reserve revision
Bull case NAV
NO
K/s
ha
re
* Hibisucs and prospect B valuation based on NPV12 of USD 8/bbl and 70% risking. As a comparison, our Tortue model @USD 70/bbl Brent suggests USD 14.4/bbl post capex. Source: Company data and SB1 Markets
9
In a bull scenario, our SOTP looks like this (red= changes vs base case):
Asset Licence Operator Counrty Stake Net
mboe
USD/boe Unrisked
USDm
Prob. Risked
NOKm
Bull case Base
case
Change
vs. base
case
Production
Aje OML 113 YFP Nigeria 12% 0.7 -8.9 -6 100% -53 -0.9 -0.9 0%
Tortue Dussafu EEA BWE Gabon 7.5% 7.6 14.4 109 100% 925 15.3 7.6 100%
Cercina & Cercina Sud (offshore) TPS TPS Tunisia 29% 2.6 11.4 30 100% 255 4.2 4.2 0%
Rhemoura (onshore) TPS TPS Tunisia 29% 0.2 15.6 3 100% 28 0.5 0.5 0%
Guebiba, El Hajeb (onshore) TPS TPS Tunisia 29% 1.9 14.7 28 100% 237 3.9 3.9 0%
Sum production 13.0 12.6 164 100% 1 392 23.0 15.3 50%
Discoveries
Ruche + Ruche NE Dussafu EEA BWE Gabon 7.5 % 2.1 8.1 17 70% 103 1.7 1.7 0%
Walt Withman Dussafu EEA BWE Gabon 7.5 % 0.6 8.0 5 20% 8 0.1 0.1 0%
Moubenga Dussafu EEA BWE Gabon 7.5 % 0.5 8.0 4 20% 6 0.1 0.1 0%
Hibiscus Dussafu EEA BW Energy Gabon 7.5 % 6.8 8.0 54 70% 321 5.3 2.7 100%
Aje, new phases OML 113 YFP Nigeria 12% 19.3 2.0 39 30% 98 1.6 1.6 0%
El Ain - Gremda (onshore) TPS TPS Tunisia 29% 0.1 15.3 2 80% 14 0.2 0.2 0%
Salloum Sfax Panoro Tunisia 53% 2.5 10.5 26 75% 166 2.7 2.7 0%
Ras El Beash / Jawahra Sfax Panoro Tunisia 53% 7.9 3.0 24 60% 121 2.0 2.0 0%
Cercina & Cercina Sud (offshore) upsides TPS TPS Tunisia 29% 0.6 5.7 3 60% 17 0.3 0.3 0%
Rhemoura (onshore) upsides TPS TPS Tunisia 29% 0.3 7.8 2 60% 11 0.2 0.2 0%
El Ain - Gremda (onshore) upsides TPS TPS Tunisia 29% 0.6 7.6 5 60% 23 0.4 0.4 0%
Prospect B Dussafu EEA BW Energy Gabon 7.5% 18.8 8.0 150 70% 893 14.7 0.0 nm
Guebiba, El Hajeb (onshore) upsides TPS TPS Tunisia 29% 0.2 7.3 1 60% 6 0.1 0.1 0%
Sum discoveries 60.1 5.5 331 55% 1 787 29.5 12.1 144%
Exploration
Mupale Dussafu EEA BW Energy Gabon 7.5% 1.4 2.0 3 10% 2 0.0 0.0 0%
Espadon (Ruche updip) Dussafu EEA BW Energy Gabon 7.5% 0.5 2.0 1 10% 1 0.0 0.0 0%
Walt Whitman NW Dussafu EEA BW Energy Gabon 7.5% 0.3 2.0 1 10% 1 0.0 0.0 0%
Hibiscus North Dussafu EEA BW Energy Gabon 7.5% 1.0 2.0 2 10% 2 0.0 0.0 0%
Tortue SE Dussafu EEA BW Energy Gabon 7.5% 0.7 2.0 1 10% 1 0.0 0.0 0%
Walt W. String of Pearls Dussafu EEA BW Energy Gabon 7.5% 0.6 2.0 1 10% 1 0.0 0.0 0%
Prospect A Dussafu EEA BW Energy Gabon 7.5% 2.9 2.0 6 10% 5 0.1 0.1 0%
Tunisia exploration Sfax Panoro Tunisia 53% 90.3 1.0 90 10% 77 1.3 1.3 0%
Sum exploration 90.3 1.0 90 10% 77 1.5 1.6 -8%
Overhead -28 100% -238 -3.9 -3.9 0%
Tax value Norway 4 10% 4 0.1 0.1 0%
Gross asset value 3 021 50.1 25.2 99%
Net cash (debt) -6 -50 -0.8 -0.8 0%
Net asset value 2 971 49.3 24.4 102%
Source: Company data and SB1 Markets
• Since BW Energy acquiredHarvest’s stake in the Dussafulicence a few years ago, the licencehas showed an extraordinarypositive development.
• Without BW Energy’s entry in thelicences, we do not rule out thatDussafu still would have been apromising discovery without anydevelopment plan
• In addition to an accelerateddevelopment plan and first oil inQ3 18, Dussafu has showed astrong development in 2Preserves, from 23.5 mmboe (gross)by January 2018 to above 60mmboe by July 2019. That is afterincluding the effect of 3.4 mmboeproduction.
Dussafu reserve development
Source.: Company data 10
Dussafu has historically showed great reserve development
• The Dussafu license has delivered world class explorationresults with 100% hit ration overt he past few years. Therecent announcement of the Hibiscus discovery confirmedthe perspectivity of the area.
• Following the Hibiscus success, we guess drilling of several ofthe identifies prospects in the license may be accelerated andthat there also may be identified new exploration prospects.
• In addition, we guess the discovery may trigger change to thedevelopment plan for the entire area. The current base caseis to produce Ruch and Ruch North East from 2021/2022,which is included in our production profile from Q1 22. WithHibiscus high quality oil, we do not rule out that thepartnership may be tempted to give priority to Hibiscus overRuch North East.
• As there already is infrastructure (the Adolo FPSO) in thearea, a new discovery will most likely imply low developmentcapex and high NPV/bbl compared to what we usually seeoffshore. The capacity of the FPSO is around 3x the currentproduction from the licenses, which implies that there shouldnot be any immediate capacity issues.
Dussafu license
11
Hibiscus discovery triggers more exploration and accelerated development
Source: Company data and SB1 Markets
0
1 000
2 000
3 000
4 000
5 000
6 000
bo
e/d
ay
Aje Tortue Cercina & Cercina Sud (offshore) Rhemoura (onshore)
El Ain - Gremda (onshore) Guebiba, El Hajeb (onshore) Solloum Ruche + Ruche NE
Production profile, boe/day net to Panoro
Source: Company data and SB1 Markets 12
Production set to grow significantly
Hibiscus added?
Panoro SOTP valuation
13
Panoro base case SOTP valuation
Source: Company data and SB1 Markets
Asset Licence Operator Counrty Stake Net
mboe
USD/boe Unrisked
USDm
Prob. Risked
NOKm
Risked
NOK/sh
Production
Aje OML 113 YFP Nigeria 12% 0.7 -8.9 -6 100% -53 -0.9
Tortue Dussafu EEA BWE Gabon 7.5% 3.8 14.4 54 100% 462 7.6
Cercina & Cercina Sud (offshore) TPS TPS Tunisia 29% 2.6 11.4 30 100% 255 4.2
Rhemoura (onshore) TPS TPS Tunisia 29% 0.2 15.6 3 100% 28 0.5
Guebiba, El Hajeb (onshore) TPS TPS Tunisia 29% 1.9 14.7 28 100% 237 3.9
Sum production 9.2 11.8 109 100% 929 15.3
Discoveries
Ruche + Ruche NE Dussafu EEA BWE Gabon 7.5 % 2.1 8.1 17 70% 103 1.7
Walt Withman Dussafu EEA BWE Gabon 7.5 % 0.6 8.0 5 20% 8 0.1
Moubenga Dussafu EEA BWE Gabon 7.5 % 0.5 8.0 4 20% 6 0.1
Hibiscus Dussafu EEA BW Energy Gabon 7.5 % 3.4 8.0 27 70% 161 2.7
Aje, new phases OML 113 YFP Nigeria 12% 19.3 2.0 39 30% 98 1.6
El Ain - Gremda (onshore) TPS TPS Tunisia 29% 0.1 15.3 2 80% 14 0.2
Salloum Sfax Panoro Tunisia 53% 2.5 10.5 26 75% 166 2.7
Ras El Beash / Jawahra Sfax Panoro Tunisia 53% 7.9 3.0 24 60% 121 2.0
Cercina & Cercina Sud (offshore) upsides TPS TPS Tunisia 29% 0.6 5.7 3 60% 17 0.3
Rhemoura (onshore) upsides TPS TPS Tunisia 29% 0.3 7.8 2 60% 11 0.2
El Ain - Gremda (onshore) upsides TPS TPS Tunisia 29% 0.6 7.6 5 60% 23 0.4
Guebiba, El Hajeb (onshore) upsides TPS TPS Tunisia 29% 0.2 7.3 1 60% 6 0.1
Sum discoveries 38.0 4.1 154 46% 734 12.1
Exploration
Mupale Dussafu EEA BW Energy Gabon 7.5% 1.4 2.0 3 10% 2 0.0
Espadon (Ruche updip) Dussafu EEA BW Energy Gabon 7.5% 0.5 2.0 1 10% 1 0.0
Walt Whitman NW Dussafu EEA BW Energy Gabon 7.5% 0.3 2.0 1 10% 1 0.0
Hibiscus North Dussafu EEA BW Energy Gabon 7.5% 1.0 2.0 2 10% 2 0.0
Tortue SE Dussafu EEA BW Energy Gabon 7.5% 0.7 2.0 1 10% 1 0.0
Walt W. String of Pearls Dussafu EEA BW Energy Gabon 7.5% 0.6 2.0 1 10% 1 0.0
Prospect A Dussafu EEA BW Energy Gabon 7.5% 2.9 2.0 6 10% 5 0.1
Prospect B Dussafu EEA BW Energy Gabon 7.5% 3.8 2.0 8 10% 6 0.1
Prospect 18 Dussafu EEA BW Energy Gabon 7.5% 1.1 2.0 2 10% 2 0.0
Tunisia exploration Sfax Panoro Tunisia 53% 90.3 1.0 90 10% 77 1.3
Sum exploration 90.3 1.0 90 10% 77 1.6
Overhead -28 100% -238 -3.9
Tax value Norway 4 10% 4 0.1
Gross asset value 1 505 25.2
Net cash (debt) -6 -50 -0.8
Net asset value 1 455 24.4
Source: Company data and SB1 Markets 14
BWE SOTP valuation in our bull case scenario (red= changes vs. base case)
Asset Licence Operator Country Stake Net
mboe
USD/boe Unrisked
USDm
Prob. Bull
case
Base
case
Change
vs. Base
case
Production
Tortue Dussafu EEA BW Energy Gabon 74% 74 14.5 1076 100% 1 076 538.2 100%
Discoveries
Ruche + Ruche NE Dussafu EEA BW Energy Gabon 74% 21 8.1 170 70% 119 119 0%
Walt Withman Dussafu EEA BW Energy Gabon 74% 6 5.0 30 20% 6 6 0%
Moubenga Dussafu EEA BW Energy Gabon 74% 4 5.0 22 20% 4 4 0%
Hibiscus Dussafu EEA BW Energy Gabon 74% 66 8.0 529 70% 370 185.2 100%
Maromba Maromba BW Energy Brazil 95% 101 5.0 504 20% 101 101 0%
Prospect B Dussafu EEA BW Energy Gabon 74% 250 8.0 2000 70% 1 400 11 nm
Kudu Kudu BW Energy Namibia 56% 108 1.0 108 10% 11 11 0%
Sum discoveries 556 6.0 3 362 48% 2 011 426 372%
Exploration
Mupale Dussafu EEA BW Energy Gabon 74% 14 3.0 42 10% 4 4 0%
Espadon (Ruche updip) Dussafu EEA BW Energy Gabon 74% 5 3.0 15 10% 2 2 0%
Walt Whitman NW Dussafu EEA BW Energy Gabon 74% 3 3.0 9 10% 1 1 0%
Hibiscus North Dussafu EEA BW Energy Gabon 74% 10 3.0 29 10% 3 3 0%
Tortue SE Dussafu EEA BW Energy Gabon 74% 7 3.0 20 10% 2 2 0%
Walt W. String of Pearls Dussafu EEA BW Energy Gabon 74% 6 3.0 18 10% 2 2 0%
Prospect A Dussafu EEA BW Energy Gabon 74% 29 3.0 86 10% 9 9 0%
Prospect 18 Dussafu EEA BW Energy Gabon 74% 11 3.0 33 10% 3 3 0%
Sum exploration 84 3.0 251 10% 25 36.2 -30%
Overhead and other -100 -100 -100 0%
Gross asset value 4 590 3 013 900 235%
Net cash (debt) 83 83 83 0%
Net asset value 4 673 3 096 983 215%
Source: Company data and SB1 Markets 15
Panoro financial summary
Annual financials Quarterly financialsP &L, USD m 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19e
Total revenues 0 5 3 5 20 11 15
EB IT D A -1 0 -2 0 11 5 6
EBITDA margin na 10% -77% -4% 56% 46% 42%
EB IT -2 0 -3 -1 9 11 3
Pretax profit -2 0 -3 -1 4 11 3
N et inco me -2 0 -3 -1 -2 8 3
EPS -0.05 -0.01 -0.07 -0.02 -0.02 0.13 0.05
R ec EP S -0.05 -0.01 -0.07 -0.03 0.04 -0.01 0.05
B alance sheet , USD m 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19e
Total fixed assets 26 32 37 90 90 96 100
Cash and equivalents 5 5 19 23 18 26 25
Other current assets 5 3 5 13 19 13 13
T o tal A ssets 36 40 62 126 127 134 137
Total equity 15 15 20 47 45 53 56
Total non current liabilities 12 16 26 56 58 54 54
Total current liabilities 9 9 16 23 24 27 27
T o tal equity and liabilit ies 37 40 62 126 127 134 137
Net cash (debt) 2 -2 7 -15 -10 -1 -2
Gross interest bearing debt 3 7 13 38 28 27 27
C o ndensed cash f lo w, USD m 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19e
Cash flow from operations -1 -1 -2 -2 -1 -10 6
Cash flow from investments 0 0 7 -38 -3 -4 -7
Cash flow from financing (incl FX) 0 2 8 44 -12 -14 0
C hange in cash -1 0 14 4 -15 -28 -1
P &L, USD m 2015 2016 2017 2018 2019e 2020e 2021e
Total revenues 0 5 7 12 62 74 77
EB IT D A -7 -4 -5 -3 29 29 40
EBITDA margin na -70% -84% -25% 47% 40% 53%
EB IT -39 -62 -36 -7 26 13 24
Pretax profit -39 -62 -36 -7 21 13 24
N et inco me -39 -62 -36 -7 13 12 24
EPS -0.17 -1.10 -0.85 -0.14 0.20 0.20 0.38
R ec EP S -0.16 -0.18 -0.24 -0.15 0.13 0.20 0.38
B alance sheet , USD m 2015 2016 2017 2018 2019e 2020e 2021e
Total fixed assets 102 52 25 90 107 138 148
Cash and equivalents 11 5 6 23 21 3 16
Other current assets 2 2 4 13 13 13 13
T o tal A ssets 115 59 35 126 140 153 176
Total equity 108 54 17 47 60 72 96
Total non current liabilities 6 2 11 56 54 54 54
Total current liabilities 1 2 7 23 27 27 27
T o tal equity and liabilit ies 115 59 35 126 140 153 176
Net cash (debt) 11 5 4 -15 -6 -24 -11
Gross interest bearing debt 0 0 2 38 27 27 27
C o ndensed cash f lo w, USD m 2015 2016 2017 2018 2019e 2020e 2021e
Cash flow from operations -7 -3 -2 -6 2 29 40
Cash flow from investments -24 -12 5 -30 -24 -47 -27
Cash flow from financing (incl FX) 0 8 -2 54 -26 0 -1
C hange in cash -30 -6 2 17 -47 -18 13
Key assumptio ns and valuat io n 2015 2016 2017 2018 2019e 2020e 2021e
Average Brent price, USD/boe 54 45 55 72 64 65 70
Production, boe/day 0 231 306 751 3 061 4 553 4 417
Share price 7 6 6 12 19 19 19
P/E neg neg neg neg 17.0x 11.3x 6.0x
EV/opcf neg neg neg neg 69.6x 5.7x 3.8x
Appendix2: Sector valuation
Appendix
16
E&P valuation summary and key figures (coverage universe)
Company Ticker Mcap,
USDm
Share Price
(local fx)
Target
(local fx)
Rec. EV/GAV P/NAV P/CORE
NAV
Prod. Discov. Explor. Net cash
(debt) &
other
Africa Energy AEC 129 1.9 2.4 Buy 0.71x 0.65x 4.92x 0.0 0.9 2.5 -0.5
Aker BP AKERBP 9 172 245.6 305 Buy 1.02x 1.03x 1.06x 188.9 70.4 7.4 -27.6
Africa Oi l AOI 402 8.3 13 Buy 0.38x 0.43x 0.49x 5.6 6.7 2.7 4.6
DNO DNO 1 446 12.7 19 Buy 0.70x 0.64x 0.69x 17.5 5.1 1.3 -4.0
Equinor EQNR 60 524 168.2 200 Buy 0.88x 0.85x 0.85x 132.5 84.3 0.0 -18.7
Genel GENL 600 177.0 280 Buy 0.23x 0.49x 0.49x 170.4 67.6 2.0 122.7
Gulf Keystone GKP 587 210.5 350 Buy 0.51x 0.51x 0.51x 358.1 52.6 0.0 2.8
International Petroleum Corp. IPCO 549 34.4 58 Buy 0.63x 0.55x 0.55x 53.7 12.3 0.0 -3.6
Lundin LUPE 8 079 296.0 315 Neutra l 1.19x 1.30x 1.37x 267.2 76.1 10.8 -126.5
Maha MAHA A 262 24.8 31 Buy 0.79x 0.78x 0.80x 33.7 0.4 0.8 -3.0
Noreco NOR 563 209.5 310 Buy 0.91x 0.84x 0.84x 367.1 40.7 0.0 -159.7
OKEA OKEA 208 19.4 32 Buy 0.74x 0.57x 0.69x 29.0 21.3 5.8 -22.1
Panoro PEN 119 20.6 24 Buy 0.87x 0.85x 0.91x 15.6 11.9 1.6 -4.7
Panoro PNOR 112 1.1 1.4 Buy 0.71x 0.70x 0.91x 1.1 0.1 0.4 -0.1
Questerre QEC 65 1.4 4 Buy 0.36x 0.30x 0.33x 3.3 1.5 0.4 -0.4
ShaMaran SNM 110 0.5 0.7 Neutra l 0.81x 0.61x 0.61x 0.7 0.9 0.0 -0.8
Tethys TETY 274 77.3 83 Neutra l 0.73x 0.78x 0.79x 44.2 35.9 1.3 17.7
Source: Company data and SB1 Markets
Source: SB1 Markets 18
Sector valuation
P/NAV EV/GAV
0.0x
0.1x
0.2x
0.3x
0.4x
0.5x
0.6x
0.7x
0.8x
0.9x
1.0x
1.1x
1.2x
1.3x
AEC
AK
ERB
P
AO
I
DN
O
EQ
NR
GE
NL
GK
P
IPC
O
LUP
E
MA
HA
A
NO
R
OK
EA
PEN
PN
OR
QEC
SNM
TET
Y
EV/G
AV
-0.1x
0.0x
0.1x
0.2x
0.3x
0.4x
0.5x
0.6x
0.7x
0.8x
0.9x
1.0x
1.1x
1.2x
1.3x
1.4x
AEC
AK
ERB
P
AO
I
DN
O
EQ
NR
GE
NL
GK
P
IPC
O
LUP
E
MA
HA
A
NO
R
OK
EA
PEN
PN
OR
QEC
SNM
TET
Y
P/N
AV
* Not all companies have booked reserves. Source: SB1 Markets 19
Asset composition and EV/reserves
Asset composition (SB1 valuation) EV/reserves*
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Financial assets Producing assets High. prob. developments Other Exploration
0
5
10
15
20
25
30
35
40
USD
/bo
e
EV/1P EV/2P
Source: Macrobond 20
Share price performance coverage universe vs. Brent and OSEBX
12 months YTD
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IMPORTANT DISCLOSURES AND CERTIFICATIONS
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