Panoro Energy ASA (“Panoro” or the “Company”) is pleased to announce strong first quarter operational and financial performance. Panoro group working interest production was in line with expectations at 9,605 bopd. Reported revenue was USD 68.9 million, EBITDA USD 38.7 million and net profit USD 12.1 million.
Consistent with its commitment to delivering sustainable shareholder returns, Panoro has today declared a Q1 2024 cash distribution of NOK 50 million and has initiated a share buy-back program that allows the Company to repurchase up to NOK 100 million of its issued shares.
Drilling results in Gabon have continued to yield positive results, most recently with oil being successfully discovered at a north-east extension of the Hibiscus South field and northern flank of the Hibiscus main field. In Equatorial Guinea, following the contract award in April for the Noble Venturer drill ship, infill drilling is set to recommence in June.
John Hamilton, CEO of Panoro, commented:
“Our strong Q1 results are in line with previously communicated guidance and illustrate the good progress we are making towards our organic growth targets. With further development wells to come in Gabon, infill drilling offshore Equatorial Guinea set to recommence in June and two high impact E&A wells planned on the Bourdon and Akeng Deep prospects, in Gabon and Equatorial Guinea respectively, we have a very exciting organic growth pipeline.
We are pleased to announce that the Board has today, alongside the core cash distribution for the quarter, also approved the immediate launch of a material share buy-back program as we believe there is a significant gap between the intrinsic value of our core assets and our share price. This is in line with our 2024 shareholder returns policy and further demonstrates Panoro’s commitment to converting the strong fundamentals of our high-quality and diversified asset base into sustainable shareholder returns, whilst maintaining our growth strategy and disciplined capital management.”
Corporate and Financial Update
Production Performance and Reserves
Group working interest production in Q1 averaged 9,605 bopd and is in line with previously communicated guidance for the quarter
Equatorial Guinea: 3,481 bopd
Gabon: 4,347 bopd
Tunisia: 1,777 bopd
Average full-year group production guidance is maintained at 11,000 bopd to 13,000 bopd
Q2 2024 group production is expected to be approximately 9,000 bopd and includes the effect of a planned three week shut down of production offshore Gabon in May to undertake routine annual maintenance work
Prior to the planned maintenance work group production in Q2 to date was 10,000 bopd
Annual Statement of Reserves published in April confirmed Panoro achieved an overall 2P reserve replacement ratio of 70 per cent in 2023 with working interest 2P reserves and 2C resources at 31 December 2023 independently assessed to be 34.67 million barrels and 28.5 million barrels respectively (63.17 million barrels 2P+2C)
Financial Performance
Reported Q1 revenue was USD 68.9 million (Q4 2023: USD 55.2 million) of which USD 64.9 million was generated from the sale of 799,399 barrels at an average realised price of USD 81.15 per barrel
Q1 EBITDA was USD 38.7 million (Q4 2023: USD 31.4 million) with profit before tax of USD 21.0 million (Q4 2023: USD 13.2 million) and net profit for the period of USD 12.1 million (Q4 2023: USD 4.5 million)
Cash inflow from operations was USD 24.9 million (Q4 2023: USD 3.5 million net outflow) against capital expenditure of USD 27.3 million (Q4 2023: USD 20.0 million)
Cash at bank at 31 March 2024 was USD 22.4 million which includes advances taken against future oil liftings of USD 17.9 million
During Q1 the Company successfully concluded a redetermination of its Reserve Based Loan (“RBL”) facility, resulting in an increase to borrowing headroom and extension of facility duration. As a result, the Company made a USD 10 million drawdown during the period and re-sculpted the RBL maturity profile. Commercial terms of the RBL facility are unchanged while the final maturity date has been extended by 24 months to end Q1 2028. The amount owing under the RBL facility at 31 March 2024 was USD 80.6 million
Post period end in April, the operator of the Dussafu Marin Permit offshore Gabon executed a Sale and Lease Back (“SLB”) agreement with Minsheng Financial Leasing Co (“MSFL”) for the BW MaBoMo production facility. Panoro has received net sales proceeds of approximately USD 26 million (not reflected in cash balance at 31 March 2024)
USD 10 million of the SLB proceeds to be used to reduce amounts owed under the higher cost RBL facility, resulting in a more efficient capital structure, with the remainder available to enhance development of the business and delivery of shareholder returns. The Company will retain significant headroom in its RBL facility, offering flexibility going forward
Q1 2024 Cash Distribution and Share Buy-back Program
Panoro today declares a Q1 2024 cash distribution of NOK 50 million
Cash distribution to be paid as a return of paid in capital
The Board of Directors of Panoro has also authorised a share buy-back program (“SBP”) that allows the Company to repurchase up to NOK 100 million of its outstanding common shares. Please refer to separate announcement for details of the SBP
In accordance with the previously communicated 2024 shareholder returns policy the Company is targeting a distribution to shareholders of between NOK 400 million to NOK 500 million through the 2024 cycle comprising:
A core cash distribution paid on a quarterly basis
A combination of share buybacks and special cash distribution at the discretion of the Board
Amounts to be weighted towards the second half of the year as production milestones are achieved
The Board will consider upward or downward revisions of the framework as production de-risking occurs and should oil prices be higher/lower than USD 85 per barrel
Operations Update
Equatorial Guinea – Block G (Panoro 14.25 per cent)
Contract awarded in April by the operator Trident Energy on behalf of the joint venture for the Noble Venturer drill ship to recommence infill drilling at the Ceiba Field and Okume Complex. The Noble Venturer has most recently been engaged in a long-term and successful drilling campaign offshore Ghana which is expected to conclude in late May, after which it will relocate to Equatorial Guinea to recommence drilling operations in June
Owing to limitations arising from the shallower water depth at one of the planned infill well locations, the drilling campaign will now comprise of two infill wells. The third infill well will be deferred as part of a potential future drilling campaign
Gabon – Dussafu Marin Permit (Panoro 17.5 per cent)
In March the DHBSM-1H production well at the Hibiscus South field on the Dussafu Marin Permit offshore Gabon was put onstream at an initial stabilised gross rate of 5,000 bopd to 6,000 bopd, in line with expectations
Drilling of the production well DRM-3H on the Ruche field was completed in April. The well encountered good quality oil saturated reservoir sands in the regionally prolific Gamba formation and will be put onstream with a new conventional Electrical Submersible Pump (“ESP”)
Two successful pilot wells were drilled post period end in May, extending the Hibiscus South and Hibiscus fields and increasing recoverable reserves:
The DHBSM-2P pilot well, drilled to test a possible north-eastern extension of the Hibiscus South field, encountered approximately 25 metres of net oil pay in the Gamba formation. Preliminary volume estimates comprise gross recoverable reserves of five to six million barrels of oil and approximately 14 million barrels of oil in place
The DHIBM-7P pilot well, drilled to appraise the northern flank of the Hibiscus field, encountered approximately 24 metres of net oil pay in an overall column of 37 metres extending across the Gamba formation and underlying Dentale formation
The next rig operation will be to drill a production well (DHBSM-2H) at the recently proved north-east extension of the Hibiscus South field. The plan is then for the rig to undertake well workovers and drill a production well at the Hibiscus field into the newly proved northern flank (the order of which will be dependent on optimising production and logistical considerations). The current campaign is therefore now expected to result in a total of eight new production wells across the Hibiscus / Hibiscus South / Ruche fields
The Bourdon prospect test well (DBM-1) will be the last operation in the current campaign, providing the aforementioned activities are performed within time expectations
Gross production in Q2 prior to the planned maintenance work averaged approximately 29,800 bopd and is expected to reach 40,000 bopd once all wells in the current campaign are completed
Tunisia – TPS Assets (Panoro 49.0 per cent)
New production opportunities include a workover campaign comprising ESP replacement and stimulation of three wells at the Cercina field (CER-1, CER-6A and CER-7)
Detailed planning for development drilling campaign on the Rhemoura and Guebiba fields
Exploration and Appraisal Activities
Equatorial Guinea - Block S (Panoro 12.0 per cent) and Block EG-01 (Panoro 56.0 per cent, op.)
The Noble Venturer drill ship has also been contracted to drill the Kosmos Energy operated Akeng Deep infrastructure led exploration (“ILX”) well in Block S once the two Block G infill wells have been drilled and completed. The Akeng Deep ILX well is intended to test a play in the Albian, targeting an estimated gross mean resource of ~180 million barrels of oil in close proximity to existing infrastructure at Block G. Other partners in Block S are GEPetrol and Trident Energy
A successful outcome at Akeng Deep can have a positive read across to the adjacent Panoro operated Block EG-01 where Panoro is conducting subsurface studies based on existing 3D seismic data
The seismic data re-processing project for EG-01 has commenced incorporating leading edge pre-stack depth migration (PSDM) techniques
Equatorial Guinea - Heads of Terms Agreed for Block EG-23
On 4 April Panoro announced that it has reached an agreement with the Government of Equatorial Guinea on the key terms and conditions for the award of offshore Block EG-23
The Heads of Terms agreement signed by Panoro, GEPetrol (the national oil company), and the Ministry of Mines and Hydrocarbons paves the way for a period of exclusive negotiations to finalise a Production Sharing Contract (“PSC”) for Block EG-23 and development of a work programme and budget. Panoro envisages its participating interest in Block EG-23 upon award of a PSC to initially be up to 80 percent
Block EG-23 is located offshore Equatorial Guinea north of Bioko Island and adjacent to the producing Alba gas and condensate field. 19 wells have been drilled on Block EG-23 to date resulting in seven hydrocarbon discoveries (four oil, two gas and one gas/condensate), some of which have been tested
Bourdon – Gabon, Dussafu Marin (Panoro: 17.5 per cent)
The Bourdon Prospect is located in a water depth of 115 metres approximately 7 kilometres to the southeast of the BW Mabomo production facility and 14 kilometres west of the BW Adolo FPSO. The Prospect has an estimated mid-case potential of 83 million barrels in place and 29 million barrels recoverable in the Gamba and Dentale formations. The partner’s intention is to drill the well during the current Gabon drilling campaign, providing that planned production activities on the block are concluded within time expectations
South Africa - Technical Cooperation Permit 218 (Panoro: 100 per cent)
Application for an Exploration Right covering part of TCP 218 located onshore in Free State, South Africa, is currently in progress
Webinar Presentation
The company will hold a live webinar presentation at 09:00 a.m. CEST on Thursday 23 May 2024, during which management will discuss the results and operations, followed by a Q&A session.
The webinar presentation can be accessed through registering at the link below and the online event will be equipped with features to ask live questions. Joining instructions for participating online or through using local dial-in numbers will be available upon completion of registration. The webinar details are as follows:
A replay of the webinar will be available shortly after the event is finished and will remain on our website (www.panoroenergy.com) for approximately 7 days.