Market Update: 19 April 2023
Mosman Oil and Gas Ltd (AIM:MSMN)* - Amadeus Basin review
Curzon Energy PLC (LSE:CZN)* - Announces proposed RTO
Kistos PLC (AIM:KIST) - Acquires Norwegian E&P
Panoro Energy (OTC:PESAF, OSL:PEN) - Buys out local partner
Energy News
Brent Oil US$82.8/bbl vs US84.4/bbl yesterday
WTI Oil US$79.1/bbl vs US$80.7/bbl yesterday
Henry Hub Gas US$2.37/mmBtu vs US$2.27/mmBtu yesterday
UK NBP Futures 102p/therm vs 100p/therm yesterday
TTF Dutch Futures €42/MWh vs €41/MWh yesterday
- Crude oil prices edged lower on demand concerns even as the API reported a 2.7mb draw in US crude oil stocks (vs 2.5mb draw expected).
- European energy prices edged higher despite French nuclear reactors’ operating levels being reported as increasing from 58% yesterday to 62% of capacity from 36 available reactors, up from 35 last week.
- US gas prices continued to climb higher ahead of forecasts for colder weather.
Company News
Mosman Oil and Gas Ltd (AIM:MSMN)* 0.075p, Market Cap £5.2m: Amadeus Basin review
- Mosman announced an update to the corporate review of the USA production and development assets and the exploration assets in Central Australia, which may involve the farm-out or spin-out of the asset groups.
- David Minchin, an experienced helium exploration geologist with public company experience, is assisting the Company in the review process in respect of EP145 (100% WI) in the onshore Australia Amadeus Basin.
- Mosman noted the recent update from Central Petroleum (CTP AU), which plans to drill three wells on nearby acreage in the Amadeus Basin in the next 12M targeting helium, hydrogen, and natural gas.
The Amadeus Basin is considered one of the most prospective onshore areas in the Northern Territory of Australia for oil and gas, as well as helium and hydrogen. The Board does not feel that the value of the assets is fully reflected in the market capitalisation, which likely reflects the focus of the Company’s resources on the US following the recent Cinnabar-1 success. However, the recent award of a permit from the Aboriginal CLC is a major step forward and work to secure several other approvals can now be progressed to carry out a seismic programme on the licence; so it makes sense to look at different funding options at this point via a corporate review. Nonetheless, we expect near-term investor focus to remain on updates from the Cinnabar development (75% WI) in Texas, which could be potentially transformational for Mosman.
*SP Angel acts as Nominated Advisor and Broker to Mosman Oil & Gas
Curzon Energy PLC (LSE:CZN)* suspended: Announces proposed RTO
- Curzon announced that it has entered into discussions with Technology Metals Market Limited (TM2) that may lead to a potential transaction that, if completed, would constitute a reverse takeover under the Listing Rules.
- The Company and TM2 have executed a Letter of Intent whereby the Company has entered an initial 18-day period of exclusivity with TM2 during which each party will begin to conduct due diligence on the other.
- The parties have agreed to work towards the execution and delivery of a definitive purchase agreement, contemplating a reverse takeover (RTO) of Curzon by an African-based lithium development company.
- TM2 will provide a working capital facility of up to £0.75m to Curzon in the form of a one-year loan note, carrying an annual interest rate of 10% per annum, that is convertible to shares in the event of an RTO.
- As Curzon is currently unable to provide full disclosure on the potential transaction, the temporary suspension of listing in its ordinary shares will continue, pending progress on agreeing terms on a potential RTO transaction.
*SP Angel acts as Broker to Curzon Energy
Kistos PLC (AIM:KIST) 335p, Market Cap £278m: Acquires Norwegian E&P
- Kistos announced a deal to acquire Norwegian E&P Mime Petroleum (private), which is backed by PE specialist Bluewater, for a combination of 6m warrants exercisable at 385p/sh and the assumption of ~$111m of debt.
- The estimated FY23 proforma combined production will increase by 2kboe/d to between 8.5-10.5kboe/d and the Balder X project should boost Group output to over 15kboe/d in 2025 once the Jotun FPSO is onstream.
- On completion, the acquisition will add 24mboe of 2P reserves (implied metric of $4.63/boe) plus 30mboe of 2C resources, increasing total proforma Group reserves plus resources to c.80mboe.
- The Company commented that Kistos has evaluated several deals in the UK and Dutch sectors, but the new windfall taxes and lack of fiscal certainty has meant that both countries remain difficult places to commit capital.
Today’s deal should come as no surprise to investors, especially after the merger spat with Serica (SQZ LN) last year that left both players with a point to prove and consolidation on their minds. The rationale for the deal is simple; the acquisition creates a diversified North Sea player with a more balanced asset portfolio and greater scale and liquidity to attract a higher valuation multiple from investors and cheaper financing options. Both Companies have similar strategies centred on adding value by investing and extending the life of mid-life production assets, such that the deal reduces portfolio risk. The entry into Norway with a prequalified team also has clear strategic advantages in allowing Kistos to allocate capital to a third jurisdiction in response to punitive windfall taxes in the UK and the Netherlands. Kistos’ West of Shetland acreage offers significant catalysts this year for investors, both from the results of the high impact Benriach exploration well (25% WI) and from a final investment decision on the Glendronach field development.
Panoro Energy (OTC:PESAF, OSL:PEN) NOK28.9, Market Cap NOK3.3bn: Buys out local partner
- Yesterday, Panoro announced an agreement with Beender Tunisia Petroleum to acquire its 40% shareholding in Sfax Petroleum Corporation (SPC) for a consideration of c.$18.2m in a mix of cash and shares.
- The proposed deal would increase the Company’s ownership in SPC to 100%, which holds a 49% interest in the producing TPS Assets that comprise five oil field concessions and an 87.5% interest in the SOEP permit.
- The transaction adds c.3mb of net 2P reserves (implied metric of $6/bbl) and 0.8-0.9kb/d of net oil production, which increases Panoro’s FY23 production guidance to 9.5-11.5 based on 9M of recognised production.
- The Company commented that the deal simplifies Panoro’s Tunisian asset ownership structure and leads to a more efficient lending structure with minimal incremental administrative costs.
Panoro believes that the TPS Assets are long-life, low-cost oil fields with a stable production history and significant volumes of oil yet to be recovered while the Sfax Offshore Exploration Permit holds three oil discoveries and numerous identified prospects and leads in the vicinity of existing infrastructure. We think the deal provides further evidence of the renewed gusto in a sector awash with cash and looking for new opportunities to deploy its cash flow to strengthen and expand current shareholder returns into the medium term. Over the results season, we have heard about increasing capex budgets for drilling activity and M&A across the sector, as companies look for greater scale and portfolio mix to help provide access to cheaper sources of capital (both equity and debt) that are available to larger and better diversified companies. In addition to this year’s planned $75m capex programme and $20m debt repayment, Panoro has also declared an inaugural quarterly dividend and set out a framework for shareholder returns that will boost the $20m intended cash return (~6.3% yield) subject to higher realisations through buybacks and/or special dividends.
Research
David Mirzai – David.Mirzai@spangel.co.uk – 0203 470 0473
Sales
Richard Parlons – Richard.Parlons@spangel.co.uk - 0203 470 0472
Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471
Rob Rees – Rob.Rees@spangel.co.uk - 0203 470 0535
Abigail Wayne – Abigail.Wayne@spangel.co.uk - 0203 470 0534
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Sources of commodity prices
Oil Brent - ICE
Natural Gas - NYMEX
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