Panoro Energy – Fourth Quarter 2023 Trading and Financial Update

Source: 2/22/2024, Location: Africa

Panoro Energy ASA (“Panoro” or the “Company”) announced record full year results in 2023 with revenue up 21 per cent year-on-year at USD 228.9 million, EBITDA up 6 per cent year-on-year at USD 135.1 million and profit before tax up 25 per cent year-on-year at USD 74.3 million.

Panoro group working interest production in 2023 averaged 8,471 bopd from its well diversified and balanced portfolio, a new annual record for the Company, and is expected to continue increasing throughout the year ahead.

Consistent with its commitment to delivering sustainable shareholder returns, Panoro has today declared a Q4 2023 cash distribution of NOK 50 million, the largest quarterly distribution since inaugurating its first payment, concluding the 2023 returns cycle.

In line with its 2024 shareholder returns framework, Panoro is targeting an overall distribution to shareholders of between NOK 400 million to NOK 500 million comprising a combination of cash distributions and share buybacks.

John Hamilton, CEO of Panoro, commented:
“Our strong 2023 operating and financial results are a reflection of Panoro’s well diversified and high quality portfolio of producing assets in Africa.

We are continuing to make good progress towards resolving the previously communicated electrical integrity issues in Gabon to unlock the full production potential of the Hibiscus field and take encouragement from recent operational activities. Below ground the Dussafu Marin Permit has a long history of delivering positive results. The first development well at the Hibiscus South field is following this trend by providing scope for material upside to our previously announced recoverable volume estimates which ranged from six to seven million barrels of oil.
Based on our current assumptions the pause in drilling offshore Equatorial Guinea is not expected to materially affect our 2024 shareholder distributions, financial and operational targets. The joint venture partners are focused on securing a new rig and recommencing the drilling campaign at the earliest opportunity.”

Corporate and Financial Update

Production Performance

Average group working interest production:
Full year 2023: 8,471 bopd (2022: 7,500 bopd)
Q4 2023: 9,411 bopd (Q3 2023: 10,008 bopd)
Group working interest production reached levels of 12,000 bopd in Q4 2023 when the four new Hibiscus wells drilled to date were simultaneously producing

Financial Performance
Full year 2023 reported revenue was USD 228.9 million (2022: USD 188.6 million)
Crude oil liftings in 2023 totalled 2.6 million barrels sold at an average realised price of USD 83.2 per barrel after customary price adjustments and associated fees
EBITDA for full year 2023 was USD 135.1 million (2022 USD 127.2 million) and profit before tax was USD 74.3 million (2022: USD 60.4 million)
Net profit from continuing operations for 2023 was USD 33.4 million (2022: USD 18.6 million)
Cash at bank at 31 December 2023 was USD 27.8 million, including advances taken against future oil liftings of USD 23.8 million
As previously communicated, a lifting of approximately 260,000 barrels net to Panoro assumed to occur in late December 2023 was completed in January 2024 resulting in proceeds of approximately USD 20 million being received post year-end (will be reflected in Q1 2024 results)
Gross debt at 31 December 2023 was USD 70.5 million

2024 Guidance
Full year 2024 group working interest production is expected to average between 11,000 bopd to 13,000 bopd
Mid-point of full year 2024 guidance represents a ~40 per cent uplift on full year 2023 group production
The production range is based on operator forecasts, including assumptions on planned facility maintenance, facilities uptime and current estimates for recommencement of the Equatorial Guinea infill drilling campaign
Expenditure on capital and other non-recurring projects in 2024 is expected to be approximately USD 75 million (unchanged from prior communication)
Q1 2024 group working interest production is expected to average 9,500 bopd to 10,000 bopd
Q1 2024 aggregate liftings are expected to be approximately 750,000 barrels
Full year 2024 aggregate liftings are expected to be approximately 3.7 million barrels based on current estimates, representing an increase of approximately 42 per cent on 2023 liftings

Shareholder distributions
Panoro declares a Q4 2023 cash distribution of NOK 50 million for payment in March as a return of paid in capital, concluding the 2023 distribution cycle
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, with first declaration at Q1 2024 results in May (for payment in June)
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
Cash distributions to be paid as a return of paid in capital and 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 and Planned Activities in 2024

Equatorial Guinea – Block G (Panoro: 14.25 per cent)
2023 full year working interest production 3,612 bopd / Q4 2023 working interest production 3,535 bopd
The planned three-well infill drilling campaign commenced in January. The Company announced on 9 February that upon recommendation of the operator, Trident Energy, the joint venture decided to terminate the rig contract. Alternative options are being evaluated that will allow for the recommencement of the intended drilling campaign at the earliest opportunity, potentially during late Q2 subject to rig availability and terms of alternative options
Numerous ongoing field life extension and asset integrity projects to continue throughout 2024

Gabon – Dussafu Marin (Panoro: 17.5 per cent)
2023 full year working interest production 3,000 bopd / Q4 2023 working interest production 3,944 bopd
Drilling of the Hibiscus South (DHBSM-1H) development well has concluded and completion operations are underway
The well utilised the top-hole section of the discovery well and has encountered high quality oil bearing reservoir sands in the prolific Gamba formation. Results from logging indicate scope for the Hibiscus South field to contain materially higher oil reserves than the previous estimated range of six to seven million barrels gross recoverable
The well is expected onstream in March, representing a less than five-month lead time from discovery to first oil, further demonstrating the highly value accretive organic growth potential of the block
At the Hibiscus field, three out of four wells remain in production with two producing on ESPs (with encouraging performance to date under adjusted operating parameters) and one producing under natural flow without an ESP. The fourth well will be worked over in April During the latter part of 2023 and into 2024, a comprehensive programme was commenced in order to establish the root cause of the electrical integrity issues encountered on the four new Hibiscus wells which were drilled in 2023. The retrievable ESPs were removed, in addition to the upper completions on two wells. As a result of these activities, production in Q4 was impacted as work necessitated the wells being offline at various times
The electrical failure root cause analysis is ongoing with the recovered ESPs sent to the manufacturer for diagnosis
Contingency plans are in place with three conventional ESPs scheduled for imminent delivery
The Tortue field continues to produce steadily from all six existing production wells
Following completion of the Hibiscus South well, the rig will undertake the following work (the order of which will be dependent on optimising production and logistical considerations):
drilling of a side-track (DRM-3H ST-1) from the suspended Ruche development well
drilling of an additional Hibiscus development well (DHIBM-7H)
performing ESP workovers
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 (the current drilling campaign has been extended through July)
Current gross Dussafu production is approximately 25,000 bopd reflecting the partial restoration of production from three of the four Hibiscus wells
Panoro expects that gross production will rise from March onwards towards the 40,000 bopd target rate once all wells in the current campaign have been completed

Tunisia – TPS Assets (Panoro: 49.0 per cent)
2023 full year working interest production 1,859 bopd / Q4 2023 working interest production 1,932 bopd
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) scheduled to commence in Q2 2024
Detailed planning for development drilling campaign on the Rhemoura and Guebiba fields with operations expected to start late 2024

Exploration and Appraisal Wells

Akeng Deep – Equatorial Guinea, Block S (Panoro: 12 per cent)
The Kosmos Energy operated Akeng Deep infrastructure-led exploration (“ILX”) well is intended to test a play in the Albian, targeting an estimated gross mean recoverable resource of ~180 million barrels of oil in close proximity to existing infrastructure at Block G. Following termination of the rig contract, the timing of the Akeng Deep ILX well is dependent on availability of alternative options. The joint venture partners remain committed to drilling the well. Other partners in Block S are GEPetrol and Trident Energy

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 prior development activities on the block are concluded within time expectations

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