First Energy report just out22 Aug 2019 10:53
Continuing to deliver on all fronts
? 1H19 production of 3,539 boe/d had already been reported, as had net cash of US$11.2 mm at the end of June 2019.
? 2019 production and capex guidance are unchanged.
? In Egypt, the central processing facility is en route to site at South Disouq, thus achieving the second of the three key project milestones. The final milestone of first gas in 4Q19 remains on track, subject to the successful installation and hook-up of the CPF, which is scheduled to begin later in August, with the company still aiming for gross plateau production of c.50 mmcf/d by 1Q20.
? Discussions continue with SDX’s partner on the potential exploration drilling programme in South Disouq.
? In Meseda, following the Rabul-7 development well, a further development well, MSD-19, was spud in early August.
? In North West Gemsa, well workovers continue to slow down field decline.
? In Morocco, the company still plans the 12 well drilling campaign to begin in 4Q19 and complete in 1H20, targeting 15 bcf
of gross unrisked prospective resources. It will aim to book reserves to satisfy existing customers' forecast demands and
test new play opening areas.
Market reaction: positive
? The company remains in a healthy cash position with first gas at South Disouq, a 12 well drilling campaign in Morocco and potential exploration drilling at South Disouq in 2020 remaining the main focuses.
Recommendation: BUY rating with £0.65 target price
? The story continues to be about production and cash flow growth. Our target price of £0.65 per share has been set close
to our ReNAV.
? The shares trade at EV/DACF multiples of only 1.2x for 2019 and 0.5x for 2020.
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