Member Info for surprised

Re broker note - cash generating, valuation gap and significant growth forecast ''..and the best case scenario (2P case) currently offers almost 7x uplift.. With activity set to ramp up over the course of the year we see significant upside for the shares in the near to medium term.''

''It's a cash machine -share price disconnect is truly exceptionally attractive in our judgement, the valuation gap has grown inordinately creating, in our view, an exceptional attractive opportunity''

https://twitter.com/surprised_trade/status/1778691691089625514

Operational progress continues.

The 17H well was brought onstream at the beginning of March, averaging 4.0mbbl/d for its first 30 days of production. This included producing at 4.5mbbl/d for the last two weeks post switching on of the ESP. This is a strong rate, in-line with company expectations. The 18H well is now drilling ahead and expected onstream in May, with 19H to then drill post that. Again, the drilling programme helps underpin full year production and cash flows.

PetroTal holds 100% in the producing Bretana field, onshore Peru. This produced at 14.2mbbl/d in 2023, driving EBITDA of US$198.3m for the period. Bretana holds a significant 100.2mmbbl of 2P reserves, and PetroTal has a multi-year drilling programme which we expect to take production to approaching 25mbbl/d in 2027 in the 2P case. The company has established multiple export routes for its Bretana crude, including barging to Manaus in Brazil, to the regional Iquitos refinery, and into the ONP pipeline (currently offline) via the Saramuro pump station, helping underpin export reliability via diversity. New export routes are also being brought forward, including via the OCP pipeline through Ecuador and Yurimaguas in Peru. PetroTal also engages in significant local social programmes in order to help reinforce its local licence to operate. The company has a strong balance sheet, holding US$85m of cash (zero debt) at the end of Q1 2024, supporting ongoing CAPEX investment and returns to shareholders, with PetroTal establishing a regular annual dividend of 6.0c/share from Q1 2023, implying a 10% yield at current levels.

As such, PetroTal offers investors regular drilling news flow, strong and growing production based on a material asset, significant cash flows underpinned by the variety of export routes, an increasingly established dividend, and a strong balance sheet.

We have a positive outlook for the shares, and value them in-line with our total risked NAV of 94p.

This is all positive stuff, and going forward we look for more news on the drilling programme, production rates, quarterly dividend levels, and progress on new export routes

Strongest start to a year in PTAL's history, quarterly average production of 18,500+ bopd. Stage set for record first half and annual production.

Oil price above guidance of $77/bbl Brent bolstering Q1 2024 financial and operational metrics.

https://twitter.com/surprised_trade/status/1778308222106865770

Broker note - ''..and the best case scenario (2P case) currently offers almost 7x uplift.. With activity set to ramp up over the course of the year we see significant upside for the shares in the near to medium term.'

''It's a cash machine -share price disconnect is truly exceptionally attractive in our judgement, the valuation gap has grown inordinately creating, in our view, an exceptional attractive opportunity''

https://twitter.com/surprised_trade/status/1773340747640504321

Cash at bank $450m (2022: $404m), Revenue $1,061.3 million up 12%, Production averaged 47,758 boepd, up 8%, special dividend of US 2.4p, in addition to Q4 23 declared dividend of 2.4p, confident will acquire transformational Exxon Mobil's (MPNU)

Broker notes 'a number of catalysts noted that offer upside between 32% & 90%+ (excluding the very likely transformational MPNU deal or conversion to PIA terms that offers further upside from it's forward valuation) a current divi around 7%. We calculate NAV at 169p at a 15% discount rate rising to 244p at a 10% discount rate'

https://twitter.com/surprised_trade/status/1773337210860798270

Intersting article in the Times today re the North Sea and that the operators still see a very profitable business opportunity despite current sentiment.

'' Ithaca has been critical of the UK government’s oil and gas profit levy, stating it has affected sentiment and investment in the North Sea. however, ''Ithaca is understood to want to place itself at the forefront of consolidation efforts in UK waters and believes any government in Westminster will eventually come to see the importance of maintaining a domestic oil and gas sector..''

Broker note out -

The facility therefore, will be substantially cheaper than the previous one, plus the lack of an amortisation schedule will free up significant cash to be reinvested into the portfolio. As illustrated in today’s reserve report, i3 has showed that it can hold reserves at a stable level even with modest drilling programme. With the signing of the new RBL, i3 has unlocked a material sum which can be reinvested, allowing the company to return to production and reserve growth (this has the added bonus of increasing reserves, from which the company’s borrowing base is calculated). Furthermore, we do not expect the currently depressed commodity prices to remain low in the long term, particularly with Canada set to unveil its first LNG export facility (the Kitimat LNG Canada project) next year, and any upwards revisions to forecast prices will have the double impact of extending the reserve life, on top of increasing NPVs for the current reserves. In line with the depressed sector, i3 shares have had a disappointing time of late, however at the current share price look completely oversold. Even in the most bearish run-off PDP case, the reserves have been valued at almost double the current enterprise value available in the market today, and the best case scenario (2P case) currently offers almost 7x uplift from today.

With activity set to ramp up over the course of the year (this year’s capital budget is due to be announced in mid-April), we see significant upside for the shares in the near to medium term.

IC article 22.02.24

This North Sea energy company is making waves

Investors should take note of this mid-cap's profitable growth strategy

Often when you buy local the trade-off is price. Brits have made their choice for day-to-day shopping, choosing supermarkets over high-street greengrocers. When it comes to oil and gas, however, the local choice is also the cheapest.

Of the UK-listed mid-cap energy companies, Serica Energy (SQZ) is an inexpensive option. The North Sea-focused group sits on a forward enterprise value/Ebitda ratio of less than one times.

Serica returns to shareholders a dividend yield of around 12 per cent. Serica's metrics look so attractive because its share price has fallen by 60 per cent from an August 2022 high of 450p. Even a cash-and-shares deal that doubled production has not been enough to bring shareholders back. The group could be due a rebound, however.

We last put forward Serica as a buy idea in January 2022 in order to hedge against soaring household energy prices. The shares shot up in the months that followed, driven by Russia’s invasion of Ukraine, but since then the government’s windfall tax, combined with weaker energy prices, has knocked its valuation.

Serica’s relatively low enterprise value (EV)/Ebitda ratio is driven by its high cash profits and small pile of debt. Ebitdax (‘x’ being exploration costs) for 2023 is forecast at £401mn. This is a sizeable drop from 2022 due to lower oil and gas prices, but still represents a cash profit margin of 63 per cent. Broker Stifel thinks this margin will climb to 70 per cent in the current year, implying Ebitdax of £612mn. Peel Hunt analysts Werner Riding and Matthew Cooper remain bullish, however. “Despite lowering our numbers, it is important to state that we believe the business remains in a very strong financial position and is funded for all planned work programmes and shareholder distributions.

Much of the appeal of Serica lies in its low operating costs, although these have climbed a third from $16 (£12.70) per boe in 2022 to around $20 per boe now, according to Peel Hunt forecasts. They are expected to stay around that level in the medium term, however, and margins are already ahead of peers'. Gross profit per barrel (or netback) is around $40/boe for 2023, which Stifel forecasts will rise to $49/boe this year. Analyst at Stifel, sees net cash rising from £81.4mn at the end of 2023 to £449mn two years later

Serica’s portfolio offers balance between energy scenarios, but its short- and medium-term prospects are good, and at this yield and valuation we would buy.

https://www.investorschronicle.co.uk/ideas/2024/02/22/this-north-sea-energy-company-is-making-waves/

Https://www.youtube.com/watch?v=20ZsEzbw7Rs

SQZ get a mention at 14.35 mins, low risk, cheap metrics, great divi and a longer term view.

Going into 2024 things already look very good indeed, production is higher than ever with the 17H well already doing 3,300 b/d pre ESP installation and the 18H well spudded on March 5th, and prices are high…

In addition, diversifying routes for existing and maybe more crude in the future has led to discussions on the OCP export route and the pilot project through Ecuador and that may not be the only route diversification.

Given the yield, accentuated by the buy-back PetroTal offers exceptional capital and income return, my Target Price of 150p still stands, but maybe if the company decided to add a little, say sizzle to the portfolio then heaven knows what might happen.

https://www.malcysblog.com/2024/03/oil-price-petrotal-touchstone-challenger-gkp/

2024 a record start, av. 19,000 bopd in first two months , oil over $80+, robust cash position, continued progress on oil export pilot through Ecuador, will continue to prioritize derisking oil sales so PetroTal can embark on new production growth projects.

The Company commenced drilling well 18H on March 5, 2024 The well is expected to take approximately 60 days to drill and complete with initial production estimated to occur by mid May 2024.

PetroTal is pleased to announce continued advancement on the OCP pilot oil shipment with the signing of three key approvals. In early February 2024, the Company received approval letters from the Ecuadorian Ministry of Environment and Ecuadorian Navy along with the successful signing of a use of port agreement with Petroecuador to start the 100,000 bbl pilot. Pending success of the first pilot, the Company anticipates an additional pilot in the second half of 2024 with recurring sales expected in Q4 2024.

https://twitter.com/surprised_trade/status/1770711771440939211

Https://twitter.com/surprised_trade/status/1770024794303447289

With wti at $83 a timely reminder of last broker note .....

i3 Energy Q4 Update – It’s a Cash Machine

i3 Energy has provided a solid Q4 2023 operational and financial update. Production for the quarter amounted to 20,413 boe/d (WHIe: 20,236 boe/d) providing for an average production rate of 20,711 boe/d for the year (WHIe: 20,668). The company indicated that 2023’s net operating income (equating to cashflow in the field before hedging and taxes) amounted to $US 93m (WHIe: $US 94.6m). The company reported an unaudited year-end net debt figure of $US23m (WHIe: $US28.5m). We believe that i3 Energy’s production and cashflow figures tell the story: it’s a cash machine, reliably delivering production, realised pricing and costs consistent with our estimates. We cannot emphasise enough the quality of the operational delivery being provided by the company...

Crude 82.900 ⬆️

Brent 87.168 ⬆️

TTF Gas 28.82 ⬆️

UK Gas 74.30 ⬆️

...... two year 'look at the industry........

Not a share for you then Shearclass, If you believe the market is as sophisticated as the details you suggest in your post I would be happy to agree, however, the market is far from that sophisticated or most shares would be priced 'correctly' according to daily/weekly metrics and as we all know share prices rarely reflect the 'true' price for numerous reasons, including broker algo's, macro etc. Share will shoot to the upside and equally crash to the downside, for on going businesses where nothing material has changed (CVSG) it is for each of us to determine if the market has over reacted to the downside in this case....a number of metrics very much suggest CVSG is oversold and broker algo's are in play, they add liquidity and can steer prices, particularly in a market such as this. The sp will likely (maybe / maybe not) trade in a band at these levels for a short while, however, a 50% drop on a two 'look at the industry' while it is business as usual suggests well oversold, no material changes and a business that is aiming for growth, I van wait a few weeks/months for the dust to settle, sentiment is a fickle aspect ....the market occasionally provides opportunity, I believe this is one, some will not, it's what makes a market.

Some comments in the Times today, and vets stating that they cannot offer some if the cheaper alternative meds as regulation does not allow them and the 'gold standard' treatments expected from pet owners is only supported by scans etc. The old style vets 'best guess' is no longer accepted so there is now a greater cost. CMA will find the whole industry complex and costly to administer, pricing signage and standard prescription costs an area CMA may highlight as an area for improvement if the industry does not move to it in the next two years (they no doubt will voluntarily). Good overview by one commentator below....

''As with our health treatment, so much more is expected of vets. 50 years ago, you didn’t have access to all these scans and tests. Vet had to make an educated guess and treated. Now people expect x-rays and other scans, blood tests etc. guess what, it costs more.

For many farmers, particularly sheep, it is completely uneconomical to get the vet out now. You either treat it yourself or put the animal down. My friends started out in mixed practice but migrated to pets as the money is better ( more emotional attachment) but never made a fortune. Neither do the vet consolidation companies appear to be making a fortune.

I’d also like to see some numbers on how long pets live now compared to 50 years ago. We had dogs that died young that would probably now get tested, treated and would have lasted several more years. Just wasn’t available then. How much does an ageing pet population push up costs?

Another factor is drug costs. About 15-20 years ago, many cheap generic drugs that vets had used for decades were withdrawn. A new EU regulation was that they could only be used if met new clinical tests. Given the cost of tests and that they were all cheap and generic meant they got withdrawn rather than tested.''

Much hysteria about the CMA look at vets, the reality is it's a costly and much improved service than just a few years ago and pet owners expectations have also increased with 'gold standard' treatment expected, a more complete treatment comes at a cost. Business as usual for the Pet industry for the next two years as CMA expect any report to be 18 months+ before it can be presented to ministers and the industry will be able to challenge any aspects they feel are damaging, so 2 years or more is a safe bet before a completed report or any actions, if any, required.

One Broker note suggests a bit of sideways trading for a while , however, it also states ...

"We think investors with an 18-24 month investment horizon should see the current price as a great opportunity to buy shares with almost 3x upside potential '' (3000p)

With many people holding stock between 1700p and 2000p over the past 2-3 years I would suggest a return to higher levels will be somewhat sooner, many considered CVSG was a decent buy at 1700p to 2000p and with no material, if any, recommnended changes at least two years away and no imminent changes to the business other than a long review it's business as normal .

Hi Dartron, I've added too in the 1030's let the dust settle and any CMA report is 18 months or more away and in such a complex business with many moving parts, properties, rents, vets & staff, medical supplies, complex surgery, precsriptions, training, investment, etc the CMA will have huge difficulty in changing business models. They can recommend a standard presciption charge and suggest better pricing signage and the like, however, any material changes would be hugely complex if not impossible and are two years or more away as the industry will clearly challenge anything they see as damaging and therefore possible further legal delays push any changes on the business even further out .....at current price for one of the top performing shares over the past ten years and a drop from 2000p just a few months ago on nothing material other than a two year look at the industry it looks like a decent buy to me and as you say a return to 1500p -17000p+ over the coming months not an unreasonable view on the current metrics.

Performance and discipline..

It was another strong year for Shell. One highlight for me was QGC in Australia, which had its highest ever liquefied natural gas (LNG) production in the fourth quarter and delivered its 1,000th LNG cargo.

Another was the strong operational performance in our deep-water portfolio. Completing the acquisition of Nature Energy, which expanded the range of low-carbon energy we can offer, also stood out.

Cash flow from operations for 2023 of around $54 billion was the second-highest in our history, income was around $20 billion and Adjusted Earnings* around $28 billion. Our performance enabled us to return $23 billion to shareholders* through $15 billion in share buybacks and $8 billion in dividends. This is 42%* of cash flow from operations (CFFO) and around the upper end of our 30-40% of CFFO through the cycle target range.

We continue to be disciplined in our investments, focusing on where we can have the maximum impact in generating value or lowering emissions. In 2023, cash capital expenditure* of $24 billion was at the lower end of our $23-27 billion range