Gaining traction in Albania
Having successfully drilled and tested Shpirag-2 earlier this year, Petromanas Energy Inc (PMI.V) is now looking for a repeat win with Molisht-1, which is scheduled for testing in H214 and expected to be followed by Shpirag-3, which targets to reach total depth, completion and testing by Q315. Benefiting from Shell’s analogous experience in Italy, we are expecting PMI’s analysis of the results from these three wells to be key to determining the level of success of the Albanian assets, and have the potential to de-risk and increase current prospective resource estimates of 375mmboe. On the cusp of a potential re-rating, our RENAV models, which include acreage in Australia and France, point to a value of C$0.69/share.
Albania’s Blocks 2-3: A likely game changer
Following on from a successful oil and gas discovery on Shpirag-2, Petromanas, along with Shell (75%), will complete two more wells on Albania’s Berati thrust belt, beginning with Molisht-1, which is currently drilling ahead and expected to reach total depth by mid-2014, followed by Shpirag-3, which is set to spud in Q314. Assuming both of these new wells realise similar levels of success as those found in Shpirag-2, we are expecting upside from current reservoir estimates, and in turn, an uplift to our current NAV for Blocks 2-3, which we base on prospective resources estimate of 375mmboe on a 100% basis.
France and Australia yet to show full potential
In the south-west of France, Petromanas is exploring fractured carbonate plays, which are not affected by the current ban on fracking. We are expecting the release of a Ledeuix conventional gas resource assessment in the second half of 2014, to provide additional data points to our current valuation estimates. PMI currently holds 1.6 million acres in Australia’s gas laden Canning Basin; we are looking to expected new news regarding farm-out partners in 2014, with these likely to add a concrete timeline to the potential of these assets.
Valuation: Two Albanian triggers now in place
Our valuation models arrive at a risked exploration NAV of C$0.69/share by making use of resource estimates for Albania’s Block 2-3 and D-E, with our models assigning a risked exploration value of US$363m to Petromanas’s share of assets in Albania. Further to assets in Albania, acreage in Australia is valued at US$11.5/acre (US$19m), while gas assets in France realise an NPV of US$18m.
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