Maha Energy - Costs under control again
Good cost control in Q1 Positioned for growth USD 47/bbl discounted Good cost control in Q1 Maha reported Q1’21 production of 3,742 boe/d, spot on ABGSCe at 3,740boe/d. Revenues of USD 13. 5m were in line with ABGSCe at USD 13. 7m.
EBITDA of USD 10. 2m was better than ABSGCe at USD 8. 3m, and consensus at USD 9.
9m. The beat vs. our numbers was explained by lower costs, as Maha has been able to reduce costs from the elevated levels in Q4’20 quicker than expected.
Unit production cost was down from USD 12. 3/boe in Q4 to USD 7. 48/boe in Q1, while SG&A was down from USD 2.
5m to USD 1. 3m. We maintain our production forecasts, but lower our ’21e unit opex and SG&A to bring down costs to normalised levels quicker than we had anticipated.
Overall, our EBITDA is increased by ~4% for 2021e-2023e. Positioned for growth Maha’s operations have been hampered by COVID-19, limiting activities in Brazil and restricting travel to Oman. However, given the acquisitions Maha has taken in the US and Oman and delays to activities in Brazil, the company should be well positioned to grow production as restrictions ease and activity can once again pick up.
With financing now in place, this should no longer be a limitation either. For ’21 we estimate production of 4. 7kboe/d, within the 4-5kboe/d guidance range.
The outcome of the soon-to-be-drilled Tie-4 horizontal should be a catalyst. USD 47/bbl discounted On our estimates, Maha discounts an oil price of USD 47/bbl (P/NAV 1. 0x, assuming a 15% WACC).
This compares to a spot oil price of USD ~69/bbl and ABGSC’s long-term oil price estimate of USD 60/bbl. In our view, with financing in place Maha is well positioned to grow production as COVID-19 limitations are gradually reduced.
