Maha Energy - 2020 is behind us, welcome 2021

We expect Q4 production of 2,732boe/d 2020 operational challenges behind us Debt refinancing needs to be concluded We expect 2,732boe/d for Q4 Based on monthly production updates from Maha Energy, we estimate a Q4 production of 2,732boe/d, leaving YE’20e production at 3,340boe/d. We estimate EBITDAX of USD 4. 3m (down 21% q-o-q, driven by lower production). 2020 was a challenging year but also with new opportunities 2020 was a challenging year amid COVID-19 but also for Maha’s own operations, particularly the troublesome workover on the GTE-4 and delays to activities in Brazil.

With the workover concluded and the Tie-2 well on stream, we think the majority of the issues that affected the company in 2020 are now behind us. The company has aggressive growth plans, and for 2021 we pencil an average production of 5,006boe/d. This compares to the 2020 exit rate of 4,112boe/d and keep in mind that the Tie-3 well is expected to be completed in the later part of Q1.

Maha was also able to use 2020 to expand into Oman, and the ability to execute on growth constitutes an upside to our estimates. The main driver for ’21 estimate revisions is our higher oil price assumptions of USD 58/bbl (USD 50/bbl). Debt refinancing needs to be concluded We estimate that an oil price of USD 46/bbl is discounted in Maha’s current share price.

Given the company’s aggressive growth plans, we expect single digit P/E for ’21-’22. The issue of the refinancing of the SEK 300m bond that matures in May 2021 is still outstanding, and we estimate NIBD at the time of maturity of USD 23m.