Unexpected headwinds for Brava Energia
Brava Energia (Brava), the company that is the result of the 3R Petroleum–Enauta merger, experienced some unexpected headwinds during Q3, including downtime and delayed start-up at its two largest assets. Maha is the largest industrial shareholder of Brava and the company is confident production will resume and start ramping up before year-end 2024. According to Maha’s estimates, Brava has the potential, fully invested, to reach 100,000 boepd during the coming months. Based on an oil price (Brent) of USD70/bbl, Maha believes Brava will be able to distribute dividends to Maha over the next three years that correspond to Maha’s current market cap.

Approval for sanction exemptions and start of production would be a game-changer
In Venezuela, Maha obtained the approval from the Venezuelan Oil Minister to acquire PetroUrdaneta. The company is still targeting an OFAC license from the US that would exempt it from the sanctions on the Venezuelan O&G sector. Maha’s ambitions are to launch production as soon as possible. The preliminary analysis is that the PetroUrdaneta fields have the potential to reach production of more than 20,000 boepd within a few years. We believe a positive outcome in the OFAC application process and the start of production in Venezuela would be a game-changer for Maha.

Resumed production for Brava’s two largest assets the key share price catalyst
Maha’s share price is highly correlated with Brava’s, which is natural since Brava accounts for the majority of Maha’s value (not taking the optionality in Venezuela into account). Brava’s share price fell 38% in September owing to the unexpected downtime and start-up delays at its two largest assets. Should production resume and the ramp-up prove successful, we would expect a bounce-back in Brava’s share price, in turn driving up the Maha share. We reduce our fair value range to SEK8–10 (11–14) to reflect the drop in Brava’s share price.

Read the full report, published on 21-11-2024 at 10:12 AM: https://researchdocs.carnegie.se/research/2024/11/21/maha_q3_2024_edited.pdf
This is a commissioned research from Carnegie Investment Bank. Read more here: Commissioned Research - Carnegie