15:43:11 Europe / Stockholm

Prenumeration

2022-11-21 15:15:00

Lowest production levels since 2018 but robust indicators that workover is completed
At 2 389 BOEPD, production levels in Q3 were the lowest since Q3 2018 and the company lowers guidance to 3 000-3 400 BOEPD for 2022. Although workover cost and lost production in the Tie field impacted production and EBITDA negatively, with the workover program completed and with signs that the wells in Tie are back onstream we should see production levels pick up coming quarters. With the lower levels in Q3 and a lower base we cut 2022-2024 EBITDA by 15-20%.

Management wants to use Maha as a platform for growth
Focus ahead is on expanding Maha’s footprint, both through organic and inorganic growth. Opportunistic M&A transactions will be critical to realize this, and the capital structure needs to be optimized. The portfolio will be analyzed and we should expect both divestments and new developments. With diversification of production, including a higher share of natural gas, risks should decrease and cash flow should become more stable.
 
Risk/reward remains compelling
Even though the earnings trend has fallen sharply on the back of the production shortfalls, compared to historical levels, earnings are still high in absolute terms. The share price still fails to reflect this – the market clearly does not take the planned production increases for granted. In case the company is able to deliver on raising the production and the growth initiatives we believe there is significant upside in the share as we should see a rerating of the stock. We find risk/reward compelling.

Read the full analysis, published 21-11-2022 at 11:48: https://docs.penser.se/a/3312/Maha221121.pdf
This is a press release from Erik Penser Bank. Read more here: https://epaccess.penser.se/