Maha Energy
Maha Energy - Robust enough for a depressed 2020 (ABG Sundal Collier)
2020-03-25 08:08
Sizeable estimate revisions on oil price
Only minor refinancing gap at bond maturity
USD 35/bbl oil price appears discounted
Sizeable estimate revisions on oil priceWe have lowered our Brent oil price estimates to an average USD 31 (62)/bbl in ’20e, USD 42.5 (65)/bbl ’21e and USD 60 (65)/bbl ’22e. As a result, we expect most growth capex to be postponed to the end of 2021/beginning of 2022, which we estimated will defer the production plateau initially planned for 2023 by roughly one year. Consequently, we lower our revenue estimates by 59% for ‘20e and 44% for ‘21e, while FCF is estimated to USD 0 (28m) and USD 18 (53m) for the corresponding period.
Minor refinancing gap at maturity – looks robust
As at year-end ’19, the NIBD was SEK 8.2m. The company has a SEK 300m (USD 31m) bond outstanding of 12% semi-annual interest with maturity in Q2’21. We estimate gross cash at bond maturity of USD 28m. This leaves a minor refinancing gap, which we deem manageable. Moreover, we estimate a minimum gross cash position of USD 20m until maturity with no risk in breach of covenants.
USD 35/bbl oil price appears discounted
On our estimates, an oil price of USD 35/bbl appears discounted for Maha Energy. If oil prices recover to USD 60/bbl in the long term, we estimate a NAV of SEK 24/sh.
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