Positive FCF in 2020e with new oil price estimate

Refinancing gap closed – improved flexibility to grow

USD 39/bbl appears to be discounted

Positive FCF in 2020e with new oil price estimate
We have increased our Brent oil price estimates to an average of USD 43(31)/bbl in ‘20e and USD 50(43)/bbl in ‘21e. With expectations of a higher operating cash flow, we see room for slightly higher capex over the next two years, resulting in production being brought forward. With both higher price realisation and volumes estimates, we increase our revenue estimates by 55% for ’20e and 37% for ’21e. FCF is estimated at USD 9m (-6m) and USD 25m (18m) for the corresponding period.

Refinancing gap closed – improved flexibility to grow
As per Q1’20 Maha Energy had NIBD of USD 9.9m and a SEK 300m (USD 29m) bond outstanding, with maturity in Q2’21. We now estimate a gross cash position at maturity of USD 34m (which closes the previously estimated refinancing gap). The company’s strong balance sheet should leave room for further flexibility to grow the portfolio as oil prices recover, and simultaneously give increased diversification between the assets.

USD 39/bbl appears to be the discounted oil price for Maha
On our estimates, an oil price of USD 39/bbl appears discounted for Maha Energy. With a USD 60/bbl long-term oil price, we estimate a current P/NAV of 0.48x and a FCF-yield of 6% and 16% for ’20e and ’21e respectively. The Q2 results will be published on 24 August.

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