Petrolia Noco - A proven explorer

An NCS exploration company 20% partner in the Dugong discovery made in 2020 We estimate a fair value range of NOK 3-12/share An NCS exploration company focused on near-field drilling Petrolia Noco is an NCS oil and gas exploration and production (E&P) company with nine exploration and two production licenses. Its primary focus in the oil and gas life cycle is the exploration phase, in particular in near-field exploration with the Tampen area in the North Sea being defined as the core focus. 20% partner in the Dugong discovery, three firm wells ahead The company’s main asset is its 20% partnered stake in the Dugong discovery, which has a gross recoverable resource estimate of 40-108mill boe. The partners on the discovery are currently maturing the discovery with the purpose of delivering a plan for development and operations (PDO) by YE’22, in order for the development to be covered by the favourable temporary tax regime on the NCS.

Petrolia Noco has a firm commitment for three exploration wells: Dugong Tail, Molaris and Bounty. The first two will be drilled in 2021 while Bounty will be drilled in 2022. All three wells have a pre-drill resource range, which if successful would make a substantial contribution to our estimate for Petrolia Noco’s asset base.

Fair value range of NOK 3-12/share Our core NAV points to NOK 3. 6-6. 3/sh, with oil priced at USD 50-70/bbl.

This is essentially all related to the Dugong discovery. Further to the core NAV we estimate that the risked exploration could add NOK 4-7/sh, assuming transaction prices of USD 2-4/boe. On an un-risked basis, the firm exploration programme could be as much as NOK 14-29/sh assuming a divestible value of USD 2-4/boe.

Taking into account that small E&Ps usually trade at a P/NAV of 0. 5-0. 8x we argue for a fair value range of NOK 3-12/sh for the next six months.