Global Petroleum : 26 January 2021 – Panmure Gordon - Namibian prospectivity increases here

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26-Jan-2021 07:15 For the exclusive use of ashley kelty. Not for redistribution

Ashley Kelty

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26 January 2021

Equity Research

Target Price: 2.00p

(unchanged)

Share Price: 1.38p

Key Data

Market Cap	£5m
DS Oil & Gas	0
Sector	Oil & Gas Producers
Stock Codes	GBPq.L / GBP LN
Last Published Research:	28 October 2020

Absolute & Relative Performance

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• Absolute

- Relative to DS Oil & Gas

Source Datastream

Investment Research

Global Petroleum

Namibian prospectivity increases

Global Petroleum has announced an upgrade to the prospective resources on its PEL-94 licence offshore Namibia. Further analysis on the 2D-seismic data acquired last year has led to the identification of seven new leads, with mean net prospective resources of 1.6bn bbls. This is over and above the 687mmbbls assigned to the drill-ready prospects at Marula and Welwitschia Deep (combined 687mmbbls net), meaning that PEL-94 has total net prospective resources of 2.3bn bbls. The company continues to seek a farm-in partner to drill the Marula and Welwitschia Deep prospects on PEL-94, with a data room anticipated to open in the near term. We remain of the view that Global is materially undervalued yet offers significant upside though transformational exploration. We retain our BUY recommendation and Target Price of 2.0p.

• The new leads identified on PEL-94 range in size from 10-371mmbbls (net), and the total prospective resources on the block have now trebled, and on a risked basis have leapt from 109mmbbls to 236mmbbls.
• Global's other Namibian Licence (PEL-29) expired last month, as further extensions are not permitted under Namibian law. Global had fulfilled all its work commitments on the block and intends to reapply for a new licence in due course. We do not see this as an issue, as the block offered longer term potential, with no prospects as well advanced as those found on PEL-94.
• Global continues to trade at a substantial discount to both peers and RENAV, despite the scale of resources on offer from the portfolio. We believe this discount should unwind as Global moves closer to securing a farm-in partner and/or drilling success in Namibia. We believe that the current price offers a good entry point to those seeking huge exploration upside in the virgin basins offshore Namibia. We retain our BUY recommendation and Target Price of 2.0p, which reflects the potential of Marula and Welwitschia Deep as drill ready prospects.

Year End	Sales	PBTA	EPS	DPS ord	P/E	EV/EBITDA	Yield
Date	(US$m)	(US$m)	(¢)	(¢)	(x)	(x)	(%)
2020A	0.0	(1.5)	(0.4)	0.0	n/a	(4.2)	0.0
2021E	0.0	(1.6)	(0.4)	0.0	n/a	(5.3)	0.0
2022E	0.0	(1.5)	(0.4)	0.0	n/a	(6.9)	0.0
						Source Company Data, Panmure Gordon

Panmure Gordon & Co acts as Corporate Broker in the UK to Global Petroleum

Panmure Gordon (UK) Limited

Please refer to the important disclosures shown towards the back of this note

Global Petroleum  New leads hint at block potential

26-Jan-2021 07:15 For the exclusive use of ashley kelty. Not for redistribution

NEW LEADS HINT AT BLOCK POTENTIAL

The new leads identified have significantly increased the potential prospectivity across the block, increasing the identified prospective resource from 687mmbbls (net) to 2,294mmbbls (net) and on a risked basis have leapt from 109mmbbls to 236mmbbls.

The prospective resources are all deemed to be sourced from the Barremian-Aptian marine "Kudu Shale" mudstone, which is a world-class quality source rock seen in the wells at Kudu, Moosehead-1,Murombe-1 and Wingat-1. It is worth noting that the Wingat-1 well recovered light oil to surface and is also located in the Walvis Basin like PEL-94.

The new leads predominately encompass plays in the Upper Cretaceous and Paleocene sandstones, which includes the Marula prospect and leads identified in the eastern part of the block, Lower Albian-Upper Aptian shallow water carbonates, which is the play that Welwitschia Deep is targeting; along with Lower-Upper Albian basinal sandstones.

The location of the prospects and leads are shown below:

Map of prospects and leads across PEL-94

Source Company

26 January 2021 2

Global Petroleum  New leads hint at block potential

26-Jan-2021 07:15 For the exclusive use of ashley kelty. Not for redistribution

Summary valuation

			WI	CoS	Liquids	Gas	Resource			Risked NAV			Unrisked NAV
Country	Field		(%)	(%)	(mmbbls)	(bcf)	(mmboe)	($m)	($/boe)	(p)	($m)	($/boe)	(p)
Namibia	PEL-94	(Welwitshcia Deep)	78.0%	10%	523.0	-	523.0	7.1	0.01	1.4	68.0	0.1	13.4
Namibia	PEL-94	(Marula)	78.0%	15%	164.0	-	164.0	2.5	0.02	0.5	16.4	0.1	3.2
Namibia	PEL-94	(leads)	78.0%	10%	1597.0	-	1597.0	16.0	0.01	3.2	159.7	0.1	31.6
Defined Exploration					2284.0	-	2284.0	25.5		5.0	244.1		48.2
Net (debt)/cash (Dec20 E)				100%				2.0		0.4	2.0		0.4
Post-tax E&A spend				100%
Tax losses (discounted)				100%
G&A (1 year)				100%				(1.5)		(0.3)	(1.5)		(0.3)
Corporate								0.5		0.1	0.5		0.1
Risked Exploration NAV (RENAV)				2284.0	-	2284.0	26.1	0.0	5.2	244.6	0.1	48.3

Source Panmure Gordon estimates

26 January 2021 3

26-Jan-2021 07:15 For the exclusive use of ashley kelty. Not for redistribution

Distribution of investment ratings for equity research (as of 11 Dec 20) Rating: GUIDELINE (return targets may be modified by risk or liquidity issues)

Overall Global Distribution (Banking Client*)		Buy	Total return of >10% in next 12 months
Buy	Hold	Sell	Hold	Total return >-10% and <+10% in next 12 months
67% (30%)	8% (5%)	25% (0%)	Sell	Total return <-10% in next 12 months

* Indicates the percentage of each category in the overall distribution that were banking and/or corporate broking clients

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26-Jan-2021 07:15 For the exclusive use of ashley kelty. Not for redistribution

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