Highlights
(all amounts are in US dollars unless otherwise noted)
Third Quarter 2024
- Daily oil production from the Illinois Basin increased 54% to 276 BOEPD in Q3 2024 compared to Q3 2023, following the completion of the development program approved in Q3 2023.
- Revenue of MUSD 1.8 increased 44% in Q3 2024 compared to Q3 2023.
- Operating netback of MUSD 0.9 increased 71% in Q3 2024 compared to Q3 2023, mainly due to higher production.
- Completion of the transaction involving the roll up of Maha’s 15% shares in 3R Offshore to Brava Energia through sale of Maha’s wholly owned subsidiary Maha Energy (Holding) Brasil Ltda. in exchange for 10,081,840 common shares in Brava Energia. Adding these shares with Maha’s previous position of 12,019,184 shares of 3R Petroleum, Maha Energy ended up with a holding of 4.76% in Brava Energia.
- The price of Brava Energia shares was calculated as per closing documents to be BRL 29.78 per share, resulting in a total value of TUSD 53,021. The equity value of Maha Energy (Holding) Brasil Ltda. as of 31 of July 2024 was TUSD 35,078. The difference between the book value of the shares received and the equity value of the investment amounted to TUSD 17,943 and has been recognized as a capital gain under discontinued operations.
- Net loss of continuing operations MUSD 42.8, mainly impacted by an unrealized net loss of MUSD 40.6 from the market value of Brava Energia shares during the quarter.
- In September 2024, Maha’s potential acquisition of indirect interest in PetroUrdaneta was approved by the Venezuelan Oil Minister.
- Total cash balance of MUSD 25.7 (including restricted cash of MUSD 5.8).
- Liquid investments of MUSD 77.4, represented by Brava Energia shares and debentures issued by 3R Offshore.
- Buy-back program to repurchase up to 10% of Maha Energy’s outstanding shares launched. As of September 30, 2024, the Company repurchased 1,528,922 shares (0.86% of outstanding shares).
- In August 2024, Maha Energy decided to fully amortize its outstanding bank debt with BTG of TUSD 24,000 using cash collateral deposited in restricted cash accounts, resulting in approximately TUSD 600 of savings on interest for the next quarters.
- In August 2024, a new loan agreement was executed for MUSD 15, with a one-year term and an interest rate of 6.9% per annum, payable quarterly.
Subsequent Events
- In October 2024, approximately MUSD 4.5 held in the escrow account related to Maha Brazil Transaction was released in exchange for a bank guarantee.
- In November 2024, Maha repaid its bank debt of MUSD 15 to avoid granting additional cash collaterals resulting in a higher cost of debt.
Financial Summary
The tables below present the highlights of the continuing operations:
| Financial Summary (TUSD) | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 | Full Year 2023 |
| Average (BOEPD) | 276 | 179 | 311 | 207 | 197 |
| Revenue | 1,805 | 1,250 | 6,165 | 4,061 | 5,226 |
| Operating Netback | 902 | 527 | 3,192 | 1,645 | 2,197 |
| EBITDA | (1,586) | (661) | (1,719) | (2,134) | (3,900) |
| Net Result | (42,862) | (3,898) | (59,547) | (5,668) | (6,755) |
| Earnings per share (basic & diluted) | (0.25) | (0.02) | (0.35) | (0.04) | (0.03) |
| Financial Liabilities | (14,835) | (39,516) | (14,835) | (39,516) | (34,379) |
| Financial assets | 83,579 | 9,000 | 83,579 | 9,000 | 1,301 |
| Cash and cash equivalents (incl. restricted cash) | 25,673 | 140,006 | 25,673 | 140,006 | 131,076 |
Letter to Shareholders
Dear Friends and Fellow Shareholders,
We accomplished important milestones in the third quarter of 2024. In Brazil, Maha’s proposed consolidation in the Brazilian E&P industry was successful as the merger between 3R Petroleum and Enauta closed at end of July, now under the new name Brava Energia. The merger which was executed in just 6 months included the roll-up of Maha’s ownership in 3R Offshore, and Maha is now holding 4.76% in one of Latin America’s largest E&P companies.
The merged company has experienced some unexpected headwinds, including downtime and start-up delay in the two largest assets, and the Brava share price significantly decreased during September. We are however confident that production will resume and start ramping up before year-end of 2024. With more than 700 MMBOE in 2P reserves, and a fully invested production capacity of around 100,000 BOEPD the company will generate significant free cash flows going forward.
Deleverage and dividend capacity is what drove our investment in 3R and the merger with Enauta, and it continues to be our agenda as the largest industrial owner in Brava. Maha’s internal estimates, based on public information and a Brent price of USD 70 bbl, indicate that Brava over the next 3 years will have the capacity to pay dividends to Maha equal to our entire market capitalization.
In Venezuela we received the important approval from the Venezuelan Oil Minister to acquire PetroUrdaneta. In parallel we are working on the OFAC license from US, commercial offtake agreements and on the organizational and asset development plans. Our ambition is to launch production as soon as possible. Based on our preliminary technical analysis, we believe that production of PetroUrdaneta’s fields has potential to reach above 20,000 BOEPD within a few years.
In the Illinois Basin, we added three new production wells in September and saw production increase to around 400 BOPD by the end of the quarter. Going forward the asset will generate free cash flows supporting our G&A. The increasing Illinois production resulted in revenues of MUSD 1.8 and operating netback of MUSD 0.9, up 44% and 71%, respectively, from Q3 2023.
Following the roll-up of our offshore assets, we recorded an unrealized net profit in discontinued operations during the quarter of MUSD 18. However, the market value of the Brava share price resulted in an unrealized net loss of MUSD 40.5, which significantly impacted our net result for the period.
We have continued to adjust the balance sheet. In October, we released the vast majority of the remaining cash held in the escrow account and in November, we repaid in full the Company’s outstanding short-term bank loan. In effect, Maha is now a debt free company that stands strong and continues to be well equipped to fulfill our obligations and plans.
Kjetil Braaten Solbraekke (CEO)
Q3 Webcast 19 November at 14:00 CET
The Company invites all interested parties to a live webcasted presentation on 19 November at 14.00 CET. Kjetil Solbraekke, CEO, and Roberto Marchiori, CFO, will present the report and recent developments.
The webcast will be held in English and will be broadcasted live. An on-demand version will also be available on Maha’s website. Questions to the presenters can be emailed in advance to the Company at info@maha-energy.com or be made directly on the day of the presentation in the YouTube Comments/Questions field.
Link to webcast: https://youtube.com/live/D7tlDJ1eD5k?feature=share