Meren Energy (MER) Q2 2024 earnings summary

Executive summary

• Cash balance decreased from $232M to $185.6M in H1 2024, mainly due to $51M returned to shareholders via dividends and buybacks.

• Prime's Q2 2024 EBITDA was $92M, with free cash flow of $77M, reflecting stable performance.

• Net income for Q2 2024 was breakeven or $0.4M, impacted by a $7M impairment from Africa Energy and a $12M negative overlift from Prime.

• Major agreement to consolidate the remaining 50% interest in Prime, bringing in BTG Pactual as a strategic investor.

• Advanced Orange Basin exploration and Venus project, positioning for transformational growth.

Financial highlights

• End Q2 2024 cash balance at $185.6M, down from $232M at YE 2023; remains debt-free at corporate level.

• $39M spent on share buybacks and $11M on dividends in H1 2024; total shareholder returns since March 2022 reached $143.4M.

• Prime's net debt at June 30, 2024 was $222.2M, down from $298.9M at YE 2023; combined net debt at $36.6M.

• Q2 2024 average oil sales price $89/bbl, above Dated Brent ($85.3/bbl); 1.5 cargoes net sold in Q2.

• Q2 2024 net income was $0.4M, down from $106.9M in Q2 2023.

Outlook and guidance

• Production guidance for 2024 is maintained, with expectations for improvement in the nine-month and full-year periods.

• New dividend policy post-Prime consolidation will set a $100M annual base, with 50% of excess free cash flow also distributed.

• Consolidation of Prime expected to double 2P reserves and production, increase scale, and introduce a strategic cornerstone investor.

• 2024 management guidance unchanged: Prime WI production (net to AOC 50%) 16,500–19,500 boepd; economic entitlement production 18,000–21,000 boepd; cash flow from operations $230–$320M.

• Completion of the Prime consolidation targeted for or before Q3 2025, subject to shareholder and regulatory approvals.