Maha Capital (MAHA) Q2 2024 earnings summary

Executive summary

• Completed transformative M&A, including the DVO transaction and roll-up of a 15% stake in 3R Offshore into 3R Petroleum, becoming the 4th largest shareholder in the merged 3R and Enauta entity, and exited Oman, reshaping the portfolio and strategy.

• Initiated a share buyback program for up to 10% of shares, approved by AGM, to enhance shareholder value and provide flexibility for M&A.

• Enhanced capital structure with $141.8M in cash and investments, and full repayment of old debt, improving liquidity and reducing interest costs by nearly 50%.

• Net loss of $22.7M to $23.1M in Q2 2024, mainly due to a $20M unrealized loss from 3R Petroleum share depreciation and non-recurring M&A/legal costs.

• Focused on value generation through M&A and operational expansion in Latin America.

Financial highlights

• Q2 2024 revenue increased 65–66% year-over-year to $2.19–$2.2M, driven by higher oil prices and new wells in Illinois.

• Operating netback of $1.1–$1.2M and margin improved to 50% in Q2 2024.

• Negative EBITDA of $(0.86)M and net loss of $(22.7)M, mainly from unrealized 3R share losses and one-off M&A costs.

• Cash and equivalents (including restricted): $36.7M; financial assets: $72.9M; financial liabilities: $23.9M as of June 30, 2024.

• CAPEX of $0.6–$0.61M in Q2 2024, mainly for new drilling in Illinois Basin.

Outlook and guidance

• Confident in receiving OFAC license for Venezuela, with plans to test wells and ramp up production if successful.

• Production ramp-up in Illinois Basin expected to continue in Q3 2024 with three new wells.

• Management expects strong cash flow generation from 3R Petroleum and substantial profit from 3R Offshore investment in Q3.

• Significant dry powder for future M&A following 3R and Enauta merger.

• Share buy-back program to commence, aiming to repurchase up to 10% of shares.