Meren Energy (MER) Q3 2024 earnings summary

Executive summary

• Prime consolidation is expected to close by end of Q1 2025, ahead of previous guidance, with key regulatory and shareholder approvals obtained and only a few conditions remaining.

• The deal will double reserves and production, more than double free cash flow, and introduce a new shareholder returns program with a threefold increase in dividends and a commitment to distribute 50% of excess free cash flow.

• Three major strategic transactions were signed, including farm downs in Namibia and South Africa and consolidation of Nigerian assets, adding over $1 billion in value.

• Increased shareholding in Impact to 32.4%, with a call option exercised to reach 39.5%, enhancing influence over strategic assets.

• Distributed a semi-annual dividend of $0.025 per share and restarted the share buyback program after exiting the blackout period.

Financial highlights

• Q3 2024 net adjusted income (excluding non-cash impairment) was $25.3 million, while reported net loss was $289.2 million due to a $305 million non-cash impairment on Prime investment.

• Prime achieved average sales prices of $80.8/bbl in Q3 2024 and $84.60/bbl for the first nine months, both above Brent benchmarks.

• Q3 2024 cash position was $136.1 million, down from $201.5 million in Q3 2023, after dividends, buybacks, and investments.

• Combined net debt reduced to $28.6 million at end Q3 2024; Prime's net debt was $164.7 million, down from $298.9 million at YE 2023.

• Q3 2024 cash flow from operations was $68.2 million; nine-month cash flow was $214.9 million.

Outlook and guidance

• Full-year 2024 entitlement production guidance is 18,000–21,000 boepd; working interest production guidance narrowed to 16,500–18,500 boepd.

• Cash flow from operations for 2024 is guided at $260–$290 million, with capital investment of $80–$110 million.

• Ongoing and future drilling in Namibia and South Africa is fully carried, with no CapEx required outside Nigeria.

• Venus development in Namibia expected to deliver first oil in 2029, supporting long-term cash flow.

• Enhanced shareholder returns program, including an enlarged base dividend policy, to be implemented post-consolidation.