Oilman Jim's Letter - December 18, 2024

Sintana Energy (SEI.V SEUSF) announced the entry of QatarEnergy into the Petroleum Exploration License 90 joint venture through its acquisition of a 27.5% working interest in the license and petroleum agreement associated with Block 2813B operated by Harmattan Energy, an indirect subsidiary of Chevron. Upon completion of the acquisition the license owners will be 52.5% Chevron as operator, 27.5% QatarEnergy, 10% National Petroleum Corporation of Namibia and 10% Trago Energy, a wholly owned subsidiary of Custos Energy, in which Sintana maintains a 49% indirect interest. Located approximately 200 kilometres offshore in Namibia’s Orange Basin and approximately 70 kilometres north of TotalEnergies’ Venus discovery, in which QatarEnergy is also increasing its ownership, Block 2813B’s license covers an area of 5,433 square kilometres in a water depth of 2,400 to 3,300 metres. Earlier this year, the joint venture contracted Northern Ocean’s semi-submersible drilling rig Deepsea Bollsta for its inaugural exploration campaign in PEL 90 and the rig is mobilizing to drill the Kapana-1X well in the second half of December 2024…more

Prospex Energy (PXEN.L) reported flow rates from the testing of the recently drilled and completed Viura-1B development well in northern Spain, which exceeded pre-drill expectations. Viura-1B achieved flow rates up to 17.7 million cubic feet per day (2.6 million cubic feet per day net to Prospex). The well will now be placed on long term production at a stabilised plateau rate of 10.6 million cubic feet per day (1.5 million cubic feet per day net to the company), more than doubling net production since the beginning of December to 2.9 million cubic feet per day. This increase does not include production from the existing Viura-1ST3 well which has been producing intermittently since mid October at rates up to 7.1 million cubic feet per day (1.0 million cubic feet per day net to Prospex) as water handling issues are managed until the completion of the current workover on the Viura-3 water injection well. Increased energy prices in Europe also have resulted in much higher revenues. Eleven further wells are planned in the next 18 months to two years across Prospex's three onshore production concessions in Spain and Italy, and prospective blocks identified for acquisition in Poland…more

Helium Evolution (HEVI.V HEEVF) announced preliminary test results from its 10-1-4-9W3 helium discovery well. HEVI holds a 20% working interest in the 10-1 well, in partnership with the operator, North American Helium. Completion, perforation and initial production testing of the well is ongoing and at the end of a 4-day extended flow testing period, the 10-1 was producing approximately 9.5 million standard cubic feet per day at 10,800 kilopascal flowing tubing pressure. The preliminary test also confirmed a helium content of 0.75%, higher than the commercially viable threshold of 0.3%. Additionally, the well produced negligible water, indicating strong potential for efficient helium recovery and processing. HEVI states that it continues to work closely with North American Helium to plan the next phase of development. This includes the drilling of a joint well at 10-36-3-9W3, which is expected to spud on or around January 2, 2025, subject to surface conditions. The 10-36 well is designed to further delineate the helium pool and support the continued expansion of the project. HEVI intends to participate in the 10-36, with the estimated total cost for the company’s share being approximately $0.4 million. A portion of this cost will be paid for in-kind, with HEVI contributing spare casing inventory to the project. In addition to drilling activities, North American Helium is evaluating the installation of processing facilities in the area, which HEVI supports. The installation of a processing facility will be contingent upon positive evaluation of results in Q1 2025. Establishment of processing facilities is an essential step in HEVI’s strategy to move toward commercial helium production…more

Arrow Exploration (AXL.V CSTPF AXL.L C1JT.F) announced that it has reached target depth at the Alberta Llanos-1 well on the Tapir Block in the Llanos Basin of Colombia using the contracted Petroworks rig. The well was successfully spud on November 30, 2024 and reached target depth on December 13, 2024. The well targeted a three-way fault-bounded structure with multiple reservoir objectives and was drilled to a measured depth of 9,960 feet (8,846 feet true vertical depth). According to initial log interpretation, the well encountered four main hydrocarbon bearing reservoirs with a total true vertical depth value of 121 feet, including the C7, Gacheta, Guadalupe, and Ubaque, and the company intends to start production testing shortly. The next steps are said to be to put the well on production and once done, the rig will immediately move to drill Alberta Llanos-2 to further evaluate this discovery…more

Zephyr Energy (ZPHR.L ZPHRF VD5N.F) announced an update on funding and operations on the State 36-2R LNW-CC well at the Paradox project, Utah. The company has now entered into binding documentation to fully-fund all expected drilling, completion and production test costs in the amount of $7.5 million from a US based industry investor in exchange for a 50% non-operated working-interest in the single well. Zephyr also has retained a right of first refusal to repurchase the working interest at a discount to fair market value in the event that the wellbore investor chooses to sell its 50% non-operated working-interest in the future. Net revenues from the well will be split 50:50 between Zephyr and the wellbore investor from the time of first production. The company expects full drilling operations for the extended lateral to begin in early January 2025. Once drilling operations have been completed, the Zephyr will immediately proceed to a production test, with results expected in the first quarter of 2025…more

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