Oilman Jim's Letter - October 26, 2024

Companies issuing interesting news last week: SEI.V SEUSF DELT.L 7RC0.F NHE.ASX NBHEF SEA.L 8YG.F ENQ.L ENQUF HEVI.V HEEVF MAN.ASX CQ4.F SNDA.L GHA.F HELI.V FHELF 2MC.F STX.ASX RJN.F

Sintana Energy (SEI.V SEUSF) announced a second exploration and appraisal campaign on blocks 2813A and 2814B located in Namibia’s Orange Basin. The blocks are governed by Petroleum Exploration License 83 which is operated by a subsidiary of Galp Energia of Portugal. Sintana maintains an indirect 49% interest in Custos Energy, which in turn owns a 10% working interest owner in PEL 83. NAMCOR, the National Petroleum Company of Namibia, also maintains a 10% working interest. The drill ship Santorini has arrived on location and the Mopane 1-A well was spud on October 23. This appraisal well is the first of an up to four well program potentially consisting of two exploration wells and two appraisal wells. This second campaign on PEL 83 is predicated on providing additional insights into the scope and quality of the Mopane complex. An inaugural two well exploration campaign that commenced in Q4 2023 resulted in multiple discoveries of significant columns of light oil in high-quality reservoir sands providing for an initial estimate of original oil in place of 10 billion barrels of oil equivalent. A drill stem test was also conducted resulting in an infrastructure constrained flow of 14,000 barrels of oil equivalent per day. The flows achieved during the well test reached the maximum allowed limits, positioning Mopane as, potentially, an important commercial discovery…more

Deltic Energy (DELT.L 7RC0.F) announced a strategic, operational and organisational update. Per the company, the UK is not the ideal place in which to invest in new oil and gas exploration or appraisal opportunities. Thus, over the next 12 months, Deltic's strategic focus will be on extraction of value from its existing core UK assets, principally the Selene prospect, eliminating or deferring expenditure on non-core UK assets, identifying and accessing opportunities in overseas arenas with an initial focus on projects with early cash flows and faster cycle times from entry to value crystallisation, and high-impact exploration. Meanwhile, operations continue on the Selene exploration well, where results from the logging and fluid sampling operations are awaited. In a success case, the intention would be to proceed directly to field development planning as further appraisal drilling is not considered to be necessary to support a future development investment decision. Furthermore, given the positive read across from Selene to the Blackadder prospect, Deltic says it has been in receipt of farm-in interest in the licence from a number of companies and, to allow time for discussions to mature, Deltic intends to defer the commencement of planned work programmes until at least mid-2025, minimising any near-term expenditure. Regarding the Syros prospect, the ongoing political and fiscal uncertainty in the UK has prevented a number of parties that participated in the farm-out process from moving forward with a transaction. Deltic has requested a 12-month extension from the NSTA to Phase A to allow a period of stability post the October budget in which Deltic could re-engage with those interested parties, however, the NSTA has indicated it is not minded to support the request and it is likely this licence will now expire on 30 November 2024. Regarding Dewar, given the continuing deterioration of the fiscal and operating environment in the UK since this licence was awarded in February 2024, Deltic has entered into negotiations with the NSTA in relation to the Phase A work programme requirements and the company does not intend to incur any of the planned costs associated with the Phase A work programme in 2025…more

Noble Helium (NHE.ASX NBHEF) announced that the initial three drill sites have been selected from 10 potential shallow targets identified so far. Mobilisation is progressing as planned and the rig will be on site along with wellheads and other critical equipment next week. The initial three drill sites have been scouted by the drilling team led by Noble Chief Operating Officer, Dermot O’Keeffe. They are said to be easily accessible and will require minimal preparation to accommodate the drill rig…more

Seascape Energy Asia (SEA.L 8YG.F) announced that it has been awarded a 28% participating interest in a small field asset production sharing contract over the DEWA complex cluster off the coast of Sarawak, Malaysia. Partners are EnQuest (ENQ.L ENQUF 3EQ.F) (42%, operator) and Petroleum Sarawak (30%). DEWA is comprised of 12 gas discoveries in shallow water (40-50 metres) near to infrastructure and the partnership is anticipated to initially focus on the D30, Danau, D41, D41W, Dana and Dafnah West discoveries, which are estimated by the company to contain around 83 million barrels of oil equivalent. Given the shallow water depths and nearby infrastructure, the partnership is targeting a low-cost development plan utilising normally unmanned platforms with minimal processing which could support a potential production plateau of up to 100 million cubic feet per day. The initial low-cost work commitment (approximately $0.6 million net to Seascape) is to conduct a detailed resource assessment and deliver a field development and abandonment plan within two years…moremore

Helium Evolution (HEVI.V HEEVF) announced that its partner, North American Helium, has given the company notice of its intention to drill a joint well in the Mankota area.  This is part of the development plan for up to nine wells in the area. The joint well is expected to spud before the end of October 2024 and HEVI holds a 20% working interest. The estimated total cost for the company’s share is approximately $0.4 million net. Helium Evolution holds the largest helium land rights position in North America among publicly-traded companies, focused on developing assets in southern Saskatchewan. The company has over five million acres of land under permit near proven discoveries of economic helium concentrations…more

Sunda Energy (SNDA.L GHA.F) announced an update on its operational and funding planning with respect to the TL-SO-19-16 production sharing contract in Timor-Leste as well as an update on the company's new business ventures. Process continues to advance with Pacific LNG for funding the Chuditch PSC appraisal and development, drilling rig negotiations are reaching an advanced stage against a backdrop of falling prices and greater rig availability, and the estimated spud date for the Chuditch-2 appraisal well is now expected in Q2 2025. Philippines licence awards are anticipated during Q4 2024, with other proposed new ventures under evaluation. As appraisal drilling on the Chuditch field approaches, the company is actively engaged with the government of Timor-Leste with regards to the potential future development and export of Chuditch PSC gas. As part of preparations for the Chuditch-2 appraisal well, Sunda is preparing to acquire an environmental baseline survey. Subject to vessel availability, this survey is scheduled to take place during Q4 2024. Per Andy Butler, Chief Executive Officer, the company remains confident of delivering on the project's significant potential…more

First Helium (HELI.V FHELF 2MC.F) announced its intention to increase the size of its non-brokered private placement financing from C$2,500,000 to C$3,000,000. The company will now issue up to 50,000,000 units at a price of C$0.06. Each unit will be comprised of one common share and one transferrable common share purchase warrant. Each warrant will be exercisable to acquire one share at a price of C$0.09 cents for a period of 36 months from the date of issuance, subject to an acceleration clause. The company intends to use the net proceeds from the offering to fund additional asset development and operating expenses on its Worsley project, as well as for general working capital. Members of the company’s management team are participating in the offering and insider participation will be in excess of 25%. First Helium holds over 53,000 acres along the Worsley Trend in Northern Alberta…more

Strike Energy (STX.ASX RJN.F) announced an exceptional production test at Erregulla Deep-1, the deepest well ever drilled onshore Australia. ED-1 stabilised rates of 53 million cubic feet per day were recorded with a very high flowing well head pressure of 5,515 pounds per square inch on a 46/64 inch choke. Flow rates were limited by surface equipment with well head pressures indicating the potential to stably flow at substantially higher rates and an absolute open flow of 400-450 million cubic feet per day…more

Mandrake Resources (MAN.ASX CQ4.F) announced a maiden JORC Code 2012 compliant inferred mineral resource estimate at its 93,755-acre Utah lithium project. The inferred resource estimate of 3.3 million tonnes of lithium carbonate equivalent establishes the project as a top tier US-domiciled lithium brine asset. Direct lithium extraction testwork via Rio Tinto-backed ElectraLith has successfully produced 99.9% pure battery grade lithium hydroxide from Utah lithium project brines. Per Mandrake it is ideally positioned in the Paradox Basin with well access, abundant existing infrastructure, access to a strong local workforce and an established regulatory environment. There is said to be strong news flow from forthcoming activities: re-entry of existing wells targeting reservoirs known to host high concentration lithium-rich brines likely to result in significant upside in lithium concentrations, production of large brine volumes from re-entry of existing wells to supply two DLE partner pilot plants, commencement of a scoping study, and further applications for US government funding opportunities following the recent award of US$1 million. Mandrake states it is well-funded with cash of A$14.9 million as of 30 June 2024.

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