Oilman Jim's Letter - 10 March 2024

Interesting news from a number of companies last week. Eco (Atlantic) Oil & Gas (EOG.V ECAOF ECO.L EOI.F) announced it has signed a farm out agreement pursuant to which it will farm out a 13.75% participating interest in Block 3B/4B, offshore South Africa as part of an aggregate 57% farm down transaction along with its JV partners, Africa Oil (AOI.TO AOIFF AFZ.F) and Ricocure. Farmees are TotalEnergies (TTE TTE.L), which will become operator, and QatarEnergy. Upon completion, Eco will retain a 6.25% interest. The transaction has a maximum value, including carry, of up to US$32.1 million to Eco, which includes payments due to Eco from Africa Oil and Ricocure under previously announced agreements. The carry is expected to be adequate to fund Eco's share of drilling up to two wells on the licence.

Invictus Energy (IVZ.AX IVCTF) announced that fluid sample analysis confirms a rich gas condensate discovery in the Mukuyu well, Zimbabwe. The company says it is high quality natural gas with minimal impurities (less than 2% carbon dioxide and no hydrogen sulfide) which will require minimal processing for sale to downstream customers. Helium and hydrogen also was confirmed in the gas stream and analysis of multiple additional samples is in progress. Per the Managing Director, Scott Macmillan, Invictus is extremely pleased with the early results which confirm a large and rich gas-condensate discovery at Mukuyu and provides the company with confidence as its prepares for the next phase of its appraisal program and works towards the monetisation of the Mukuyu gas discoveries, plus further exploration of its portfolio of multiple drill ready prospects.

Challenger Energy (CEG.L BSHPF) announced the farm-out of 60% of the AREA OFF-1 block in Uruguay to Chevron (CVX CHV.F). Chevron will pay to Challenger US$12.5 million cash and carry 100% of CEG's share of the costs associated with a 3D seismic campaign on AREA OFF-1 up to a maximum of US$15 million net to Challenger. Chevron will acquire a 60% participating interest in the AREA OFF-1 block, and will assume operatorship of the block. Challenger will retain a 40% non-operating interest. Following the 3D seismic campaign, should Chevron decide to drill an initial exploration well on the AREA-OFF 1 block, Chevron will carry 50% of CEG's share of costs associated with that well, up to a maximum of US$20 million net to Challenger.

Reconnaissance Energy Africa (RECO.V RECAF 0XD.F) announced the grant of incentive stock options to certain directors and officers of the company to acquire an aggregate of 2,800,000 common shares at an exercise price of $1.40 per share. This follows news the previous week that, subject to court approval, ReconAfrica has reached a global settlement of the class action lawsuits pending against the company in the United States and Canada. Expected in June 2024, subject to finance (farm-out, equity raise, or both), is the spud of the first well on the Damara Fold Belt Prospect L. The company is currently in the process of preparing well site access roads and preparing the drilling pad. Follow-up drilling is expected to be either Prospect M or Prospect P. Both locations are being prepared for drilling operations.

Noble Helium (NHE.AX NBHEF) announced a significant probable free gas cap at Mbelele, said to be six times larger than originally mapped. The probable free gas cap could underpin short term monetisation options on a standalone basis according to the company. The potential is described as “phenomenal.” Meanwhile, fellow Tanzanian explorer Helium One Global (HE1 HLOGF 9KE.F) announced a forward operational update. Drill stem test results carried out on the Itumbula West-1 well have calculated a minimum flow rate of 0.5 million cubic feet per day containing 4.7% helium and an extended well test is planned on the well in Q3 2024.

Finally, Chariot (CHAR.L OIGLF C62) announced that it has received approval for its Environmental Impact Assessment for drilling activity on its Loukos licence, onshore Morocco. The EIA covers a total of 20 well operations, including an initial drilling campaign of 2 exploration wells on the Gaufrette and Dartois prospects, a further 17 candidate well locations and re-entry of an existing gas discovery. The permit is valid for a period of 5 years and civil works have commenced to prepare the first well locations and access routes. The company says it is on track for commencement of operations around the end of Q1 2024.

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