Oilman Jim's Letter - 15 April 2024

Valeura Energy (VLE.TO VLERF 83PN) announced three oil discoveries on its assets in the offshore Gulf of Thailand, one in the Nong Yao D area and two in the north-east portion of the Wassana concession. Following this exploration drilling campaign, the company is returning to both infill drilling and development work, which is intended to increase production rates over the coming months to support cash flow generation, particularly, it says, as benchmark oil prices rise to new highs for this year. The company is also planning for further exploration drilling elsewhere in its portfolio later in the year.

88 Energy (88E.AX EEENF 88E.L POQ.F) announced dual reservoir success at Hickory-1 with a second light oil discovery at the SMD-B reservoir. A peak flow rate of around 50 barrels of oil per day of light oil was recorded under nitrogen lift. The Upper SFS had a previously announced peak flow rate of over 70 barrels of oil per day under natural flow. Both flow rates result from low volume stimulations over small 20 feet perforated intervals in the vertical well. It is anticipated that these reservoirs will be developed from long horizontal production wells which typically produce at multiples between 6 to 12 times higher than vertical wells. The results are also relevant for Pantheon Resources (PANR.L PTHRF P3K.F), which owns adjoining leases. Per 88E, commercialisation options are to be advanced in parallel, including farm-out to a strategic development partner and/or early, capital-lite production, given proximate infrastructure advantages. Hickory-1 is next to Dalton Highway and the Trans-Alaskan Pipeline System.

EnergyPathways (EPP.L) announced an update regarding operational and strategic progress. The outcome of outstanding licence applications is expected in H1 2024 and the company is engaging with regulators to enable fast-track development of its Marram gas project. Progress on front-end engineering design work-streams is being made, including commencement of discussions with infrastructure hosts. Developing a fully electrified Marram subsea development concept to be 100% powered with renewable energy is said to be aligned to UK Government energy strategy. The company’s plan is to develop a clean energy hub to harness the large untapped gas resources, wind energy and high-quality geo-storage reservoirs of the UK Irish Sea.

Alvopetro Energy (ALV.V ALVOF A6Y0.F) announced that it has filed a material change report which details the anticipated impact to following the decision of the independent expert in the redetermination process which increased the company's working interest in the unitized area which includes Alvopetro's Caburé natural gas field, plus the receipt of a notice of dispute from the third-party partner with respect to the findings of the expert. Alvopetro's working interest in the unit has increased from 46.2% to 56.2%, with such increase expected to become effective on June 1, 2024. As of the effective date, the company's entitlement to natural gas production from the unit will increase to 13.9 million cubic feet per day (before additional natural gas liquids volumes), compared to average 2023 natural gas production from the unit of 11.7 million cubic feet per day and Alvopetro has the right to assume operatorship of the unit. The company's before tax net present value of 2P reserves discounted at 10% increases 10.6%, from $309.7 million to $342.4 million.

Helix Exploration (HEX.L) announced a strategic partnership with Petroleum Consultants, headquartered in Billings, Montana. The company's selection was based on Petroleum Consultants’ extensive operational experience within the State of Montana and across the United States, particularly in managing exploration activities throughout the Rocky Mountains region. The execution of this contract marks the initiation of Helix’s Phase 1 work programme and first steps towards the delivery of a drilling campaign in Q3 2024. Helix raised £7.5 million in funding through its IPO in early April 2024 and is funded for the contracting of a drilling rig for the Ingomar Dome helium appraisal drilling. The company has exchanged a draft drilling contract with a supplier and anticipates executing the agreement within the coming weeks.

Grand Gulf Energy (GGE.AX GRGUF) announced that, following a seismic, petrophysical, completion and production review of analogue helium fields in the region, the company has identified three highly prospective deeper stacked potential helium reservoir targets that will be tested in future well operations. Per Grand Gulf, the updated well design and engineering (casing and perforating the entire basinal stratigraphic section) will add significant helium upside to the already identified Mississippian Leadville dolomite (10.9 billion cubic feet) and Devonian McCracken sandstone (2.7 billion cubic feet) targets. In a success case, deeper helium reservoirs will be perforated and tested for modest additional cost.

Corcel (CRCL.L RM4B.F) announced an update to Tobias Field reactivation activities in Block KON-11 in the Kwanza Basin, onshore Angola, where the Company has a 20% working interest (18% net). The operator, Sonangol, has now reported the conclusion of initial well test efforts at the TO-14 well in Block KON-11 with ongoing engineering work set to continue.  Well clean-up operations using nitrogen resulted in significant water production with oil shows and nominal oil saturation levels. Given shortages of nitrogen in Luanda, the operator has made the decision to move to testing the TO-13 well, which has been drilled in what is considered the least drained section of the reservoir and historic field. The equipment move is expected to take approximately 7 days after which formal testing will begin.  Subject to a successful well test at TO-13 and related engineering studies, the operator intends to return to TO-14 and continue well clean-up and testing operations.

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