Oilman Jim's Letter - 24 March 2024

Reconnaissance Energy Africa (RECO.V RECAF 0XD.F) announced a C$15 million bought-deal public offering. 16,666,700 units of the company are being issued at a price of C$0.90 per unit, each comprised of one common share and one common share purchase warrant exercisable at C$1.15. If the share price goes over C$2.50, the company can accelerate the expiry date, effectively forcing warrant holders to exercise immediately, thus raising up to a further C$19.2 million. ReconAfrica also has engaged the services of FTB Capital to conduct investor awareness, advertising and marketing activities. The agreement runs from March 18, 2024 to December 31, 2024 and FTB will be paid a fee of US$995,000 for its services, plus be granted two million options in the company at an exercise price of $1.10. Let’s see how they get on. There’s a helpful interview with Brian Reinsborough, President & CEO of ReconAfrica here.

Pulsar Helium (PLSR.V PSRHF Y3K.F) announced that its shares have commenced trading on the OTCQB Venture Market in the United States. Per the company, this is an important component of its efforts to increase Pulsar’s profile and exposure to a broader audience, including the US investment community. Pulsar also has investor awareness agreements running, which were announced in January 2024. Latest fundamental news was the previous week, noting that eleven samples from the Jetstream #1 appraisal well were analysed and helium contents of up to 13.8% were measured. Edelgas Group, an international gas advisor firm, says that having compared this to their extensive database for helium occurrences around the world, the results from Jetstream #1 are the highest helium concentrations they have ever seen. A well testing package is intended to rig up on Jetstream #1 and execute a flow testing and pressure build-up program, plus collect pressurised gas samples for laboratory analysis when road conditions allow heavy traffic to return.

Pantheon Resources (PANR.L PTHRF P3K.F) announced interim results. Cash on hand at 15 March 2024 was US$8.7 million. Per David Hobbs, Executive Chairman, an updated report is expected from Netherland, Sewell & Associates at or near the end of this month, updating its resource estimates for Kodiak to include the new acreage acquired in the State of Alaska's December 2023 lease sale. Netherland Sewell is also working on a resource estimate at Ahpun, targeted for completion at or near the end of Q2 2024. Final investment decision for Ahpun is targeted by the end of 2025 and for Kodiak in 2028. Shorter term, the company is working to optimise a funding platform for the Ahpun development and says it will provide a preliminary update over the coming weeks, with a goal of finalising strategy by the end of Q2 2024. An informative interview with David Hobbs is here.

Global Oil & Gas (GLV.AX BAKPF) announced that it has identified the Piedra Redonda gas field located, in its entirety, within Global’s 4,858 sq km oil and gas block, offshore Peru, where Netherland, Sewell & Associates defined a best estimate gross contingent resource of 404 billion cubic feet of gas from the the existing discovery well C-18X and the C-13X appraisal well, and in addition, a best estimate prospective resource of 2.2 trillion cubic feet of undiscovered gas. Piedra Redonda is located in shallow water and will be further evaluated as part of the historical 3D seismic reprocessing exercise being undertaken by Global. The company will continue to focus on the evaluation of the oil targets identified in the initial two seismic reprocessing areas selected, however, the Piedra Redonda gas field offers Global a low risk discovered field with significant resources and further upside within the field which will be evaluated for potential commercialisation.

ADX Energy (ADX.AX ADXRF GHU.F) announced that its Welchau-1 well, located in Upper Austria, has discovered condensate rich gas. 115 metres of liquids rich gas shows were intersected in the Steinalm formation, the same zone that flowed condensate rich gas in the nearby Molln-1 well at a rate of 4 million cubic feet per day in 1989. The success case forward program is to run wireline logs then undertake down hole pressure measurement, inflow testing and formation fluid sampling across the zones of interest prior to running 7 inch casing and suspending the well. Per Ian Tchacos, Executive Chairman, the Welchau gas discovery has the potential to yield an exceptional resource.

PetroTal (TAL.V PTALF PTAL.L SER1.F) announced 2023 financial and operating results. Average year on year production grew 17% to 14,248 barrels of oil per day, generating free funds flow of US$91 million in 2023. The company returned over US$61 million through dividends and share buybacks during the year. Return on capital employed was 30%. 2024 is said to be off to a record start having maintained nearly 19,000 barrels of oil per day production over the first two months in an eighty-dollar oil price environment, enabling the company to maintain a robust cash position through the first quarter.  With continued advancements on the OCP oil export pilot through Ecuador, PetroTal is continuing to prioritize derisking oil sales so it can embark on new production growth projects.

Finally, Zephyr Energy (ZPHR.L ZPHRF VD5N.F) announced that initial drilling operations have commenced on the State 36-2R well at the company's project in the Paradox Basin, Utah, United States. A small and low-cost spudder drilling rig was mobilised to the well location on 20 March 2024. The spudder rig subsequently drilled a 30-inch hole to a depth of 96-feet before successfully setting 20-inch conductor casing. The remaining sections of the well will be drilled using the Helmerich & Payne Rig 257, which was contracted earlier this month. The H&P rig has now been mobilised to the well site and will begin rig-up activity in mid-April, prior to commencing the larger drilling operation.

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