Oilman Jim's Letter - 25 April 2024

Sintana Energy (SEI.V SEUSF) announced that it has entered into a definitive agreement with Crown Energy,  a private Namibian company, providing for the acquisition by Sintana of up to 67% of the issued and outstanding shares of Giraffe Energy Investments. Giraffe is the owner of a 33% interest in Petroleum Exploration License 79 which governs blocks 2815 and 2915 located inboard of blocks operated by BW Energy, Rhino Resources and Shell.  The National Petroleum Corporation of Namibia is currently the operator with a 67% interest in PEL 79. Significant existing 2D and 3D coverage supports a material existing prospect inventory and recent discoveries, including at Mopane, provide opportunities to deploy new approaches and new insights on potential.

Royal Helium (RHC.V RHCCF) announced that it has entered into an agreement with Research Capital Corporation as the lead underwriter and sole bookrunner, on behalf of a syndicate of underwriters, pursuant to which the underwriters have agreed to purchase, on a bought deal basis, 66,667,000 units of the company at a price of C$0.09 per unit for aggregate gross proceeds to Royal of C$6,000,030. Each unit is comprised of one common share and one common share purchase warrant, exercisable at C$0.12 for a period of 36 months following closing of the offering. The net proceeds will be used for new high-impact drilling on the 40 Mile project in southern Alberta, development through the Saskatchewan helium corridor, completion and testing of an existing discovery at the Ogema project, working capital and general corporate purposes.

Helium Evolution (HEVI.V HEEVF) announced the filing of the company’s annual financial statements and associated management’s discussion and analysis for the year ended December 31, 2023. There was a positive working capital position of C$5.7 million at December 31, 2023, excluding C$0.8 million of tubing and casing that was pre-purchased and not utilized. During the year ended December 31, 2023, HEVI says it continued to execute on its focused strategy of developing the company’s 5.6 million acres of helium rights in southern Saskatchewan and advancing its ultimate goal of producing and selling helium, generating cash flow and driving positive returns for shareholders. For the remainder of 2024 and into 2025, HEVI is planning to embark upon a drilling program in the Mankota area of Saskatchewan with its partner, North American Helium, building upon three existing helium discoveries in the region.  HEVI and North American are planning to drill up to nine joint development wells which are expected to spud between Q3 2024 and Q2 2025.

Zephyr Energy (ZPHR.L ZPHRF) announced the spud and start of the main drilling operation on the State 36-2 LNW-CC-R well, Utah, United States. The rig-up operation for the Helmerich & Payne Rig 257 was completed yesterday and shortly thereafter the surface section of the well was spud. The well, for which the company expects to recover substantially all the drilling costs incurred through the well control insurance policy, will target the Cane Creek reservoir and the highly productive natural fracture system encountered by the original well. Drilling is planned to a total depth of 10,362 feet measured depth (9,600 feet true vertical depth) and will incorporate a short, 270-foot horizontal reservoir section. The well has been designed and permitted such that the horizontal section can be extended to a further 10,000 feet in the Cane Creek reservoir, should that be required in the future. Drilling operations are expected to take approximately 30 days. After reaching total depth and setting a production liner, the rig will be demobilised and the well will be prepared for production testing.

i3 Energy (I3E.L ITE.V) announced the company's 2024 capital budget and production guidance. The budget of US$50.9 million is forecasted to deliver 15 gross wells (10.5 net, 95% net i3-operated) to be drilled across the portfolio in Central Alberta, Simonette, and its northern Clearwater acreage. Forecast exit 2024 production of 20,250 - 21,250 barrels of oil equivalent per day represents a year-over-year increase of approximately 3% from the prior year average exit rate, or approximately 8% from current levels, as the company expects to recommence drilling in June 2024 and positions for accelerated Montney development in 2025. US$70 - 75 million of 2024 net operating income is forecast and US$55 - 60 million of EBITDA before hedging gains and losses, based on budget price assumptions of US$82/barrel for WTI and C$2.25/gigajoule for AECO natural gas. The company is expected to return forecasted dividends of £12.3 million (US$15.7 million) in 2024, representing 1.0260 pence per share for the year, translating to a forward yield of 8.1% based on the closing price of i3's ordinary shares of 12.66 pence on 23 April 2024.

Petro Matad (MATD.L PRTDF) announced an operational update. The company says it is working with the local government agencies to secure the remaining approvals necessary to allow the 2024 operational programme to commence. Preparations are being made to complete the Heron 1 well for production once approvals are in hand and when contractor crews return to Mongolia. Petro Matad continues to push the central government to complete the certification process and confirm Block XX as State Special Purpose land to streamline the permitting process in future years and reduce the risk of interference or obstruction. Meanwhile, SunSteppe Renewable Energy, MATD's renewable energy joint venture is said to continue to make good progress. An exclusive memorandum of understanding with the Oyu Tolgoi mine to develop a green hydrogen project has been signed and grant funding from the Japanese government has been secured.

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