Oilman Jim's Letter - 26 May 2024

Aminex (AEX AEXFF) announced that the Ministry of Energy in Tanzania has granted a 25-year development licence over the Ntorya gas discovery area to the Ruvuma joint venture. It divides the Mtwara Exploration Licence into nine blocks: five blocks containing the Ntorya discovery and four blocks labelled as "adjoining blocks". The Ruvuma JV parties are required to undertake the following work programme over the four adjoining blocks to the discovery area: geological, geophysical and geochemical studies; drill one exploration well within five years of the start of production under the development licence; and spend a minimum of $10 million. Further discoveries in the adjoining blocks will fall under the Development licence. The Ntorya development licence area lies adjacent to a region containing supergiant world-class LNG projects, extending from offshore Tanzania into Mozambique waters to the south. A multi-year gas sales agreement was signed earlier this year with the Tanzania Petroleum Development Corporation. Aminex, with a 25% non-operated interest, is carried throughout the ongoing work programme to a maximum gross capital expenditure of $140 million ($35 million net to Aminex). The carry is expected to see the company through to the commencement of commercial gas production from the Ntorya field at zero cost to Aminex.

Reconnaissance Energy Africa (RECO.V RECAF) announced an operations update with respect to activity relating to Petroleum Exploration Licence 73, onshore northeast Namibia, an update on the joint venture process and the termination of the marketing agreement with FTB Capital. Per Brian Reinsborough, President and CEO, operations teams and contractors are working to ensure the company remains on schedule for a June 2024 spud of the high potential Naingopo exploration well, the first exploration well in the Damara Fold Belt. Drilling teams are now in Namibia with the Jarvie-1 drilling rig undergoing routine maintenance and certification ahead of its planned move to the well location in the first week of June. Advanced planning work has also commenced for the second Damara Fold Belt exploration well, Prospect P. Advanced discussions with potential joint venture partners are underway and the company expects to conclude negotiations in the coming weeks. For undisclosed reasons, RECAF terminated its contract with FTB Capital on May 10, 2024, prior to the provision of any marketing or investor awareness services. As a result of the termination, all previously granted stock options to FTB were canceled, however, there is no mention of the nearly $1 million payment for promotion.

Afentra (AET.L STGAF) announced completion of the acquisition of a 12% non-operating interest in Block 3/05 and a 16% non-operating interest in Block 3/05A, offshore Angola. The acquisition increases Afentra’s interest in Block 3/05 to 30% and in Block 3/05A to 21.33%. Payable cash consideration at completion is $28.4 million, the initial cash consideration of $48.5 million being reduced by the impact of cash flow adjustments as of the transaction effective date of 1 October 2022. The company inherits a crude oil stock of around 480,000 barrels and net debt at completion is expected to be $46.2 million, with a crude oil stock of around 840,000 barrels. Combined gross production for the first four months of 2024 for Blocks 3/05 and 3/05A has averaged around 23,000 barrels of oil per day (net around 6,800 barrels of oil per day). The light well intervention programme, commenced by the joint venture during 2023, continues into 2024 with a further 45 interventions planned over two campaigns. The company and it’s auditor, BDO, continue to review and audit the appropriate accounting treatment relating to the INA and Sonangol acquisitions completed in 2023. This work is expected to be completed and the annual results issued in early June.

Energean (ENOG.L EERGF) announced an update on recent operations and the group's trading performance in the 3-months to 31 March 2024. Production for the period was 142,000 barrels of oil equivalent per day, a 49% increase versus Q1 2023. Group 2024 production guidance is reiterated at 155,000 – 175,000 barrels of oil equivalent per day, which is weighted towards the second half of the year. In Israel, FPSO uptime during Q1 2024 was 98% and in April 2024 the wells were successfully tested at 720 million cubic feet per day. Day-to-day production was and continues to be unimpacted as a result of what the company diplomatically describes as ongoing geopolitical developments. The new wells brought online in Egypt in the Abu Qir, NEA and NI concessions continue to perform above expectations. At the Abu Qir infill well drilling campaign in Egypt, around 270 feet of net pay across the BKES-1 formation and Abu Madi formations was encountered, around two times initial expectations. Preliminary analysis indicates gas-initially-in-place volumes of approximately 87- 129 billion cubic feet based on the P90 to P10 range. The well also encountered a possible liquids column of around 55 feet of net pay that requires further analysis. First production is expected in Q3 2024. Drilling operations continue on Cassiopea, Italy, with the second and third well (out of four) and first gas is on track for summer of 2024. The near-field Gemini exploration well is to be drilled after completion of the Cassiopea production wells. The Morocco farm-in is completed (with Chariot) and a rig contract signed for the Anchois appraisal well, the spud of which is planned for August 2024. Long-lead items have been ordered for the Katlan development in Israel to maintain the project schedule ahead of final investment decision. Revenues for the period were $413 million, a 43% increase versus Q1 2023, and adjusted EBITDAX for the period was $259 million, a 60% increase versus Q1 2023. Group cash as of 31 March 2024 was $220 million and total liquidity was $424 million. A Q1 2024 dividend of 30 cents per share was declared.

Blue Star Helium (BNL.AX BSNLF) announced that it has successfully drilled, cased and cemented the intermediate hole section of the State 16 SWSE 3054 development well at its Galactica helium project in Las Animas County, Colorado. The intermediate hole section of the well was drilled to approximately 1,110 feet and the hole has been cased and cemented. A mandatory cement bond log is to be run. Following review of the cement bod log, the company will drill out into the target Lyons formation and TD the well as planned at the base of the upper Lyons sandstone. At total depth the well will be wireline logged after which it will be flow and pressure tested for at least an additional 5 days. It is anticipated that upon successful testing at State 16 SWSE 3054 the well will be completed, ready to be tied-in to production facilities.

Melbana Energy (MAY.AX MEOAF) announced an operational update. At the Alameda-3 appraisal well, wireline logging has been successfully completed in the Alameda structure and good quality data is said to have been obtained, preliminary analysis of which is encouraging. Technical difficulties resulting in a delay to drilling operations have now been resolved and drilling operations are expected to resume by week’s end. Total depth of the well is projected to be reached about two weeks after drilling operations resume and first flow tests are to be conducted immediately thereafter. Workshops and field trips in Cuba with the partner and regulator regarding preparations for commencement of field development have been successfully undertaken this month and the plan remains to initially develop Unit 1B of the Amistad structure with first oil sales by end 2024.

Criterium Energy (CEQ.V) announced that it has signed a binding sale and purchase agreement for the divestment of its wholly owned subsidiary which holds a 42.5% non-operated working interest in the Bulu production sharing contract. Total consideration for the transaction is $7,750,000 (C$10,500,000). Closing is expected on or before August 31, 2024 and is expected to result in: an increase in cash of $7,750,000, equivalent to C$0.08 per share; a forecasted 2024 year-end net debt of approximately $15 (down from approximately $23 million at closing of the Mont D’Or Petroleum acquisition in Q1 2024); and the ability to accelerate development activities in Criterium’s core operating areas, namely the Tungkal and West Salawati production sharing contracts, thereby prioritizing investment into short cycle return opportunities as a mechanism to fund further material production growth.

Chariot (CHAR.L OIGLF) announced the spud of the OBA-1 well on the Dartois prospect in the Loukos licence, onshore Morocco. The Dartois target has best estimate recoverable prospective resources of 12 billion cubic feet of gas. This is an independent prospect targeting a different trapping style to the Gaufrette prospect drilled by the RZK-1. Success could potentially unlock a trend of prospects with combined best estimate recoverable prospective resources of 20 billion cubic feet and results will be announced on completion of drilling. Also upcoming is the Anchois appraisal well, the spud of which is planned for August 2024.

Union Jack Oil (UJO.L UJOGF) announced audited results for the year ended 31 December 2023. Wressle continues to deliver following a workover, installation of a down hole pump and other site upgrades. The latest competent person's report upgrades reserves by 263% and an application has been submitted for the drilling of two back-to-back Wressle development wells plus the Penistone Flags gas monetisation. Acquisition of United States mineral royalties and drilling activity in Oklahoma has commenced and further drilling and development is planned during 2024 to encompass both sides of the Atlantic following the Andrews 1-17 well in Oklahoma being declared a commercial discovery. The company recorded a gross profit for the year of £3,298,844 and a net profit of £859,089, with basic earnings per share of 0.79 pence. A dividend of 0.25 pence per share has been declared. The board is of the opinion that within the Wressle development there remains significant material upside which will support the company with revenues for at least another decade. Progress at West Newton also is upcoming. This is said to hold resources comparable to those usually reported offshore. In the US, discussions are at an advanced stage with Reach in respect of materially expanding the company’s activities over the coming months and beyond. Also announced last week was a carbon intensity study on the West Newton gas development by GaffneyCline & Associates, showing that carbon intensities at the West Newton field are significantly lower than the UK average compared to other onshore and offshore analogues.

Serica Energy (SQZ.L SQZZF) announced that it has received final approval from the NSTA to develop the 100% owned and operated Belinda field. The field will be tied back to the Triton FPSO following drilling of the development well which is scheduled to take place in the first half of 2025. The Belinda well is the 5th well in Serica’s Triton area drilling campaign, which commenced in April this year using the COSLInnovator drilling rig. All are designed to enhance production via the Triton FPSO. Proven and probable reserves in the Belinda field are estimated at about 5 million barrels of oil equivalent (80% oil) and production is scheduled to commence in Q1 2026 following the tie-back work to the Triton FPSO.

HyTerra (HYT.AX HYTLF) announced that new leasing has significantly increased the Nemaha Project. 3,113 net acres have been leased in areas geologically contiguous to the Sue Duroche 2 well, which has published occurrences of up to 92% hydrogen and 3% helium. Current net exploration lease acreage has increased from 9,607 to 12,720 acres and HyTerra plans to continue leasing high-priority acreage and drill two exploration wells commencing in Q3 2024. The leases are in Wabaunsee County, Kansas, and are covered by the airborne geophysical survey acquired by HyTerra in 2023 and existing seismic data. HyTerra’s datasets are said to link the new leases with the existing leases near the Sue Duroche 2 well and provide promising subsurface definition of the geology and the prospectivity of white hydrogen and helium.

Rockhopper Exploration (RKH.L RCKHF) announced results. Included in 2023 highlights, Navitas Petroleum provided details of the updated field development plan and an additional independent resource report by Netherland Sewell & Associates optimised for the specifications of identified and available redeployable floating production and offloading vessels. The 2C resource base has increased to 791 million barrels, up from 712 million barrels. The initial development stage is now targeting 312 million barrels, up from 269 million barrels, with a peak rate up to 55,000 barrels of oil per day and a prolonged plateau of around 8 years. Improved economics reduced breakeven at $25 per barrel cost life of field. Cost to first oil is $1.2 billion, capex per barrel is $8 life of field and opex per barrel is $17 life of field. NPV 10 is over $4 billion gross to the JV at $77 per barrel Brent. The environment impact statement pre-consultation started in November 2023 and Navitas continues to refine the field development plan, working with industry vendors to secure all long lead equipment.

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