Oilman Jim's Letter - 3 March 2024

Interesting news from a number of companies last week. Top End Energy (TEE.AX) announced the acquisition of granted Northern Territory acreage and a A$2.1 million capital raising. The land acquired from Hancock Prospecting is considered highly prospective for natural hydrogen and helium, plus conventional and unconventional hydrocarbons. Simultaneously, the company has raised A$2.1 million in an oversubscribed placement to fund a forward work program and corporate working capital. The permits cover a combined area of 27,885 square kilometers across the northern flank of the Beetaloo and South Nicholson basins. Light gasses are of great interest now. Gold Hydrogen (GHYLF GHY.AX), for example, moved up from A$0.19 to A$1.70 in recent months. It’s been featured a few times previously in the newsletters and there are many more with the same potential.

Pulsar Helium (PLSR.V PSRHF Y3K.F) is another company covered several times before and it’s up from around C$0.20 to C$1.00. The company announced that the Jetstream #1 appraisal well at the Topaz helium project in Minnesota reached total depth of 2,200 feet (671 meters) and helium shows were encountered during drilling between 1,750 - 2,200 feet (533 - 671 meters) with concentrations of up to 12.4% helium measured by the on-site mass spectrometer. When total depth was reached, the well was conditioned with air to assist in the removal of residual drill fluid and then began to naturally flow helium-rich gas. 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.

Falcon Oil & Gas (FO.V FOG.L FAC.F) announced that strong IP30 day flow rates have advanced the Beetaloo to pilot development. The Shenandoah South 1H well in EP117 achieved a commercial IP30 flow rate of 3.2 million cubic feet per day (normalised to 6.4 million cubic feet per day over 1,000 metres), significantly higher than pre-drill expectations. Flow testing of the Shenandoah South 1H well will continue for the next 60 days to achieve average IP90 flow rates to better determine the well’s estimated ultimate recovery and the flow rate results are expected to be announced in April 2024. The Beetaloo JV partners of Falcon and Tamboran Resources (TBN.AX TBNRL) will now progress development plans for the proposed 40 million cubic feet per day pilot project at the Shenandoah South location. The project is expected to require six 10,000-foot development wells initially to achieve plateau production of 40 million cubic feet per day. Drilling of the first of these wells is planned to commence in Q2 2024 and the JV is targeting first gas in H1 2026. At the end of January 2024, Falcon held ~US$5 million in cash and has the benefit of a further A$16.67 million gross (~US$2.5 million net to Falcon) carry to support immediate activities. Falcon is funded to commence drilling of the initial two wells in the program and will evaluate opportunities to support funding the remaining capital commitments to reach first production, including issuance of equity and/or debt, evaluation of pre-payment for gas from the proposed pilot project and potential farm-down opportunities.

Eco (Atlantic) Oil & Gas (EOG.V ECAOF ECO.L EOI.F) announced unaudited results and a corporate update. Government approval of the farm-out agreement of a 6.25% participating interest in Block 3B/4B, South Africa to Africa Oil has strengthened the company’s cash position as it continues preparations for a two well drilling campaign on the block and progresses farm out discussions. Regarding the Orinduik Block, Guyana, the CEO says the company has seen a great deal of interest from a number of oil and gas players as it progresses a formal farm out process. In Namibia, oil discoveries last year close to Eco’s acreage are expected to aid its farm out process there.

88 Energy (88E.AX EEENF 88E.L POQ.F) announced a Hickory-1 flow test operations update. Mobilisation operations are complete and pre-flow testing operations have advanced, with current operations involving the testing of the blow-out preventers installed on the wellhead. Two flow tests are scheduled, one each in the Upper SFS and SMD-B reservoirs, with each expected to take approximately ten days. Flow testing operations are said to be set to deliver information critical to development planning, such as reservoir deliverability, fluid compositions, pressures and connectivity. Another beneficiary of a positive result (and at no cost to it) would be Pantheon Resources (PANR.L PTHRF P3K.F), which holds adjoining acreage.

Helium Evolution (HEVI.V HEEVF) announced an operational update regarding three Mankota-area wells in which the company maintains a 20% working interest. Following the successful stimulation of HEVI’s first helium discovery well (2-31), the well was production tested on a three-day extended test, with a helium concentration of 0.95%, more than three times the 0.3% level deemed commercially viable. The 2-31 well continued to increase in both flow rate and surface flowing pressure throughout the flow test period. Productivity of the 2-31 well increased threefold following stimulation and produced negligible volumes of water, a positive indication for helium recovery and processing. Next steps may include the drilling of an offset location designed to further delineate the pool during the latter half of 2024. Completion, perforation and initial production testing of HEVI’s 9-35 discovery well is ongoing.  The well was producing approximately 7 million cubic feet per day at the end of a six-day extended flow period, with a helium concentration of 0.64% and no water. After the extended production flow period, the 9-35 well will be shut in for a 21-day period to collect reservoir pressure data for interpretation. After initial testing, HEVI’s 9-18 discovery well had a preliminary helium concentration of 0.78% and no water. To enhance productivity, as was successfully done on the 2-31 well, the 9-18 well will be stimulated in the coming weeks. Further updates can be expected.

Finally, Aminex (AEX.L AEXFF) announced a Ruvuma seismic update. Interpretation of the recently acquired 338 square kilometers 3D seismic dataset over the Ruvuma PSA has improved the in-place volumetrics for the Ntorya gas discovery and revealed a significantly higher resource potential in the wider licence area than previously identified on the existing 2D database. A most-likely (approximating to P50) estimate of 3.45 trillion cubic feet of gas initially in place is now believed to be potentially connected to the reservoir sandstones encountered in the Ntorya-1 and Ntorya-2 discovery wells. Furthermore, the new 3D seismic images a possibly even larger area of gas charged reservoir sandstones, which can be tested by the forthcoming Chikumbi-1 appraisal well later in the year. An upside aggregated gas initially in place volume for the Ntorya accumulation based on a success case in multiple stacked sands at Chikumbi-1, is estimated to be up to 7.95 trillion cubic feet (approximated to a mean unrisked P10 gas initially in place). The 3D dataset has also revealed considerable undrilled exploration potential within the broader licence area. Multiple undrilled structural and stratigraphic plays spanning a range of geological intervals are estimated to contain a total Pmean unrisked gas initially in place potential of 8.43 trillion cubic feet (excluding Ntorya). The new volumetric studies result in a total updated unrisked gas initially in place volume for the Mtwara licence of 16.38 trillion cubic feet. 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 the company). 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.

More in the Private Letter and International Letter this evening.

These are opinions only of the individual author.  The contents of this piece do not contain investment advice and the information provided is for educational purposes only and no discussions constitute an offer to sell or the solicitation of an offer to buy any securities of any company.  All content is purely subjective and you should do your own due diligence.  No representation, warranty or undertaking, express or implied, as to the accuracy, reliability, completeness or reasonableness of the information contained in the piece is made.  Any assumptions, opinions and estimates expressed in the piece constitute judgments of the author as of the date thereof and are subject to change without notice.  Any projections contained in the information are based on a number of assumptions and there can be no guarantee that any projected outcomes will be achieved.  No liability is accepted for any direct, consequential or other loss arising from reliance on the contents of this piece.  The author is not acting as your financial, legal, accounting, tax or other adviser or in any fiduciary capacity.