Oilman Jim's Letter - 3 May 2024

Sintana Energy (SEI.V SEUSF) reported a new interview in which it detailed the outcomes of the company’s exploration campaign in Namibia, highlighting the discovery of oil across multiple horizons in the Mopane wells, with one well testing at a flow rate of 14,000 barrels per day. The estimated reserves exceed 10 billion barrels, positioning Mopane among the largest oil discoveries globally in recent decades. CEO Robert Bose also noted the enhanced visibility and investor interest following these discoveries, evidenced by a rise in trading volumes and stock response. Furthermore, Chevron Namibia Exploration, an affiliate of Chevron Corp., has entered into an agreement to join Petroleum Exploration License 82. Under the agreement, Chevron assumes an 80% working interest and operatorship, while NAMCOR and Custos Energy each retain a 10% carried interest in PEL 82. Sintana, with an indirect 49% interest in Custos, maintains a strategic position within the license. Bose emphasized the expanding partnership with Chevron as a testament to the quality of Sintana's Namibian portfolio, highlighting the timeliness of the entry into PEL 82 and the portfolio's unmatched potential as Namibia emerges as a significant hydrocarbon province. Additionally, Sintana has entered into a definitive agreement with Crown Energy for the acquisition of up to 67% of Giraffe Energy and its 33% interest in Petroleum Exploration License 79. This acquisition provides Sintana with an attractive entry into a high-impact license with substantial upside potential, further expanding its exposure to Namibia's Orange Basin. PEL 79 is said to present a unique opportunity for Sintana, as it is one of the last remaining licenses not operated by a private operator and underscores Sintana's commitment to strategically positioning itself in promising exploration areas, poised for significant growth and value creation. The company also announced that it has granted an aggregate of 2,400,000 restricted share units and 1,650,000 stock options to certain directors and officers of Sintana. The stock options are each exercisable to acquire one common share of the company at an exercise price of C$1.08 until May 1, 2034 and vest in tranches over the next two years.

Zephyr Energy (ZPHR.L ZPHRF) announced that the company has retired US$3.88 million (£3.11 million) of existing debt through the issuance of equity comprised of  64,045,768 new ordinary shares at a price of 4.85p per share. The issue price is the undiscounted mid-market closing price of the company's shares on 2 May 2024. Zephyr also reported that State 36-2 LNW-CC-R well operations are progressing as expected. On 26 April, the 17-½ inch surface section of the well was completed at a total depth at 1,570 feet, at which point casing was set and cemented prior to the installation of the blowout preventor. Drilling operations have since commenced on the 12-¼ inch intermediate section, with a current hole depth of 3,238 feet. 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. 

Finally, Chariot (CHAR.L OIGLF C62.F) announced that drilling operations have commenced at the Loukos licence, onshore Morocco, with the spud of the RZK-1 well on the Gaufrette prospect. The main target has best estimate recoverable prospective resources of 10 billion cubic feet of gas. Success potentially unlocks combined best estimate recoverable prospective resources of 26 billion cubic feet and results will be announced on completion of drilling.

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