Oilman Jim's Letter - 31 March 2024

Arrow Exploration (AXL.V AXL.L C1JT.F) announced year-end reserves and an operations update. Before tax NPV-10 values have increased 133% for 1P and 120% for 2P over year-end 2022, due to reserves growth and notwithstanding decreases in the oil price forecast. Before tax NPV-10 per share is US$0.47, US$0.98 and US$1.56 for 1P, 2P and 3P reserve categories, respectively. The imminent drilling of the Carrizales Norte horizontal wells into the Ubaque reservoir, if successful, is expected to result in a step change in production and lead to booking of substantial additional reserves.

Pantheon Resources (PANR.L PTHRF P3K.F) announced an update on its development planning and funding initiatives. New independent expert reports from Cawley Gillespie & Associates and Lee Keeling & Associates have shortened the timeframe for potential partners to conduct technical and commercial due diligence to enable the conclusion of non-equity funding arrangements by the end of Q2 2024. The reports will be released in the next few weeks. Additionally, Pantheon could potentially provide gas for in-State use through Alaska LNG, thus reducing the number and cost of gas re-injection wells, and further providing a path to the commercialisation of helium potential identified in the Kodiak field. Meanwhile, Pantheon is undertaking preparations to support winter campaigns for up to three appraisal wells in the western portion of the Kodiak field, subject to funding, and preparing drilling plans for a Megrez-1 well into eastern Ahpun Topsets.

Next door neighbour, 88 Energy (88E.AX EEENF 88E.L POQ.F) announced a Hickory-1 flow test operations update. Upper SFS flow testing is nearing completion and results are to be announced once the flow back programme is completed and analysed. The flow testing programme for the shallower SMD-B reservoir is scheduled to begin immediately after the flow back of the Upper SFS reservoir is complete and is expected to last around 14 days. Completion of all operations and demobilisation from the site is now expected around mid-April. Pantheon Resources is providing 88 Energy with technical assistance.

Royal Helium (RHC.V RHCCF RD31.F) announced that it has entered into its first off-take agreement for the sale of food and beverage grade CO2 from its Steveville processing and purification facility. The agreement has a term of three years and will primarily serve markets in the Pacific Northwest Region of the United States. Per the company, the agreement marks a significant expansion of the economics of Royal’s initial facility, illustrating the multiple economic cash flow streams for shareholders. The company controls over 1 million acres of prospective helium permits and leases across southern Saskatchewan and southeastern Alberta.

Bowleven (BLVN.L BWLVF BO2.F) announced interim results. The expenditure run rate has been temporarily reduced to between US$125,000 and US$200,000 per month to extend Bowleven's current cash resources. There is a proposed open offer at a price of 0.1 pence per share with a view to raising c.£1.38 million and Crown Ocean Capital, the company's largest shareholder, has agreed to subscribe for all shares not otherwise taken up. Eli Chahin, Chief Executive Officer, says they are satisfied that the JV partnership all agree that Etinde has significant value and excellent prospects so long as agreement can be reached with SNH and the Government of Cameroon on the lowest risk, economically optimum development option as soon as possible. Completion of the proposed open offer is said to give Bowleven the necessary capital to continue operating and work towards first investment decision. Market capitalisation is less than £1 million.

Invictus Energy (IVZ.AX IVCTF) announced that compositional analysis of additional downhole fluid samples has confirmed a rich gas-condensate discovery in Mukuyu. High quality natural gas with minimal impurities will require minimal processing for sale to customers. Samples show a condensate gas ratio estimated between 10-25 barrels per million standard cubic foot of gas at Mukuyu-2 with 50-60° API gravity condensate. Light oil potential also is evidenced from sample analysis in the Upper Angwa and Dande formations. Per the company, these results auger well for the presence of hydrocarbons in the prospects and leads in the remainder of the acreage which has now been de-risked by the Mukuyu gas-condensate discovery

Westmount Energy (WTE.L WMELF W6M.F) announced interim results. In addition to a cash balance of £0.34 million and listed marketable securities of £0.61 million, the company owns approximately 6.24% of the issued share capital of JHI Associates, which in turn owns 17.5% of the Canje Block, offshore Guyana, and approximately 5.26% of the issued share capital of Cataleya Energy Corporation, which in turn owns 50% of the Kaieteur Block, also offshore Guyana. Per the announcement, exploration drilling on the Canje Block could potentially recommence from 2024 and the Kaieteur Block farm-down process continues with a primary objective of bringing a new deepwater operator to the block before February 2025.

Falcon Oil & Gas (FO.V FOG.L FAC.F) announced that the Shenandoah South 1H well in EP117 achieved an above commercial IP60 flow rate of 3 million cubic feet of gas per day (normalised to 6 million cubic feet of gas per day over 1,000 metres). Per the company, results to date confirm that the region measuring more than 1 million gross acres below 8,850 feet (2,700 metres) is one of the best locations in the Beetaloo Basin to commence pilot development activities. Flow testing of the SS-1H well will continue for the next 30 days to achieve average IP90 flow rates to better determine the well’s estimated ultimate recovery per well. These results are expected to be announced in late April 2024. The Beetaloo JV partners, Falcon and Tamboran Resources (TBN.AX TBNRL), will continue to progress development plans for the proposed 40 million cubic feet of gas 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. Drilling of the first of these wells is planned to commence in Q2 2024 and the JV is targeting first gas in H1 2026. Falcon is funded to commence drilling of the initial two wells in the program and says it will evaluate opportunities to support funding the remaining capital commitments to reach first production.

Finally, Pharos Energy (PHAR.L SOCLF) announced 2023 preliminary results. The company says it is advancing plans to drill the potentially transformational Block 125 in Vietnam. Parallel discussions with several potential farm-in partners are ongoing and Pharos is actively working with another operator in the region to enhance efforts in securing a suitable rig. The competent person's report for Block 125 confirms an impressive range of gross unrisked prospective oil resources of between 1.178 billion barrels (1U) and 29.785 billion barrels (3U) with a mean value of 13.328 billion barrels.

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