Oilman Jim's Letter - 7 April 2024

88 Energy (88E.AX EEENF 88E.L POQ.F) announced that flow testing of the Upper SFS reservoir has confirmed a light oil discovery at Hickory-1. The test produced at a relatively modest “peak gauge flow rate of over 70 barrels of oil per day,” however, the rates were achieved from a low volume frac over a small 20 feet vertical interval and are in line with expectations and the results observed from other reservoirs on the adjacent Pantheon Resources (PANR.L PTHRF P3K.F) acreage (88E Managing Director, Ashley Gilbert, specifically points out that production rates in long horizontal production wells are typically multiples of 6 to 12 times higher than tested in vertical wells). 88 Energy will now seek an Independent Contingent Resource declaration for both the Upper SFS and Lower SFS reservoirs based on the flow of hydrocarbons to surface. Meanwhile, flow testing operations will transition to testing the shallower SMD-B reservoir over the next few days.

Desert Mountain Energy (DME.V DMEHF QM01.F) announced it has successfully installed the necessary physical equipment for the helium processing plant in New Mexico, achieving its initial objective of becoming a fully vertically integrated helium company. DME is still performing maintenance on initially selected wells to increase the overall throughput of the plant and the geologic team has identified wells for short-term and long-term production boosts. The company continues negotiations with a specific end-user for the natural gas portion of the product stream at the end of the current contract and DME continues to receive interest from end-users for processed helium. Additionally, it is collaborating with a private company and national laboratories for CO2 capture and processing, the goal being to cost-effectively produce food-grade CO2 for potential commercial sale.

HyTerra (HYT.AX HYTLF) announced it is undertaking a capital raising of approximately A$6.1 million before costs. Shares are to be issued at A$0.018 per share and funds raised will be used to execute a multi-well exploration drilling program and pursue growth activities along the Nemaha Ridge, Kansas, United States. The multi-well exploration drilling campaign is planned to begin in Q3 2024 and HyTerra is exploring for hydrogen and helium. Its land covers over 9,600 acres and is 100% owned and operated. Hydrogen and helium occurrences have been recovered previously from well bores within these leases.

Orcadian Energy (ORCA.L 9J1.F) announced the completion of a farm-out of an 81.25% interest in licence P2244, which contains the Pilot field, to Ping Petroleum. Ping has been appointed operator and Orcadian will retain an 18.75% fully carried interest in the licence. The carry will apply to all pre-first offload expenditure up to a cap which will be based upon the field development plan budget, as submitted to NSTA, inclusive of contingencies and will be repaid by a combination of a reduced revenue interest of 10% and any cash tax benefits enjoyed by Ping related to the carry expenditure. On repayment of the carry the revenue interest will revert to 18.75%. Orcadian will now receive a US$100,000 cash payment and reimbursement of certain past costs capped at £250,000, plus a US$3 million payment on FDP approval.

SDX Energy (SDX.L SDXEF 3KX.F) announced that it has commenced drilling the Beni Malek-2 well in the Rharb Basin, Morocco, approximately 1.5km from the BMK-1 discovery well. The BMK-2 well will be drilled to a planned depth of approximately 1,470 metres and is targeting three stacked reservoirs in the Guebbas formation, which have been identified using 3D seismic. If BMK-2 is successful, the well will be completed and tied-in for production. The company is the sole independent gas producer in Morocco.

Deltic Energy (DELT.L 7RC0.F) announced that it has received the required consents in respect of the farm-out of a 25% interest in Licence P2437, containing the Selene Prospect, to Dana Petroleum and the farm-out has therefore completed. This transaction, in combination with the existing Shell UK carry, results in Deltic retaining a 25% non-operated interest in Licence P2437 and having no exposure to 2024 drilling and testing costs up to a cost cap of US$49 million gross, which is in excess of current success case well cost estimates provided by the operator. Timing of the Selene well remains on track, with operations expected to commence in July 2024. Attention is now focussed on drawing the Pensacola farm-out process to a successful conclusion.

Helium Evolution (HEVI.V HEEVF) announced a joint initiative with its partner and the operator, North American Helium, to embark on a drilling program in the Mankota area of Saskatchewan. HEVI and NAH are planning to drill up to nine joint development wells which are expected to spud between Q3 2024 and Q2 2025, subject to surface and environmental restrictions. The company intends to work with NAH over the coming months to determine specific well locations and timelines. Per HEVI, NAH’s decision to pursue drilling of an incremental six to nine wells demonstrates confidence in the ongoing partnership, builds on the existing three helium discoveries at Mankota, and highlights the opportunity to unlock value from HEVI’s 5.6 million acres of prospective land in Saskatchewan.

Reconnaissance Energy Africa (RECO.V RECAF 0XD.F) announced that it has completed its bought deal public offering for aggregate gross proceeds of C$17,250,035, including the full exercise of the over-allotment option. A total of 19,166,705 units were sold at a price of C$0.90 per unit, each unit consisting of one common share and one common share purchase warrant exercisable at C$1.15 until April 3, 2026. In the event that the moving volume weighted average trading price of the shares is equal to or greater than C$2.50 for any 20 consecutive trading days, the company may accelerate the expiry date of the warrants, effectively forcing exercise and raising up to a further C$22,041,710. The net proceeds from the offering are expected to be used for drilling activities, long lead items for drilling, road and location construction, and working capital. The project is potentially massive, being the opening of the newly discovered deep Kavango Sedimentary Basin in the Kalahari Desert of northeastern Namibia and northwestern Botswana, where the company holds petroleum licenses comprising ~8 million contiguous acres.

3D Energi (TDO.AX) announced that the Transocean Equinox semi-submersible drilling rig is mobilising to Australia, where it has a five-well drilling contract on the Northwest Shelf. After completion of that campaign, the rig will mobilise for a 16 well drilling campaign for a consortium of operators that includes 2 exploration wells for the joint venture in which 3D Energi holds a 20% participating interest. The rig is currently expected to arrive in the Otway first quarter of 2025; ConocoPhillips, operator of the joint venture, has previously signed a contract for 2 firm wells and up to 5 option wells. Latest fundraising was a A$3.3 million placement in February 2024 to underpin activities leading up to the 2025 drilling campaign.

Union Jack Oil (UJO.L UJOGF 1UJ0.F) announced that the company’s ordinary shares have been approved to trade on the OTCQB Venture Market in the United States and will commence trading at market open today, providing trading access for investors based in the US and increased liquidity due to a now broader geographic pool of potential investors. Harbor Access, an established North American based investor relations group, has been appointed to represent Union Jack, to assist with increasing visibility and facilitating a better understanding of the company. Obtaining a trading facility on the OTCQB is an important step forward at a time where the company is actively conducting an ongoing drilling program in Oklahoma and building a portfolio of cash generative mineral royalties focused on the Permian Basin in Texas and the Bakken Shale in North Dakota. Per Harbour Access, proven producing assets in the UK and an impressive mineral royalties portfolio and drilling campaign within the US will resonate with North American investors leading to a successful IR program.

Elixir Energy (EXR.AX ELXPF) announced what it described as impressive initial flow test results. Following a recent successful suite of diagnostic formation integrity tests conducted at Daydream-2, the company decided to test the free-flowing capacity of the Lorelle Sandstone, the zone which flowed into the well bore late last year. The test has been highly successful with a maximum rate of 2.3 million standard cubic feet per day and a stabilised flow rate of 1.3 million standard cubic feet per day through a 20/64 choke. Elixir understands this is the deepest unstimulated flow of gas in onshore Australia East of the Perth Basin. In the next few weeks, the stimulation phase of the Daydream-2 program is due to commence and will be followed by more extensive flow testing. The stimulation program will target 6 zones (only 19% of the total net pay) and will include this natural flowing sandstone.

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