Oilman Jim's Letter - August 4, 2024

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Companies issuing interesting news last week

Eco (Atlantic) Oil & Gas (EOG.V ECO.L ECAOF EOI.F) announced that via its subsidiary it has signed an assignment and share cancellation agreement pursuant to which it has agreed to sell and assign a 1% participating interest in Block 3B/4B offshore South Africa to a subsidiary of Africa Oil (AOI.TSX AOIFF AFZ.F) in exchange for the cancellation of all common shares in the company and warrants over common shares held by Africa Oil, which assuming conversion of the warrants, would equal 16.16% on a diluted basis of the total outstanding common shares of Eco worth approximately C$11m. Upon completion, Eco will hold a fully carried 5.25% interest in Block 3B/4B offshore South Africa, reducing from the current 6.25%. The subsequent announcement of audited results for the year ended 31 March 2024 disclosed that the company had cash and cash equivalents of $2.97 million and no debt as at 31 March 2024 and, following the successful farm-out deal of Block 3B/4B, expects to receive a first tranche of $8.3 million during August 2024, giving Eco a cash and cash equivalents position of $10 million, with no near-term capital commitments for operational expenses…more…more

Deltic Energy (DELT.L 7RC0.F) announced that it has been informed by Shell, operator of Licence P2437, that drilling operations on the Selene exploration well have commenced, which are expected to take approximately 90 days. The well is designed to collect all key information in relation to reservoir quality and gas composition that is required to support a field development plan and final investment decision on the potential development of the Selene gas field without the requirement for a further appraisal well. Deltic estimates the Selene structure to contain gross P50 prospective resources of 318 billion cubic feet with a 69% geological chance of success. The company is fully carried for its 25% working interest in the well up to a gross success case well cost of $49 million, which is in excess of the operator's success case authorisation for expenditure of $47 million…more

Arrow Exploration (AXL.V CSTPF AXL.L C1JT.F) announced an update on operational activity, with particularly reference to the Carrizales Norte field on the Tapir Block in the Llanos Basin of Colombia where the company holds a 50 percent beneficial interest. The second of the Ubaque horizontal wells, CNB HZ-3, is now on production exceeding expectations and is being restricted to a current flow rate of 3,038 barrels of oil per day with less than 6.5% water cut while still recovering load fluid. CNB HZ-1 continues to perform above expectations and is being restricted to a current flow rate of 2,220 barrels of oil per day with approximately 34% water cut. The well cost approximately $4.9 million and paid out in under 30 days. The rig has now been moved to the fourth cellar on the Carrizales Norte B Pad where the company has spud the third horizontal well, CNB HZ-4. Thereafter, Arrow expects to drill the fourth horizontal well on the B pad, followed by the Baquiano-1 exploration well.  Following the drilling program at Baquiano, Arrow plans to return to the CNB pad for two additional horizontal wells…more

Helium One Global (HE1.L HLOGF HE1.F) announced that operations at the Itumbula West-1 well have commenced ahead of the planned extended well test. The company plans to test two intervals: the fractured basement and faulted Karoo, following what is said to have been a successful flow of 4.7% helium to surface during the drill stem test in February 2024. Prior to undertaking the extended well test, the well will be deepened further into the basement. Phase III operations from spud to completion of the extended well test are anticipated to take approximately five weeks…more

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Invictus Energy (IVZ.ASX IVCTF) announced that the company has completed its fully subscribed $10 million strategic Zimbabwean institutional placement. The Mutapa Investment Fund of Zimbabwe underwrote $5 million and a secondary listing on the Victoria Falls Stock Exchange is scheduled for 2 August 2024. Invictus issued 151,515,152 shares at a price of A$0.10 and participants will also receive an option to subscribe for one share for every four shares subscribed exercisable at A$0.30 with a two-year option period. Funds raised from the placement will be used to advance the Cabora Bassa project, including Mukuyu-2 flow testing and advancement of early monetisation opportunities, purchase of long lead items for shallow exploration wells targeting the Eastern Margin and Basin Margin plays and general working capital. Additionally, Invictus says it is engaged in active discussions on multiple fronts to bring in strategic participants to the Cabora Bassa project through the completion of a farmout to accelerate development of the project…more

Tower Resources (TRP.L TWRFF ULF1.F) announced an update in respect of its PEL 96 license, offshore Namibia. The company has been notified by the Namibian Ministry of Mines and Energy of its agreement to the extension of the initial exploration period of PEL 96 to October 31, 2024 and has invited Tower to apply to enter the first renewal period for 2-3 further years. The remaining work commitment for the initial exploration period is said to be already substantially complete, and the Ministry has also agreed to defer the company's commitment to acquire 1,000 square kilometres of new 3D seismic data to the first renewal period. Tower says it is continuing to work on the evaluation of large stratigraphic and structural leads and prospects, and plans to reprocess the previously acquired 2D seismic data over large areas of the license both in the remainder of the initial exploration period and in the first renewal period. The remaining work commitment for the initial exploration period, comprising the oil seep satellite analysis, play fairway analysis, development of an updated prospect and lead inventory, and the high-grading of acreage, is stated to be already substantially complete. Per the company, its basin modelling work has identified source rocks deep within the PEL96 portion of the Dolphin Graben calculated to be mature for in excess of 100 to 150 billions of barrels of oil generation…more

Gran Tierra Energy (GTE GTE.TSX GTE.L G1P0.F) announced financial and operating results for the quarter ended June 30, 2024, and continued exploration success. In Ecuador, the company has drilled a second successful well in the Bocachico field to the west of the recent Arawana discovery, which it has completed, and testing is underway. GTE also is seeing very encouraging results in the Charapa-B6 well which has been cored with excellent oil shows in the targeted Hollin formation and is now being completed for testing. The company is constructing two new drilling pads at what it describes as the exciting Arawana field area with the first expected to be completed by early September. Preliminary results of Bocachico Norte-J1 are said to have confirmed the geological interpretation of the Bocachico discovery with potential pay in the T-Sand, B-Limestone and the Basal Tena. Testing of each zone will take place in the third quarter. In the second half of the year, the company plans to drill the remainder of its high impact near field exploration wells in Ecuador, including drilling two wells to further assess the Arawana discovery. Second quarter 2024 total average working interest production was 32,776 barrels of oil per day with an operating netback of $113 million and adjusted EBITDA of $103 million. The company exited the quarter with $115 million in cash…more

Reconnaissance Energy Africa (RECO.V RECAF 0XD.F) announced that the company has completed its C$35 million underwritten public offering of units of the company at a price of C$1.25 per unit, and together with the partial exercise of the over-allotment option, raised aggregate gross proceeds of approximately C$38.8 million. BW Energy (BWE.OL 6BW.F) participated in the offering by way of an equity investment in Reconnaissance for C$22 million in connection with the strategic partnership. The company issued an aggregate of 30,944,000 common shares and 31,844,600 warrants entitling the holder to acquire one share at a price of C$1.75 until July 31, 2026 with acceleration provisons. The net proceeds from the offering are expected to be used for drilling activities, mobilization/demobilization and site costs, geology and geophysics, 3D seismic planning and acquisition, and working capital. BW Energy now owns approximately 6.6% of RECAF’s outstanding common shares, not including warrants, and has entered into a farm-in agreement with Reconnaissance providing for the terms of a farm-in transaction, including the transfer to BW Energy of a 20% working interest in the onshore exploration license PEL 73 in Namibia…more…more

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