Oilman Jim's Letter - July 17, 2024

Reconnaissance Energy Africa (RECO.V RECAF 0XD.F) announced that it has signed a letter agreement for a strategic farm down of Petroleum Exploration Licence 73, onshore Namibia, with BW Energy (BWE.OL 6BW.F) for a 20% working interest. In connection with the letter agreement, BW Energy has agreed to a strategic equity investment in the company for $16 million (c. C$22 million) pursuant to the brokered equity offering of units at a price of C$1.25 per unit for gross proceeds of C$35 million. Each unit will comprise one common share and one common share purchase warrant exercisable at C$1.75. BW Energy will participate in two Damara Fold Belt exploration wells and a 3D seismic program, with an option to participate in two Rift Basin exploration wells over 2-year period. Total potential consideration is $141 million, including the $16 million equity investment and an additional $45 million in carry payments based on achievement of commerciality. In the event of development of discoveries, production milestone payments could total an additional $80 million. Three separate production payments of $25 million are made after BW Energy reaches certain free cash flow milestones. An additional first production payment of $5 million is paid sixty days after the start of commercial production. On completion of the transaction, the ownership interests in PEL 73 will be ReconAfrica 70%, BW Energy 20% and NAMCOR 10%. ReconAfrica remains the operator of PEL 73 and now has the financial runway to execute a high impact multi-well exploration drilling program. The company also intends to apply for a dual-listing on the Namibian Stock Exchange, alongside its existing listing on the TSXV in Canada, to further broaden its global exposure…more

HyTerra (HYT.ASX HYTLF) announced that it has received a permit to drill from the Kansas Corporation Commission for the Blythe 13-20 well at the company’s fully-owned Nemaha project. The well has been sited around 1,400 metres east of the historic Scott-1 well drilled in 1982, which reported up to 56% hydrogen in historic analyses. HyTerra has around 6,500 net acres of owned and operated lease holdings geologically contiguous to this well. Additional permits to drill are being prepared in parallel for other hydrogen and helium prospects to support final selection for maiden drilling which remains on track for Q3 2024…more

Longboat Energy (LBE.L 8YG.F) announced that it has completed the sale of its 50.1% holding in Longboat Japex Norge to joint venture partner Japan Petroleum Exploration. The company has received the full cash consideration of $2.5 million and JAPEX has now assumed all future financial obligations associated with LJN, including existing debt. Proceeds from the transaction, along with Longboat's existing cash resources and savings from continued cost reduction measures are forecast to provide sufficient capital through the end of Q1 2025. Longboat's near-term focus remains its Malaysian activities. This includes the farm-out of Block 2A, which contains the Kertang prospect, and finalising negotiations with Petronas on a production sharing contract for several material and undeveloped gas fields capable of near-term development. Longboat intends to rename and rebrand the company as the final step in repositioning its business in Southeast Asia…more

Trillion Energy (TCF.CN TRLEF Z62.F) announced an operational update for the SASB gas field well intervention program. The South Akcakoca-2 well was perforated and well hole pressure, 86 pounds per square inch before perforation, increased to 1,046 pounds per square inch. The well flowed continuously from the morning of July 9 and by the afternoon of July 10 the flow rate was 700 thousand cubic feet per day. The July 12 flow rate was 1.2 million cubic feet per day and the July 14 flow rate was 1.88 million cubic feet per day. The last data point at 4:30 pm July 15 showed a flow rate of 2.88 million cubic feet per day. The well will continue to be monitored until it reaches a stable rate. Production characteristics indicate that perforating the new zones blew the water out of the well and further indicate that the reservoirs that were water blocked are cleaning up and producing gas. The Guluc-2 well also was perforated and well hole pressure increased from 650 pounds per square inch to 1,243 pounds per square inch before settling to 1,098 pounds per square inch. Guluc-2 will be flowed to clean the water and perforation debris out to be capable of gas production, then will be shut in while South Akcakoca-2 gas production stabilizes. The perforation operation is currently ongoing at West Akcakoca-1 after which it will perforate the remaining pay in Akcakoca-3.

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