Oilman Jim's Letter - July 21, 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.CDN 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 increased to 1.2 million cubic feet per day and the July 14 flow rate increased further to 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.

Carnarvon Energy (CVN.ASX CVONF CJB.F) announced an update on its Dorado Phase 1 liquids development, offshore Western Australia, owned 80% by operator Santos (STO.ASX STOSF STS1.F), 10% by OPIC Australia and 10% by Carnarvon. The production rate has been optimised, allowing the joint venture to reduce the sizing of the floating production offtake and storage vessel, wellhead platform and other facilities, and phase the timing of wells, reducing overall capital expenditure. Phasing the development wells and reducing the number of wells required prior to first oil allows the joint venture to further reduce the up-front capital expenditure prior to first oil, considerably improving the project’s economics and reducing the time to first oil. Carnarvon now anticipates that overall capital expenditure prior to first oil will be below previous guidance of ~$2 billion gross and expects that the company, with its strong balance sheet, the $90m development cost carry and optionality for a prospective debt facility, will be fully funded for its share of development costs…more

Union Jack Oil (UJO.L UJOGF 1UJO.F) announced a positive drilling update in respect of the Andrews 2-17 well, located in Seminole County, Oklahoma, in which Union Jack holds a 45% working interest. The well was drilled to a total depth of 4,850 feet and the Hunton Limestone was penetrated at approximately 4,180 feet measured depth, showing elevated gas readings and good oil and gas shows. Completion and production testing is scheduled to commence within the next 14 days…more

Invictus Energy (IVZ.ASX IVCTF) announced an update on operations at its 80% owned SG 4571 licence in Zimbabwe’s Cabora Bassa Basin. The licence, containing the Mukuyu discovery, has been renewed for a further 3 year term. This third period runs to June 2027 and the company plans to undertake a comprehensive work program including 3D seismic acquisition and additional exploration/appraisal drilling. Invictus is able to apply for a production special grant licence at any stage…more

Enwell Energy (ENW.L RGPMF RHN.F) announced an update on its operational activities in Ukraine in respect of its Mekhediviska-Golotvshinska, Svyrydivske and Vasyschevskoye gas and condensate fields and its Svystunivsko-Chervonolutskyi exploration licence. Production operations are continuing at the Mekhediviska-Golotvshinska and Svyrydivske fields and currently the aggregate production rate is approximately 2,000 barrels of oil equivalent per day. Field operations are said to be continuing relatively normally. Suspension orders have been cancelled at the Vasyschevskoye field and the Svystunivsko-Chervonolutskyi exploration licence area and the company is now preparing to resume production operations at the Vasyschevskoye and is planning further development activities at Svystunivsko-Chervonolutskyi. At 30 June 2024, Enwell's cash resources were approximately $93.7 million, more than the company’s current market capitalisation.

Subscribe to the International Letter