Oilman Jim's Letter - July 28, 2024

88 Energy (88E.ASX 88E.L EEENF POQ.F) announced that the 2D seismic data acquisition program for PEL 93 over the Owambo Basin, Namibia, has been completed on time and within budget. The program acquired 203 line kilometres of 2D seismic data utilising Polaris vibroseis and is expected to deliver an excellent image for the accurate interpretation of the subsurface geological structures of the Damara play. Processing of the data is ongoing and interpretation of the new lines is currently expected in Q4 2024. Determination of the size and quality of a number of the Damara fold structures that are expected to be present in PEL 93 is the key purpose of the program and this work will form the basis for an independent certified prospective resource assessment. This will allow for more accurate drilling location identification and enable planning for potential future drilling events. 88E also noted that its near neighbour, Reconnaissance Energy Africa (RECO.V RECAF 0XD.F), has now spudded its first well, Naingopo-1, on PEL 73, which is modelled by 88 Energy to be a continuation of the interpreted opportunity at PEL 93. Subsequently, BW Energy (BWE.OL 6BW.F) farmed into Recon Africa's Namibian acreage, acquiring a 20% working interest in PEL 73 with a $16 million equity investment to 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 a two year period…more…more

Pantheon Resources (PANR.L PTHRF P3K.F), 88E’s next door neighbour in Alaska, announced the results of its fundraise and retail offer, which raised gross proceeds of approximately $29 million before costs at a price of 17p per share. Funds will be applied towards data acquisition, tests of multiple horizons and, in a success case, a possible long term production test at Megrez-1, as well as further development of the company's asset portfolio and general corporate purposes. 22,380,254 new shares also will be issued to the holder of the convertible bond at the issue price pursuant to the bond prepayment of $4.9 million, which reduces the outstanding balance of the convertible bond from $24.5 million to $19.6 million. Additionally, the holder of the convertible bond supported the fundraising through participation in the placing at the issue price. The company now will be able to spud the Megrez-1 well in Q4 this year and be able to conduct extended testing on that well in a success case. Megrez-1 is said to be targeting a 609 million barrel resource, adjacent to pipeline and road infrastructure and analogous to other fields on the Alaska North Slope currently under development…more

D3 Energy (D3E.ASX) announced that production testing has commenced at RBD03, a legacy gold exploration borehole drilled in 1982 within the area of the ER315 exploration right in the Free State Province, South Africa. The testing programme at RBD03 will form part of an extended multi-borehole testing programme including the historical RBD01 borehole in the coming months. The extended testing and pressure monitoring programme will enable decisions to be made on well interference and spacing and will form the basis for expediting a production right application to be submitted by the company to the South African authorities in the near future. Testing of RBD03 is expected to take about 2 weeks with an update to be provided in the next few days. The company also has executed a rig contract for the drilling of RBD12, D3’s next well at ER315, which will commence as soon as possible upon completion of the testing work at RBD03. RBD12 will be an important well in the production testing programme and will also hopefully confirm the geological model that drilling into the high wall sequence and intersecting fractures below the base of the Karoo yields commercial helium and methane production rates.

Parkmead Group (PMG.L LYK1.F) announced the formal award of the P2634 licence by the UK Government’s North Sea Transition Authority. The licence is situated in the Outer Moray Firth and comprises Blocks 14/15a, 14/20d and 15/11a. Parkmead (50% interest and operator) and joint venture partner Orcadian Energy (ORCA.L 9J1.F) (50% interest) say they will leverage their expertise gained in developing challenging crudes to work towards commercialisation of Fynn Beauly, one of the UK’s largest undeveloped discoveries. This heavy oil accumulation has been proven by three wells and is estimated to contain oil-in-place of between 740 million and 1.33 billion barrels. The company’s board believes that this licence offers Parkmead and its investors access to huge potential upside, via one of the largest remaining oil resources left on the UK continental shelf…more…more

ADX Energy (ADX.ASX ADXRF GHU.F) announced an update in relation to the appraisal, exploration and testing programme on its ADX-AT-I and ADX-AT-II exploration licences in Upper Austria. The programme includes drilling of the Anshof-2A side track well within the Anshof field area in the ADX-AT-II licence, which is expected to commence in early September 2024. The Anshof-2A well is planned as a producer and is expected to take approximately 14 days to drill in preparation for testing and tie-in to the recently installed Anshof permanent production facility which is currently processing oil from the Anshof-3 well. Additionally, ADX will be drilling a gas exploration well in the MND Investment Area within the ADX-AT-I licence, which is expected to commence in early October 2024. Drilling and environmental permitting is completed for the LICHT-1 prospect and the IRR-1 prospect is expected to be permitted by mid August 2024. ADX and its partner MND Austria will finalise their preferred drilling prospect early next month. Both prospects are said to offer significant resource potential, are covered by high quality 3D seismic and are proximal to gas infrastructure. MND will fund the first EUR 4.5 million of well costs to earn a 50% economic interest in the MND Investment Area (an exploration investment area within the ADX-AT-I license). Preparations and permitting for Welchau-1 production testing meanwhile are ongoing with a view to undertaking an extended testing program during the fourth quarter of 2024…more

Europa Oil & Gas (EOG.L EGN.F) announced that an additional 716 billion cubic feet of unrisked prospective resources have been identified on the EG-08 block bringing total gross unrisked mean prospective resources on the block to 2.116 trillion cubic feet. EOG owns a 42.9% equity interest in Antler Global, which in turn holds a 80% interest in the EG-08 production sharing contract, located offshore Equatorial Guinea, with Guinea Ecuatorialde Petroleos, the national oil company, holding the remaining 20%. This stage of technical work on the block now is complete and the data is being loaded into a data room, which will be open in the coming weeks. A number of companies are said to have already expressed interest in farming into the block. Antler says it is seeking a farmin partner to accelerate drilling an exploration well which will target one horizon in the Barracuda prospect, with an estimated chance of success of 70%. Future wells will target the significant additional upside in Barracuda and throughout the license. Initial discussions have also been initiated with rig providers with a view to securing a jack-up rig to drill the farmin well in H2 2025…more

Blue Star Helium (BNL.ASX BSNLF) announced an update on its Serenity high-grade CO2 project in Las Animas County, Colorado. The company has undertaken a review of various development concepts for the Serenity CO2 project and selected an initial small-scale, low capex development targeting first production of beverage-grade CO2 from H1 2025. The proposed facility, expected to cost in the order of $1.3 million, is a chilled distillation system producing high-purity liquid CO2 and will support processing of approximately 500 thousand cubic feet per day of raw gas from an initial two-well development, producing between 20 and 25 tons per day of beverage-grade CO2. Meanwhile, the Sammons 315310C well has been drilled, tested and proven, and is currently suspended for tie-in to the production facility. Lab analysis of representative reservoir samples taken during natural flowing of Sammons 315310C contained a combined average composition from both the upper and lower Lyons reservoirs of 98.77% carbon dioxide, 1.15% nitrogen and 0.09% helium, with the lower Lyons reservoir consistently showing higher CO2 levels up to 98.95%. Flow testing was conducted at various stages throughout the upper Lyons drilling with gas rates as high as 500 thousand cubic feet per day through a 1.25-inch orifice. The company has three additional approved drilling locations which require final drill approvals and it is expected that a second well will be drilled with the existing Sammons well being completed for production in anticipation of installation of the initial facility. On successful development of that facility, Blue Star expects to be able to develop up to 18 further locations at Serenity as an expanded commercialisation of this asset. The company is also continuing to refine its development case for Galactica/Pegasus, which envisages production of both helium and CO2 product streams. Ongoing evaluation here is said to demonstrate the considerable opportunity presented by processing larger raw gas volumes through a CO2 plant prior to feeding what is then helium-enriched feed gas into a helium processing plant…more

Deltic Energy (DELT.L 7RC0.F) announced that the Valaris 123 drilling unit has been mobilised and is on route to the Selene well location. Drilling operations are expected to commence shortly after its arrival, with planned operations lasting 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. The joint venture has therefore determined there is no requirement for a full well test as part of that process and, in line with normal oilfield practice, the well will accordingly be plugged and abandoned on completion. Deltic estimates the Selene structure to contain gross P50 prospective resources of 318 billion cubic feet with a 69% geological chance of success and the company is fully carried for its 25% working interest in the Selene well up to a gross success case well cost of $49 million, which is in excess of the operator's success case well authorisation for expenditure of $47 million…more

Trillion Energy (TCF.CSE TRLEF Z62.F) announced an update on the flow rates and well perforations at the SASB gas field. South Akcakoca-2 well head pressure has stabilized at 371 pounds per square inch and the well was recently producing 1.94 million cubic feet per day using a 42/64 inch choke. At Guluc-2, initial flow was diverted to the platform vent line with a 64/64 inch choke where producing well head pressure was about 350 pounds per square inch. The well was shut in and within 40 minutes the well head pressure increased to 1,200 pounds per square inch. Guluc-2 is currently producing at 3.35 million cubic feet per day with a well head pressure of 484 pounds per square inch using a 32/64 inch choke. At West Akcakoca-1, only two of the five zones slated for perforations have been completed at this time due a wait for a replacement tool expected to arrive today. The two perforated zones contain 5 metres of gas pay, where well head pressure went from 1150 pounds per square inch to 1350 pounds per square inch. Three more gas zones totaling an additional 4 metres are expected to be perforated, after which the well will be tested and flowed. Akcakoca-3 was perforated over 11 metres of gas pay with no observable well head pressure increase, likely due to water loading which is currently at 315 metres depth. The well is expected to come back on at about 2 million cubic feet per day upon installation of a velocity string…more

Chariot (CHAR.L OIGLF C62.F) announced that the accelerated bookbuild has closed and the company has conditionally raised net proceeds of $6.4 million (£5 million), comprising gross proceeds of $7 million less expenses, through the placing of and subscription for 83,353,179 new ordinary shares at the issue price of 6.5p per share. In addition, the company proposes to raise up to a further $2 million by the issue of new ordinary shares pursuant to an open offer to qualifying shareholders on the basis of 1 open offer share for every 46 existing shares. The net proceeds of the fundraise will be used to strengthen the balance sheet, secure a material new venture opportunity with multi-billion barrel potential and progress onshore gas commercialisation plans in Morocco to build a gas to industry supply…more

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