Oilman Jim's Letter - June 11, 2024

Sintana Energy, Crown Energy, BW Energy, Shell, Melbana Energy, Chariot, Union Jack Oil, Deltic Energy, Helix Exploration, Pulsar Helium, Pantheon Resources

Sintana Energy (SEI.V SEUSF) announced that it has closed its acquisition of an initial 49% interest in Giraffe Energy Investments, pursuant to an agreement dated effective April 24, 2024 with Crown Energy (CWE.F) and Giraffe. The latter is the owner of a 33% interest in Petroleum Exploration License 79 which governs blocks 2815 and 2915 located inboard of blocks operated by BW Energy (BWE.OL 6BW.F), Rhino Resources and Shell (SHEL.L SHEL). The National Petroleum Corporation of Namibia is currently the operator with a 67% interest in PEL 79. Sintana acquired its initial 49% interest in Giraffe for a cash consideration of $2 million and retains an option to increase its ownership up to 67% of Giraffe anytime over the 5 years following closing based on the shares issued and outstanding at the time of the option exercise for an additional cash payment at the time of exercise of $1 million…more

Melbana Energy (MAY.AX MEOAF) announced that it is seeking a farm-in partner for offshore exploration permits AC/P70, NT/P87 and WA-544-P, located in the Bonaparte Basin and Northwest Shelf, in which the company is currently 100% equity holder and operator. All the permits are located within less that 100m of water, close to existing infrastructure. Numerous leads exist throughout both the Paleozoic and Mesozoic have been matured and are prospective for gas; opportunities are a mixture of proven fairways and new play concepts, not historically exploited. Seismic reprocessing is close to complete in AC/P70 and seismic acquisition is planned for NT/P87 & WA-544-P to mature and rank leads…more

Chariot (CHAR.L OIGLF C62.F) announced final results. The company says it has progressed all of its natural gas, renewables and green hydrogen assets, further de-risking each division of the business. Catalysts ahead are forward plans for Loukos, drilling at Anchois in August and moving into the next phases of evolution for power and hydrogen. The company is now focused on generating near-term cashflows from its gas business with an ambition to return capital to shareholders from these revenues. Loss after tax for the year to 31 December 2023 was $15.6 million and cash was $6 million. The company remains debt free…more

Union Jack Oil (UJO.L UJOGF) announced the acquisition of a 45% working interest in the Rogers Enhanced Oil Recovery Project and associated leases located in Seminole County, Oklahoma from Reach Oil & Gas, the operator. The Rogers Project contains two production wells and one injector. The transaction is structured to provide Union Jack with a comparable working interest to the neighbouring West Bowlegs area of interest, including the producing Andrews 1-17 well. Cash consideration is $105,000, project activity is scheduled to commence next month and the budgeted capital expenditure of c.$133,000 net to Union Jack will occur through the remainder of the current financial year. Base case secondary recovery volumes calculated by the operator suggest that up to a further 124,000 barrels of oil gross can be recovered. Project economics indicate future gross revenues at prevailing oil prices of c.$7.5 million gross, an IRR approaching 80% and a c.18 month payback period post-CAPEX. Production rates from Andrews 1-17 will be announed once a permanent electricity supply and upgraded pump jack have been installed. Per David Bramhill, Executive Chairman, these site upgrades are expected to materially enhance current flow rates, with up to 100 barrels per day of high quality (46 º API gravity) oil having already been recorded at Andrews 1-17 during May 2024. Planning for the follow-on Andrews 2-17 well continues prior to anticipated spudding over the coming weeks…more

Deltic Energy (DELT.L 7RC0.F) announced the Pensacola withdrawal and a portfolio update. Despite an exhaustive process, deteriorating sentiment towards the oil and gas industry as a result of ongoing fiscal volatility and negative political rhetoric in the run-up to the July election have resulted in Deltic being unable to secure a farm-out or an alternative funding solution which would allow the company to commit to its future commitments with respect to the Pensacola appraisal well. Therefore, the only appropriate course of action available to Deltic is to withdraw from the licence prior to further liabilities being crystallised following the operator's issuance of the AFE for the well cost, expected tomorrow. Attempted funding solutions which included potential industry partners, including Deltic’s existing joint venture partners, the equity capital markets, strategic investors, debt providers and commodity trading houses which can pre-pay for future gas deliveries were all unsuccessful. On the brighter side, good progress continues to be made on the Selene exploration well which remains on track to commence drilling operations in the first half of July, with operations expected to last approximately 90 days. Following a farm-out to Dana Petroleum earlier this year, Deltic retains a 25% working interest in the licence and has no cost exposure to the imminent well up to a gross success case well cost of $49M. Selene, on its own, is estimated to be worth multiples of the company's current market value…more

Helix Exploration (HEX.L) announced the results of a scoping study economic analysis conducted by Aeon Petroleum Consultants. NPV8 is $303.1 million using a helium price of $550 per thousand cubic feet and a grade of 1.50%. The initial CAPEX requirement is $19.7 million. Net revenue is $605.6 million after CAPEX, OPEX, tax and royalty over a 29-year life of mine. Per Bo Sears, CEO, rapid payback and free cash-flow estimates of over $40 million a year release a range of finance possibilities to provide the initial CAPEX requirement…more

Pulsar Helium (PLSR.V PSRHF Y3K.F) announced further results from its exploration program at the 100% owned Topaz project in Minnesota: a flow rate of up to 821,000 cubic feet per day with helium grade between 8.7-14.5%; 162 psi (1,117 kpa) bottom hole pressure; and a 70% pressure rebound within the first hour of post-flow shut-in. The fast build-up of pressure is regarded as highly positive, suggesting that there is a significant volume of gas present. The combination of flow rate multiplied by helium concentration is said to confirm Jetstream #1 as a world-class helium well in the context of other publicly listed helium explorers and developers. Ongoing analysis of Jetstream #1 has identified additional fractures sets, which in combination with the data collected to date confirms the presence of what is said to be a globally significant discovery and provides Pulsar with the confidence to drill deeper and test the entirety of the interpreted helium-bearing zone, as identified by seismic surveys conducted by the company. All data is now being transferred to Sproule International Ltd for their resource update calculation, expected to be completed in July. In the meantime, the Company is preparing for additional field activities consisting of seismic surveys, interpretation of the recently acquired in-fill FALCON airborne gravity gradiometry, and preparation for drilling later in 2024. The drilling is likely to consist of deepening Jetstream #1 and drilling step-out wells…more

Pantheon Resources (PANR.L PTHRF P3K.F) announced results of the recent independent expert report by Cawley Gillespie & Associates. This completes the independent estimates for the company's aggregate resources from the Kodiak field, Ahpun western topsets and Alkaid horizon resulting in totals exceeding 1.5 billion barrels of ANS Crude and 6.5 trillion cubic feet of associated gas. As with Lee Keeling & Associates which recently updated its IER on the Alkaid horizon of the Ahpun field, CGA has evaluated the economics of the best estimate or 2C case. Based on an ANS Crude price of $80 per barrel delivered to the US West Coast, CGA estimates the net present value of the total contingent resources in the western topsets in the Ahpun field using a discount rate of 10% at $1.74 billion. Pantheon states it is targeting final investment decision at the earliest possible date subject to regulatory consents, but in any case to allow first production no later than 2028…more

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