Oilman Jim's Letter - June 13, 2024

Reconnaissance Energy Africa (RECO.V RECAF 0XD.F) announced an operations update with respect to activity relating to Petroleum Exploration Licence 73, onshore northeast Namibia, plus an update on the joint venture process. Per Brian Reinsborough, President and CEO, the operations teams and contractors are busy completing the camp and rig moves this week; the, Jarvie-1 drilling rig has undergone all its maintenance and certification processes and is moving to the Naingopo location. The conductor hole has been drilled and the company continues to track for a spud toward the end of the month. The well is expected to take 90 days to drill, targeting multiple reservoir intervals in the Damara Fold Belt. The well is targeting 163 million barrels of unrisked prospective oil resources or 843 billion cubic feet of unrisked prospective natural gas resources, net to ReconAfrica, based on the most recent prospective resources report prepared by Netherland, Sewell & Associates. The company says it continues to progress its farm out joint venture process which it expects to conclude in the next few weeks…more

Matador Resources (MTDR 7MR.F) announced that a wholly-owned subsidiary has entered into a definitive agreement to acquire oil and natural gas producing properties and undeveloped acreage in New Mexico and Texas. The consideration will consist of a cash payment of $1.905 billion, subject to usual closing adjustments. On a pro forma basis following closing of the acquisition, Matador expects to have over 190,000 net acres in the Delaware Basin, approximately 2,000 net locations, production of over 180,000 barrels of oil and natural gas equivalent per day, proved oil and natural gas reserves of over 580 million barrels of oil equivalent and an enterprise value in excess of $10 billion. The acquisition preserves Matador’s strong balance sheet with pro forma leverage expected to be approximately 1.3x at closing and back below 1.0x by the middle of 2025…more

Jadestone Energy (JSE.L JDSEF 8KW.F) announced a corporate update. Year-to-date (end-May) 2024 production has averaged c.17,200 barrels of oil equivalent per day, a c.50% increase year-on-year, with production in the second half of 2024 expected to increase significantly with the onset of production at the Akatara project. The lower end of the 20-22,000 barrels of oil equivalent per day 2024 production guidance range remains the most likely outcome. The Akatara gas processing facility now is nearing the key milestone of mechanical completion, and the project remains on schedule for first gas later this month and for commercial gas, LPG and condensate sales to follow shortly thereafter. Net debt at the end of May 2024 was c.$66 million, a reduction from the last reported figure of c.$78 million at the end of March, reflecting c.$110 million of cash revenues received in April, ongoing operating and capital expenditures, and the second payment to the abandonment trust fund associated with the CWLH 2 acquisition. Due to the phasing of cargoes, there were no oil liftings in April 2024. May 2024 liftings generated estimated cash revenues of c.$32 million, which are expected in June. 2024 operating cost guidance is $240-290 million (excluding c.$30 million of royalties and carbon taxes) and capital expenditure guidance is $80-110 million…more

Capricorn Energy (CNE.L CRNCY FKG0.F) noted the Woodside Energy (WDS.AX WDX WOP0.F) announcement confirming that first production from the Sangomar field development offshore Senegal has commenced and reported that the company has received confirmation from Woodside that the first oil condition under the sale and purchase agreement has been satisfied. Capricorn may be entitled to a contingent payment of either $25 million or $50 million if the average Brent oil price during the first six months of production exceeds the $55 per barrel or $60 per barrel thresholds and first oil is achieved in the first half of 2024. The contingent payment is anticipated in early 2025 once the average oil price has been determined and there has been 30 days of continuous production. The company says it remains committed to returning any available proceeds of this contingent payment to its shareholders. FAR (FAR.AX FARYF) issued a similar announcement…more

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