Oilman Jim's Letter - June 17, 2024

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. Subsequent news was of a $3.36 million private placement to two existing long term shareholders at $0.364 per share. The funding strategy was also addressed and the Gas Sales Precedent Agreement is said to open a potential path to funding to long term funding of post Ahpun first investment decision expenditures without further equity dilution. In the interim, the company estimates the funding up until the point of Ahpun FID is in the range $60 - $85 million. This includes US IPO preparation costs, hot-tap into the TAPS pipeline and the cost of drilling and testing the planned Megrez-1 well to assess the Ahpun East project area which the company estimates to contain a prospective resource of c. 609 million barrels of marketable liquids.  The upper end of the cost range also includes the cost of drilling and testing an additional Ahpun appraisal well if required. Funding options presently under consideration include farm-out, equity, debt, hybrid and a US listing targeted for 2025. Pantheon believes a US listing is an important step into providing greater access to the US institutional investment community, and to enhance market depth and liquidity in the company's shares. I spoke with David Hobbs, Executive Chairman, last week and it sounds like he can pull this off…more

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

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

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

Zephyr Energy (ZPHR.L ZPHRF VD5N.F) announced an operations update for the State 36-2R LNW-CC well at the company's flagship project in the Paradox Basin, Utah, United States. Completion operations have now concluded and the Helmerich & Payne drilling rig is being rigged down and transported off location. Production testing equipment will then be mobilised to site. Testing is expected to commence within two weeks and is expected to take less than ten days to complete…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

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

Beach Energy (BPT.AX BEPTF BPS.F) announced successful connection of the Enterprise gas field to the Otway Gas Plant, with first sales gas delivered on 12 June 2024. The Enterprise field was discovered in 2021 and resulted in a 2P gas and associated liquids reserves booking of 34 million barrels of oil equivalent gross (20 million barrels of oil equivalent net to Beach). A sales agreement was signed to supply Origin Energy (ORG.AX OGFGF ORL.F) with gas from the Enterprise field until the end of 2026. The Enterprise wellsite is located onshore, 3.5 kilometres from Port Campbell and eight kilometres from the Otway Gas Plant. The well was drilled directionally to target the Enterprise gas field, located 2.5 kilometres from the shoreline with a total vertical depth of 2.5 kilometres. It is one of the longest extended reach wells in the southern hemisphere with a ~5.0 kilometre lateral section…more

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