Oilman Jim's Letter - June 23, 2024

Energean (ENOG.L EERGF 1YE.F) announced that it has entered into a binding agreement for the sale of its portfolio in Egypt, Italy and Croatia to an entity controlled by Carlyle International Energy Partners for an enterprise value of up to $945 million, of which $820 million is firm. Energean expects sufficient cash proceeds at closing in order to repay in full the $450 million PLC corporate bond and facilitate a special dividend of up to $200 million. The sale enables Energean to rationalise the portfolio and focus on its gas-weighted, gas-development strategy, underpinned by the Karish Field in Israel and the recent farm-in to the Anchois field in Morocco with Chariot (CHAR.L OIGLF C62.F). This strategy aims to maximise asset monetisation (through a develop and operate model), free cash flow generation and returns to shareholders. The transaction also removes over 60% of the group’s decommissioning liabilities. In addition to the $945 million, there is a $/boe contingent payment linked to the recent Location B well in Egypt. Moving forward, Energean will maintain and seek to grow its footprint in the Mediterranean and look beyond this to the wider Europe, Middle East and Africa region, particularly where there is long-term policy support for gas and displacement of coal. The group will also focus on creating a carbon storage hub in Greece and the wider Mediterranean region.

Elixir Energy (EXR.ASX ELXPF) announced a Daydream-2 operations update relating to its 100% owned Grandis project located adjacent to the Wallumbilla gas hub in Queensland. Following recent operational issues in the stimulation phase of the Daydream-2 appraisal program, Elixir has engaged Condor Energy to complete the remaining stimulation stages. Condor has advised Elixir that it will be in a position to recommence this work in late July or early August. The exact timing will become clearer in coming weeks as the availability of coil tubing equipment being utilized by a neighbouring operator becomes clearer. Condor is one of Australia’s leading well services companies and has substantial relevant recent experience in successfully performing high impact stimulation operations in various locations such as the Beetaloo Basin in the Northern Territory and in the Taroom Trough adjacent to the Grandis gas project. Elixir and Condor have successfully worked together in earlier stages of the Daydream-2 program. Over the last week, Elixir has successfully removed all debris associated with the lodged setting mechanism of the lowermost bridge plug in preparation. The Lorelle Sandstone, which flowed at a stabilized rate of 1.3 million cubic feet per day – pre stimulation - will form part of the multi-zone flow testing operations. Elixir aims to flow test all the target zones of the well in August.

Helix Exploration (HEX.L) announced the execution of a farm-In agreement whereby it has acquired a 100% working interest in 5,600 acres in Hill County, Montana, (to be known as the Rudyard Project) from Adam Standiford, a consultant to the company, for $250,000 in cash and shares. Standiford will also receive 600,000 new ordinary shares in the company at a price of 10 pence per share as an introducer fee. Helium has been proven from two wells (not included) in a 640-acre section on the northern anticline and adjacent to the Rudyard Project, both of which tested favourably for helium grade (1.3% He) and overall flow rates. Contingent resources are 0.48 billion cubic feet with an in-situ value of over $250 million at a helium price of $550 per thousand cubic feet. Additional upside is said to exist in the untested Dry Creek Formation. The company says it is fully funded for Q3 2024 appraisal drilling and the rig and services will move to Rudyard immediately after completion of drilling at Ingomar Dome in Q3 2024.

Tamboran Resources (TBN.ASX TBNRL) announced the launch of its NYSE Initial Public Offering with an offering range of $24 – 27 per share for a total of 6,500,000 shares of common stock. The company is seeking to raise capital to fund the drilling, completion and infrastructure requirements to reach plateau rates from the proposed Shenandoah South Pilot Project. Final Investment Decision is targeted in mid-2024. Additional capital will fund the proposed NTLNG pre-FEED activities, other Beetaloo Basin activities and general working capital. Upon the successful completion of the IPO, Tamboran will trade on the NYSE under the ticker TBN. Per Managing Director and CEO, Joel Riddle, the US market has deep knowledge of the development of shale gas resources and a long history of supporting gas companies to fund their developments and the board believes the US listing will deliver Tamboran shareholders a greater reflection of the value of company’s assets. The IPO is expected to fund Tamboran’s next six wells in the Beetaloo Basin, which will all be drilled to approximately 10,000 feet and are planned to deliver gas to the Northern Territory Government via the company’s proposed 40 million cubic feet per day Shenandoah South Pilot Project. Separately, the company announced that the development of the Beetaloo Basin has been awarded Major Project Status by the Northern Territory Government. This provides Tamboran with significant benefits.

Arrow Exploration (AXL.V AXL.L) announced an update on operational activity at the multi horizon, Carrizales Norte field on the Tapir Block in the Llanos Basin of Colombia where Arrow holds a 50 percent beneficial interest. The company has put on production the first of four Ubaque horizontal wells planned for 2024. This first horizontal well on the Carrizales Norte "B" pad, CNB HZ-1, is exceeding expectations and is being restricted to a current flow rate of 3,150 barrels of oil per day gross with less than 1% water cut while still recovering load fluid. CNB HZ-1 was spud on May 14, 2024, and reached target depth on 8,448 feet (true vertical depth) on June 7, 2024. The well was drilled to a total measured depth of 11,680 feet with a horizontal section of approximately 2,042 feet. The pay zone is a clean sandstone exhibiting consistent 28% porosity and high resistivities, similar characteristics to those seen in previous wells. The well is flowing and has been choked back in keeping with conservative reservoir management as well as ongoing development of adequate water disposal capabilities. The rig has now been moved to the second cellar on the Carrizales Norte B Pad where the company plans to drill a dedicated water disposal well and, thereafter, Arrow expects to drill three additional horizontal wells on the B pad, followed by the Baquiano-1 exploration well, which is on trend with the Carrizales Norte field. The three follow up wells will have longer horizontal sections, which are expected to result in enhanced rate and ultimate recovery. Arrow's cash position was approximately $12.1 million on June 1, 2024.

Baron Oil (BOIL.L GHA.F) announced an update on the status of the TL-SO-19-16 Production Sharing Contract, offshore Democratic Republic of Timor-Leste. The PSC, which Baron operates through its SundaGas subsidiary, with a 60% working interest in partnership with state-owned joint venture partner TIMOR GAP, has now entered Contract Year Three. Contract Year Three contains a commitment to drill an appraisal well on the Chuditch gas field, an obligation which was previously subject to seismic data reprocessing confirming the presence of a significant structure associated with the field. The successful conclusion of the 3D seismic reprocessing project, and subsequent interpretation of those data and other technical studies, has removed that subjectivity and Chuditch has been demonstrated to be a field of significant scale, interpreted to be more than 20 km long with a Pmean contingent resource of 1.16 trillion cubic feet of gas. Baron continues its discussions with additional potential funding partners regarding participation in the drilling of the appraisal well; these parties include potential strategic investors into the Chuditch project and enterprises with an interest in developing and / or taking the gas resources to market. Progress is said to be encouraging, and the board is confident of the financing being in place in time to enable drilling of the Chuditch well as planned in early 2025.

Longboat Energy (LBE.L) announced that it has reached agreement to sell its 50.1% holding in Longboat Japex Norge to joint venture partner Japan Petroleum Exploration. Cash consideration is $2.5 million plus Longboat's share of drawn debt under the JAPEX Acquisition Facility, currently $8.5 million net. JAPEX will assume all future financial obligations of the joint venture. Proceeds will be used to fund Longboat's working capital and operations in Malaysia. The plan now is to pivot Longboat's strategy to build a business in Southeast Asia. Significant industry interest has been received in Malaysian Block 2A and a farm-out process is to be launched in H2 2024. There is also the provisional award of a cluster of material, undeveloped gas fields capable of near-term development offshore Sarawak. Longboat Japex Norge sale proceeds will provide working capital to run the company through the end of Q1 2025 and cost savings in excess of $1.25 million are being achieved with a now streamlined board and management team.

D3 Energy (D3E.ASX) announced that it has executed a contract with Van Zyl Boorwerke to undertake drilling operations at RBD12 located within ER315, onshore South Africa. VZB was the drilling contractor for D3 Energy’s maiden two well drilling program at ER315, which confirmed helium concentrations of 5.0% and 5.1% respectively. The wells were drilled to confirm the geological model and the fact that gas (both helium and methane) migration was a function of faulting and associated fractures below the base of the Karoo formation at this location. RBD10 drilled on the west of the Virginia Fault was production tested and flowed at an average stabilized rate of 126 thousand cubic feet for a 36-hour period without any evidence of decline. D3 Energy plans to locate the RBD12 well to the west (hanging wall side) of the Virginia Fault and close to the historical RBD03 borehole, which is also flowing methane and helium at measurable rates and has been doing so since 1984. Upon successful intersection of gas, RBD12 will be production tested with samples collected to ascertain helium and methane concentrations. It is anticipated that this will form the basis of a larger and longer production testing programme which will start with testing of legacy gold exploration boreholes RBD01 & RBD03 as soon as early next month. RBD12 is budgeted to cost around AU$200,000 to drill and complete, which demonstrates the low-cost nature of D3 Energy’s South African assets. RBD12 will be a future potential development production well, which, because these wells flow naturally without artificial lift or pumping, have low to negligible operating costs throughout the extensive life of the well.

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