Oilman Jim's Letter - June 30, 2024

Serica Energy (SQZ.L SQZZF A3P.F) announced an operations and financial update. Production guidance is unchanged at 41,000 to 46,000 barrels of oil equivalent per day and operating costs for the year to date are consistent with the target of $20 per barrel of oil equivalent. Average net production for the year to date is 43,781 barrels of oil equivalent. Well intervention to reinstate production from the Keith field has been successfully completed and the reservoir section of the B1z sidetrack (re-named as the B6 well) on the Bittern field has been drilled, with initial well logging giving good indications of high quality, oil filled reservoir. The forward plan is to complete the well and commence testing in August 2024. Following completion of the B6 well, the rig will move to the Gannet E field in order to drill the GE-05 well. Production from this well is expected to start in November 2024. At 26 June 2024 the company held cash and cash equivalents of £301.6 million and debt drawings of £182 million. Estimated cash spend on capital items during 2024 as a whole is currently estimated at about £200 million pre-tax. I first bought SQZ in 2015 at under 5p per share. It’s now 135p, having been as high as 454p since then and paid out dividends totalling multiples of the purchase price along the way. You can see what I said at the time on Twitter (now X) where I post as @Oilman_Jim. For those who don’t know me, I have been involved in the stock markets, UK and North America, for over 40 years now. Along the way, I’ve also been a director of a number of publicly traded oil, gas and mining companies.

Longboat Energy (LBE.L 8YG.F) announced a summary of the competent persons report in respect of Block 2A offshore Sarawak in eastern Malaysia. In anticipation of a farm-out process, Longboat commissioned ERC Equipoise to undertake a CPR on the main Kertang prospect located in Block 2A, in which Longboat holds a 52.5% interest and is operator. Kertang is a well-defined, large, four-way dip closed structural high with over 220 km2 of closure. Four target intervals have been evaluated comprising of Cycle I and Cycle II/III Oligo-Miocene reservoirs, representing the primary targets and shallower Cycle V/VII reservoirs representing the secondary targets. The prospect is covered by high-quality, wide-beam 3D seismic shot by CGG in 2015. The CPR confirms the giant scale of the Kertang prospect, assigning total gross, unrisked mean prospective resources of 9.1 trillion cubic feet of gas plus 146 million barrels of natural gas liquids across the four target horizons. Preliminary work undertaken by Longboat indicates that all target horizons are capable of being tested by a single exploration well. Following recent increased interest levels in exploration for world-scale fields, multiple large companies have approached Longboat regarding Block 2A. Having consulted with Petronas, the company now intends to run a farm-out process during H2 2024 to identify a suitable partner.

CGX Energy (OYL.V CGXEF GXCN.F) and Frontera Energy (FEC.TSX FECCF 3PY3.F), joint venture partners in the petroleum prospecting license for the Corentyne block, offshore Guyana, announced that the joint venture has submitted a notice of potential commercial interest for the Wei-1 discovery to the Government of Guyana, which preserves the joint venture's interests in the license. In 2023, the joint venture successfully drilled the Wei-1 well, its second well on the Corentyne block. The well fulfilled the obligation under phase two of the second renewal period of the original 10-year license and served as an appraisal well for the Kawa-1 appraisal programme with the Government of Guyana. The joint venture, with support from investment bank Houlihan Lokey, continues to actively pursue strategic options to unlock the potential of the Corentyne block.

Condor Energies (CDR.TSX CNPRF WQ6.F) announced the initiation of a multi-well workover campaign for the eight gas-condensate fields it operates in Uzbekistan. This initially includes installing proven artificial lift equipment to yield higher gas flow rates and increase well uptime, perforating newly identified pay intervals, performing downhole stimulation treatments, and isolating identified water intervals. With over 100 wells associated with the project, both existing and shut-in wells will continue to be evaluated for optimization opportunities. The company has also started construction of the first in-line flow separation unit, which separates water from the gas streams in the field, rather than at the production facility, thereby reducing pipeline flow pressure that can lead to higher reservoir flow rates. Per the company, since assuming operations on March 1, 2024, it has flattened the project’s natural production decline rates, which previously exceeded 20% annually, while producing an average of approximately 10,000 barrels of oil equivalent per day in the second quarter to-date.

Reconnaissance Energy Africa (RECO.V RECAF 0XD.F) announced an operations update with respect to Petroleum Exploration Licence 73, onshore northeast Namibia, and a joint venture update. All camp, rig and equipment moves have been completed with all major equipment now on site of the Naingopo exploration well. Third party service contractor teams are either on site or expected to mobilize to the site in the next week ahead of the expected spud date of July 7, 2024. On Prospect P, debushing and road access activities are ongoing with major civil works including well pad construction expected to commence in the next month. This prospect is expected to spud immediately after completion of the Naingopo exploration well. The company continues to progress its farm out joint venture process which is expected to conclude soon.

On to the upcoming drills and what you need to know about each of them. I have been publishing this information privately each week for over five years now, expanding it to cover public companies trading in all the English speaking markets: Australia, Canada, the United Kingdom and the United States. There are always exciting and profitable opportunities available. Endless opportunities in fact, since new drills come along all the time. The secret is getting in to the right ones at the right time. Accurate and informed information is key. Upcoming drills are the best plays to trade and we have seen gains of up to 750% this year. This is valuable information and has different values to different people, so pay what you want, just click subscribe

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