Oilman Jim's Letter - September 8, 2024

Companies issuing interesting news last week

PetroTal (TAL.TSX PTAL.L PTALF SER1.F) announced an operational update. The 20H well has allowed for the evaluation and testing of the upper Vivian formation sand, which for the first time will be jointly completed with the main Vivian sand. So far, the company has only produced from the main Vivian sand, where permeability is an order of magnitude greater than the upper Vivian. As of year-end 2023, Netherland, Sewell and Associates estimated that about 20% of the 442 million barrels of 2P original oil in place at the Bretaña field is assigned to the upper Vivian sand, while all 2P reserves are allocated to the main Vivian sand. The 20H well design thus included a short test of the upper Vivian, to acquire crude samples and test production deliverability. During a brief production test, the upper Vivian flowed at an equivalent rate of approximately 320 barrels of oil per day of 18.6 API oil, which is of similar gravity to oil in the main Vivian sand. PetroTal has decided to complete the 20H well in both sands and once sufficient production data has been collected, the company will evaluate the possibility of amending its field development plan to include the upper Vivian, with a view to potentially including the unit in Bretaña's future 2P oil reserves certification. If expectations of low production of formation water volumes from the upper Vivian are confirmed, oil produced from that sand conceptually should not require additional water treatment facilities to be constructed. The well is now drilling ahead in the main Vivian sand target and is expected to be completed by the end of September…more

Invictus Energy (IVZ.ASX IVCTF) announced that following completion of the interpretation of the CB23 Seismic Survey data and a review of prospectivity in the Zimbabwe eastern Cabora Bassa basin, eight key prospects have been defined in the company’s Exclusive Prospecting Orders 1848 and 1849, totalling 2.9 trillion cubic feet of gas and 184 million barrels of condensate on a gross mean unrisked basis. The company will focus its next exploration drilling campaign, initially targeting the Musuma prospect estimated to contain 1.17 trillion cubic feet, on further appraisal drilling in the Mukuyu gas field. The interpretation of the 2023 2D (CB23) seismic survey data identified multiple prospects with high potential gas volumes at multiple stratigraphic levels. The targets’ relatively shallow depths and, in some cases, stacked prospective intervals can be tested with simple vertical wells. Based on the company’s 80% share in the Cabora Bassa project, Invictus’ net share of this prospective resource would equate to 2.3 trillion cubic feet and 147 million barrels of condensate and the company will conduct a further evaluation of the Basin Margin play to select additional prospects for a future drilling campaign…more

Blue Star Helium (BNL.ASX BSNLF) announced that it has received firm commitments to raise A$3.0 million in gross proceeds via a placement of 750,000,000 new ordinary shares to institutional and sophisticated investors at an issue price of A$0.004 per share. Participants in the placement will receive one free option for every two shares subscribed for and issued, exercisable at A$0.01 and expiring two years from the date of issue. The placement is said to have been strongly supported by existing sophisticated, professional and institutional shareholders. Funds raised will enable Blue Star to advance helium development and exploration evaluation activities across its Las Animas County acreage in Colorado, including the Galactica-Pegasus and Serenity projects as well as the company’s continued exploration and acquisition strategy…more

Helium One Global (HE1.L HLOGF HE1.F), which recently farmed in for 50% of Blue Star’s Galactica-Pegasus project, announced a helium discovery in Tanzania following completion of its extended well test operations at Itumbula West-1 which successfully flowed a sustained average of 5.5% helium (air corrected) from the fractured basement and flowed a sustained average of 5.2% helium (air corrected) to surface from the faulted Karoo Group. The well flowed naturally at a maximum flow rate of 2,701 barrels per day of fluid on a 36/64ths of an inch choke setting, equating to 834 standard cubic feet per day of helium. The company claims its internal modelling demonstrates that this could increase to 20,000 barrels per day of fluid with artificial lift in the development phase. On this basis, Helium One estimates the actual flow rate would increase to 6,176 standard cubic feet per day of helium, when applying an average concentration of 5.5% helium. Preliminary internal financial modelling is said to demonstrate positive project economics with artificial lift and 20-30 additional development wells. The company is now integrating the results of the extended well test and finalising its feasibility study ahead of submitting a mining licence application…more

Bluejay Mining (JAY.L BLLYF S5WA.F) announced that its change of name to 80 Mile (80M.L) has been formally completed. This follows the successful passing of all relevant resolutions at the General Meeting and the company's expansion of corporate strategy to include the exploration and development of industrial gas and liquid hydrocarbon projects. 80 Mile's recent acquisition of White Flame Energy expanded its portfolio into the energy sector, adding large-scale licenses for industrial gas, natural gas, and liquid hydrocarbons in East Greenland. Further news is awaited…more

Falcon Oil & Gas (FO.V FOG.L FAC.F) announced that it plans to change its corporate name to “Beetaloo Resources Corp.” and consolidate its share capital on the basis of up to 250 pre-consolidation common shares for one post-consolidation common share, subject to shareholder and regulatory approvals. Falcon wishes to proceed with the consolidation in order to pursue a listing on a US stock exchange during H1 2025, which is expected to expand awareness among US based investors and potentially provide the company with additional sources of capital. In conjunction with the consolidation, Falcon plans to complete the name change in order to align the company’s name with its strategic focus on appraisal and development activities in the Beetaloo Sub-basin, Northern Territory, Australia. Falcon currently has 1,109,141,512 issued and outstanding common shares, which would reduce to 4,436,566 common shares on the basis of a 250 to one consolidation…more

Conrad Asia Energy (CRD.ASX 3MD.F) announced that it has signed a binding gas sales agreement for the sale of natural gas from the Mako gas field with Sembcorp. The agreement is for gas from the Mako gas field (in which Conrad has a 76.5% interest, Empyrean Energy (EME.L E1E.F) has an 8.5% interest and Coro Energy has a 15% interest) and is said to be an important next step in the commercialisation of the Mako field, the largest undeveloped gas field in the West Natuna Sea. With this gas sales agreement and the gas sold under a separate domestic market obligation gas sales agreement with PGN, Indonesia’s largest gas company, all of Mako’s current gas contingent resources have been committed to gas buyers, which marks a significant milestone on the path to a final investment decision for the 376 billion cubic feet Mako project targeted for Q4 2024…more

TAG Oil (TAO.V TAOIF TOP.F) announced interim results. As at March 31, 2024, the company had C$7.7 million in cash and cash equivalents, C$7.3 million in working capital and no debt. TAG says it made significant progress at the BED4-T100 horizontal well, targeting the unconventional Abu Roash “F” reservoir in the Badr Oil Field, Western Desert, Egypt. Following flow back operations in April, the T100 well was cleaned out with coiled-tubing and a jet pumping artificial lift system was installed to establish stable flow from the well. Intermittent oil production continued to produce oil and unload fracture fluid and is being shipped to nearby processing facilities. Construction of an oil delivery station at the General Petroleum Corporation Abu Sennan receiving facility is ongoing and should be completed in due course. Gross field production from when the jet pump was installed on June 21, 2024, through to the end of July 2024 (online for ~25 days over this period) averaged 373 barrels per day of fluid (~256 barrels per day of oil). Total oil produced from the T100 well to date is over 12,000 barrels. Planning of TAG’s next horizontal well is in progress and will incorporate learnings and information that were obtained in drilling, completing, and producing the T100 well. Plans are also being developed to resume production from the BED 1-7 vertical well. The company says progress is also being made on potential strategic partnerships and acquisition opportunities in Egypt. These efforts aim to drive growth in multiple zones, including the ARF reservoir, to expand TAG Oil’s footprint in the Western Desert. Additionally, TAG is exploring other potential strategic acquisition opportunities in the broader Middle East and North Africa region, targeting both conventional and unconventional oil and gas potential…more

Zephyr Energy (ZPHR.L ZPHRF VD5N.F) announced an update on operations on the State 36-2R LNW-CC well at the company's project in the Paradox Basin, Utah. The second phase of the production test has completed, with peak production rates of over 2,100 barrels of oil equivalent per day. Variable liquid-yields were observed over the second test, all of which are higher than that at the company's State 16-2 LN-CC well in the northern part of Zephyr's Paradox project acreage. At the peak production rates in the second test, condensate/light volatile oil represented approximately 510 barrels of oil equivalent per day, and these liquid yields are said to have been on an increasing trend at the conclusion of the test. Given the highly positive observations, Zephyr has commenced the process of discussing potential well and wider Paradox project development opportunities with US based industry partners in an effort to accelerate additional appraisal and development of the project…more

Criterium Energy (CEQ.V) announced that the company has received a $500,000 non-refundable payment from the buyer of its wholly owned subsidiary which owns a 42.5% non-operated working interest in the Bulu production sharing contract. Inclusive of this $500,000 non-refundable payment, to date Criterium has received $1,000,000 of the $7,750,000 total purchase price consideration and expects closing to occur in early Q4 2024. Meanwhile, the company has also announced the spud of MGH-43, the first of two planned and operated infill wells to be drilled from a new well-pad within the proven Mengoepeh field situated on its 100% owned and operated Tungkal PSC. The 2024 program intends to access untapped areas in the field, targeting multiple pay zones within the Talang Akar formation. The field and the planned infill locations are mapped on 3D seismic and located less than 1 kilometre from the central processing facility, mitigating risks related to potential deliverability and access to markets. Approximately 300 barrels per day of incremental light oil production is expected to be added from the 2024 program, the cost of which is anticipated to be $4.5 million, including drilling, completion and tie-in.…more

Talos Energy (TALO 7T2.F) announced that its Ewing Bank 953 well successfully discovered commercial quantities of oil and natural gas. Separately, Talos has entered into an agreement to participate in the Sebastian prospect, currently drilling in the Mississippi Canyon Block 387 of the US Gulf of Mexico. The 953 well encountered approximately 127 feet of net pay in the target sand at approximately 19,000 feet true vertical depth. Preliminary data indicates an estimated gross recoverable resource potential of approximately 15–25 million barrels of oil equivalent from a single subsea well with an initial gross production rate of 8–10 thousand barrels of oil equivalent per day. First production is expected in mid-2026. Current plans are for the well to be tied back to the South Timbalier 311 Megalodon host platform, which Talos partially owns. Talos holds a 33.3% working interest in the 953 well, with Walter Oil & Gas, the operator, holding 56.7% and Gordy Oil holding 10%. The Sebastian prospect began drilling in late August 2024, targeting the Upper Miocene K-1 reservoir at approximately 12,000 feet true vertical depth. This is an amplitude-supported prospect containing an estimated gross resource potential of 9–16 million barrels of oil equivalent with a potential initial production rate of 6–10 million barrels of oil equivalent per day. Results are expected late fourth quarter 2024. If successful, the Sebastian prospect will be tied back to the Delta House facility, where Talos has a partial interest and Murphy Oil is operator.

Strike Energy (STX.ASX RJN.F) announced multiple successful gas discoveries in the EP469 Erregulla Deep-1 well, which was drilled to a total depth of 5,225 metres making it the deepest well ever drilled onshore Australia. The well has made two high-quality, low impurity conventional gas discoveries, both observed to be blocky zones of good quality gas charged sandstone reservoir. The company will now run the production liner and cement in place before completing the well for production testing. The rig is expected to demobilise in the coming fortnight and Strike is preparing to immediately follow with the mobilisation of a well test spread. The Erregulla Deep-1 well is the most easterly penetration of the Permian gas play. Strike has what it describes as a commanding acreage position across its 100% owned tenure on the eastern flank of the play, which covers the Tathra Terrace in EP503, 504 and 505 and the thickness and quality of the Erregulla Deep-1 result at depths of around 5,000 metres is said to improve the prospectivity of much of the company’s acreage.

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These are opinions only of the individual author. The contents of this piece do not contain investment advice and the information provided is for educational purposes only and no discussions constitute an offer to sell or the solicitation of an offer to buy any securities of any company. All content is purely subjective and you should do your own due diligence. No representation, warranty or undertaking, express or implied, as to the accuracy, reliability, completeness or reasonableness of the information contained in the piece is made. Any assumptions, opinions and estimates expressed in the piece constitute judgments of the author as of the date thereof and are subject to change without notice. Any projections contained in the information are based on a number of assumptions and there can be no guarantee that any projected outcomes will be achieved. No liability is accepted for any direct, consequential or other loss arising from reliance on the contents of this piece. The author is not acting as your financial, legal, accounting, tax or other adviser or in any fiduciary capacity.

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