Sintana Energy Inc. (TSX-V: SEI): Widening high impact exploration footprint with deeper relationship with Chevron
• Sintana is acquiring Challenger Energy in an all-share transaction under which Challenger shareholders will receive 0.4705 new Sintana shares for each Challenger share held. Challenger shareholders will hold ~25% of the combined entity on completion.• Challenger holds interests in two exploration licences, offshore Uruguay. The transaction is strategically compelling, creating a combined entity with a diversified portfolio of high-impact exploration licences spanning both sides of the South Atlantic conjugate margin. Sintana’s balance sheet would also be boosted by Challenger’s US$9 mm net cash.
• Uruguay is an emerging basin that has become an exploration hotspot for large independents and supermajors in under three years with Chevron, Shell, Apache and YPF now holding licences. Challenger was the first company to enter Uruguay in 2020.
• Challenger holds a 40% WI in AREA OFF-1 with Chevron as operator (60% WI). Challenger also holds a 100% WI in AREA OFF-3. A farm-out process is expected to commence in 4Q25.
• Chevron is a strategic partner to Sintana across multiple Namibian licences, including PEL 82 and PEL 90, where Sintana holds an effective ~5% interest in each. The presence of a common partner across assets in both Namibia and Uruguay, at varying stages of maturity, could offer financial flexibility to Sintana. While Chevron’s carry continues in Challenger’s OFF-1 license and Sintana’s PEL 82, Sintana will be required to fund its share of drilling costs at PEL 90, currently anticipated for 2H26.
• Important newsflow for the combined entity includes (1) a farm-out of PEL 83 by Galp, potentially by YE25, (2) the results on ongoing exploration drilling on BWE’s PPL003 licence, (3) farm-out of OFF-3 and (4) drilling at PEL 90 in 2H26.
• Pending the completion of the transaction, we are withdrawing our target price and forecasts.
Resources
Challenger’s WI Pmean prospective resources are estimated at 1,180 mmboe. Based on Galp’s reported 0.7 bnboe contingent resources for Mopane based on operations through November 2024 (equating to essentially the first 2.5 wells), we estimate ~43 mmboe net contingent resources to Sintana for PEL 83 on the same basis. Using prospective resource disclosures from Pancontinental and Corcel, and assuming PEL 90 holds a similar volume to AREA OFF-3, we estimate Sintana’s net prospective resources at ~248 mmboe. Under the 25%/75% split in the combined entity, Sintana has effectively exchanged ~11 mmboe contingent resources and ~62 mmboe prospective resources across Namibia and Angola, in return for ~885 mmboe prospective resources in Uruguay.
Sintana Energy is a development stage company engaged in oil and gas exploration and development activities in the United States.
Auctus Advisors is a specialist Equity Capital Markets and Advisory business with a focus in the Energy Sector.
The partners have complementary skill sets, with decades of experience across Equity Capital Markets, Investment Banking and the Energy industry. We have worked at Société Générale, Canaccord Capital, BMO Capital Markets and Schlumberger. Most recently we have worked together for many years at GMP FirstEnergy.
Auctus has been set up at the beginning of a new decade in which we see significant opportunities in the Energy space. Globally, demand for energy is at record levels and continues to grow. Conversely, investment in traditional energy sources has been severely constrained. We believe this imbalance creates opportunities for both companies and investors.
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