AUCTUS ON FRIDAY - 19/04/2024

AUCTUS PUBLICATIONS
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Tethys Oil (TETY SS)C; target price of SEK100 per share: Increasing further the size of the prize/Considering Algeria – The South Lahan area on Block 58 is estimated to hold 55-523 mmbl prospective resources (P90-P10 case) with a mean case of 251.8 mmbbl prospective resources across six prospects in the Ara Carbonate. Combined with the previously disclosed prospective resources of the Fahd area in the north-eastern part of Block 58, Tethys Oil’s unrisked recoverable prospective resources on the block are estimated to be 435.9 mmbbl (Pmean). The geological chance of success ranges from 6% to 11% for the six new prospects. The reserves auditors considers that “considerable upside exists within the intra-Ara Formation plays”. The new prospect portfolio presented by Tethys largely summarises the potential of only one stringer level within each prospect, with the exception of the SL9 prospect. Additional intra-Ara seismic reflectors exist, and these may represent additional stringer reservoirs. Moreover, Tethys has not yet evaluated the ‘basal’ Ara carbonates (A1/A0) or the A4 Athel Silicylite plays, which have both proved to be highly prospective in the South Oman Salt Basin. Two exploration wells will be drilled at Block 58 in 2024 starting with the high impact Kunooz-1 well in Fahd (123.5 mmbbl unrisked prospective resources and unrisked NAV of ~SEK200 per share). The second exploration well will be either in Fahd or South Lahan depending on the results of Kunooz-1. Production from Blocks 3&4 was 8,005 bbl/d in March, up from 7,557 bbl/d in February. Tethys Oil has signed a Heads of Agreement with Sonatrach to achieve partnership for hydrocarbon exploration, development and exploitation in the areas of interest of El Hadjira II and El Haiad II in Algeria.
See website for full report

Valeura Energy (VLE CN)C; target price of C$9.30 per share: Three exploration wells deliver three discoveries - The Nong Yao-13 exploration well in the new Nong Yao D area that was targeting multiple zones has encountered >30 feet of new oil play across several new shallow intervals which have not been produced elsewhere on the concession. These reservoirs are believed to be recurring across the Nong Yao D area. The drilling result confirms that oil has successfully migrated into this area of the block (a factor that was seen to be a risk in the Nong Yao D area) and open the opportunity for further appraisal and exploration drilling in the vicinity to derisk sufficient volumes to justify a future development. Ahead of further updates, we have increased our chance of success for the area from 35% to 50% with a trimmed volume estimate (mid case) of 6 mmbbl (8 mmbbl previously). The Niramai-4 well at the North of Wassana and ~1 km north east of the Niramai-1 oil discovery has encountered 90 feet of new oil pay across two reservoirs. The well was then sidetracked into the Wassana North prospect where ~40 feet of new oil pay was encountered. The deepest oil-bearing zone is of particular interest in that the wellbore intersected the reservoir significantly downdip of the crest but did not encounter the oil-water contact. This indicates further potential, both deeper than penetrated, and more laterally expansive in the updip portion of the structure. When combined with the pre-existing Niramai volumes, the total encountered volumes in the area could already justify a separate development in addition to the planned redevelopment of Wassana. This could extend the economic life of the concession, which would reduce further the NPV of the decommissioning costs. Niramai and Mayura are known additional fields on the Wassana block which were previously deemed to be too small to justify development in themselves, but with additional volumes now identified in the Niramai area (including Wassana North), ahead of further information from the company, we are assuming there potential for a future development of ~ 5 mmbbl with a 50% chance of development. We have increased our target price of from C$9.00 to C$9.30 per share to incorporate the impact of the exploration drilling. The story continues to be about strong free cashflow generation, reserves growth and exploration upside.
See website for full report

Zephyr Energy (ZPHR LN)C: target price of £0.12 per share: Spudding high impact well – The State 36-2 LNW-CC-R well redrill in the Paradox basin will be spudded in the coming days. Drilling at the new well is planned to reach a total depth at 10,362 feet measured depth (9,600 feet true vertical depth) incorporating a 270-foot horizontal reservoir section. The new well has also been designed to allow the drilling of a longer, 10,000-foot horizontal section later, should that be required. Our unrisked NAV for this well is £0.12 per share. On success, the well will start unlocking the basin’s resources and add production and reserves.

IN OTHER NEWS
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AMERICAS

88 Energy (88E AU/LN): Flow test result in Alaska – The SMD-B reservoir was flowed at a peak rate of 50 bbl/d of light oil. The Upper SFS reservoir had been previously reported to have flowed at a peak rate of 70 bbl/d.

Canacol Energy (CNE CN): Discovery in Colombia – The Chontaduro 1 exploration well encountered 123 feet true vertical depth of net gas pay with average porosity of 21 percent within the primary Cienaga de Oro sandstone reservoir. The well has been tested at rates up to 12 mmcf/d.

Challenger Energy (CEG LN): Strategic equity for Uruguay – Challenger is raising £1.5 mm from a strategic investor. The funding will be initially in the form of a loan that can convert into equity at a price of 0.168p per share, which represents a 20% premium to the prior day close. The Loan will accrue interest at the rate of 1% per month. The new investor will be issued 105 mm new warrants with a strike price of 0.2p per share.

Galp Energi (GALP LI): 1Q24 trading update – 1Q24 production was 116 mboe/d including 107 mboe/d in Brazil.

i3 Energy (I3E LN): Selling Canadian assets – i3 is selling its royalty assets (excluding Simonette) for US$24.8 mm. The assets consist of ~388 boe/d production.

Interoil E&P (IOX NO): Production update in Argentina and Colombia – WI production in March was 2,283 boe/d including 1,584 boe/d in Argentina and 699 boe/d in Colombia.

Royal Helium (RHC CN): JV partner in Canada – Royal Helium and Sparrow Hawk have entered into an Economic Participation Agreement and a letter of intent for a $C25 mm joint venture investment by Sparrow Hawk in the development of Royal’s Val Marie helium project located in southwestern Saskatchewan. Sparrow Hawk will invest C$25 mm into the drilling and completion of new wells, as well as the construction of the associated helium purification facility. Sparrow Hawk will have an approximate 57.5% non-operating working interest in the wells and an approximate 46% non-operating interest in the processing facility.

Trinity Exploration & Production (TRIN LN): Resources update in Alaska – YE23 2P reserves were estimated at 12.9 mmbbl with a negative technical revision of ~4 mmbbl. YE23 2C contingent resources have also been reduced by ~10 mmbbl to ~39 mmbbl compared to YE22. The reduction of the 2P reserves estimate reflects (1) development opportunities now being considered uneconomic and (2) revisions to the Trintes infill well programme. The reduction of the 2C contingent resource estimate reflects a revised model of the size of the Galeota structure.

ASIA AND AUSTRALASIA

Falcon Oil & Gas (FOG LN/FO CN): Raising new equity for Australia – Falcon is raising up to US$4.5 mm of new equity priced at 6p per share. Alongside the Fundraising, Falcon Oil & Gas has agreed to grant Daly Waters Energy, a US-based energy industry service provider overriding royalty interests over Falcon’s working interests in the Beetaloo Sub-Basin exploration permits in return for cash payments of US$3 mm and US$1 mm. Daly Waters will be entitled a 8% royalty in respect of the area around the pilot development, and an overriding royalty interest of 1.7777% in respect of the remaining area.

Woodside Energy (WDS AU/LN): 1Q24 results – 1Q24 production was 44.9 mboe/d.

EUROPE

Europa Oil & Gas (EOG LN): Results for the six month period ending 31/01/2024 – Net production in the UK over the period was 116 bbl/d. The company held £3.8 mm in cash (of which £1.1mm is restricted) at the end of January.

OKEA Energy (OKEA NO): 1Q24 update – 1Q24 production was 42.1 mboe/d. Net cash at the end of March was NOK0.8 bn.

Scirocco Energy (SCIR LN): Delisting from AIM – Scirocco is looking to cancel the trading of its shares on AIM.

Union Jack Oil (UJO LN): Operating update in the UK – 1Q24 oil production at Wressle averaged ~530 bbl/d with 24.3% water cut.

Var Energi (VAR NO): Discovery in Norway - The Ringhorne North exploration well in production license (PL 956) encountered estimated recoverable oil resources of between 13 and 23 mmbbl.

FORMER SOVIET UNION

Enwell Energy (ENW LN): Operating update in Ukraine – 1Q24 production was 2,128 boe/d. The company held US$86.2 mm in cash at the end of March.

MIDDLE EAST AND NORTH AFRICA

SDX Energy (SDX LN): Selling Egypt asset – SDX is selling West Gharib to New Horizons and NPC Petroleum Services for US$6.6 mm including US$3.5 mm in cash payable immediately outside of Egypt.

United Oil & Gas (UOG LN): Receiving payment from Egypt – United has received US$1 mm rom EGPC in relation to Egyptian receivables.

SUB-SAHARAN AFRICA

Corcel (CRCL LN): Update in Angola and equity raise – The TO-14 well at Block KON-11 flowed water on test with oil shows. The TO-13 well will now be tested. The company has raised ~£1.3 mm of new equity at a price of £0.005 per share with one for one warrants at £0.01 per share.

EVENTS TO WATCH NEXT WEEK
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17/04/2024 - Star Energy (STAR LN): FY23 results
23/04/2024 – Var Energi (VAR NO): 1Q24 results
24/04/2024 – Aker BP (AKERBP NO): 1Q24 results
24/04/2024 – Eni (ENI IM): 1Q24 results
25/04/2024 – Serica Energy (SQZ LN): FY23 results
25/04/2024 – OKEA Energy (OKEA NO): 1Q24 results
25/04/2024 – Repsol (REP IM): 1Q24 results