Sintana Energy Inc. (TSX-V: SEI): Adding high impact exploration onshore Angola
• Sintana has agreed terms to acquire a 5% net interest in KON-16 onshore Angola from Corcel for US$2.5 mm. In addition, Sintana will receive a 2.5% net profit interest on 71.5% of KON-16 until reaching US$50 mm, after which the net profit interest reduces to 1.5%.• There are multiple post-salt (shallow) and pre-salt (deeper) prospects that were highlighted by 2010 2D seismic. The pre-salt prospects are analogous to what is being developed offshore with significantly lower cost. Corcel, plans to drill the first exploration well in 2026 targeting both a post-salt (~100 mmbbl) and a pre-salt (~300 mmbbl) prospect. A 1960s well encountered oil at the edge of the pre-salt target, significantly de-risking it by demonstrating a working hydrocarbon system beneath the salt. An exploration well costs ~US$20 mm (gross).
• We reaffirm our target price of C$1.80/sh.
The onshore Kwanza basin – prolific but frozen in time until 2023
Back in the 1960s/1970s, production in Angola came from the onshore part of the Kwanza basin. With the onset of the civil war (1975-2002), international oil companies moved offshore where drilling success has validated the pre-salt play expected to continue onshore. Very limited onshore activity took place until 2023, when international companies were finally allowed to acquire onshore licenses. KON-16 was cherry-picked by Corcel as one of the first international entrants onshore.
Valuation
Assuming 20% chance of success and US$3/bbl, our unrisked NAV for Sintana’s interest in KON-16 is US$60 mm (C$0.21 per share). We have increased our ReNAV from C$1.79 per share to C$1.82 per share.
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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