Sintana Energy Inc. (TSX-V: SEI): Drilling underway at PEL83. Chevron to drill up to 10 wells at PEL90 from 4Q24
• Galp Energia has spudded the Mopane 2X exploration well at PEL83. It has been reported the structure could hold up to 10 bn bbl of oil in place. Assuming 30% recovery factor, this implies ~150 mmbbl net to Sintana’s 4.9% interest in the block.• This is the first well of an extensive drilling schedule for Sintana that will cover three different blocks, all with different partners.
• Chevron has filed an application for an environmental clearance certificate to drill for up to 5 exploration and 5 appraisal wells beginning in 4Q24 at PEL90.
• By then, Total will have also drilled the Mangetti-1X exploration well on PEL56, near the southern edge of Sintana/Chevron’s PEL90.
• At US$125 mm per well, Chevron’s programme would suggest up to ~US$1.2 bn total drilling cost. The value of the licence has to at least justify the drilling cost and a drilling programme of that magnitude would suggest a readthrough value of US$60 mm for Sintana’s 4.9% interests in PEL90.
• This is in addition to the US$8 mm seismic carry provided by Chevron to Sintana for a total readthrough value of US$68 mm for Sintana’s interests in PEL90, which is above the current market cap of the company.
• Our unrisked NAV for Sintana’s interests in PEL83 and PEL90 is C$0.68 per share (for each licence) based on the readthrough value from the recent equity financing of Impact Oil & Gas on PEL56 (Venus discovery operated by Total).
• We re-iterate our target price of C$0.90 per share.
PEL87: waiting on Woodside Energy
Woodside is expected to take the decision whether to exercise its option to acquire 56% in PEL87 in early 2024 and drill one well that year. Sintana holds a 7.3% interest in PEL87. Total and Shell are also drilling back-to-back exploration wells at the adjacent PEL56 and PEL39 until YE24.
Value build-up
The readthrough valuation of the last financing of Impact Oil & Gas suggests that drilling success unlocks C$0.68/sh (~US$195 mm) in each of Sintana’s PEL 83 and PEL 90 and C$1.00/sh (~US$290 mm) at PEL 87 for a total of C$2.38/sh. Our ReNAV for the company continues to be C$0.94/sh. Our unrisked NAV for Sintana is C$2.78/sh.
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.
Auctus provides Corporate Broking, Equity Research and Investment Banking services.
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