Sintana Energy Inc. (TSX-V: SEI): First high impact well to spud mid November
• The Hercules drilling rig is expected to reach Walvis Bay around 4 November and reach the first drilling location at PEL83 (operated by Galp) by mid November.• On completing the first well the rig will then move to the second drilling location – if results merit, the second location may be drill stem tested.
• The drilling programme is targeting the Mopane complex located at the southern end of PEL83 with an estimated mean oil in place up to 10 bnbbl.
• Assuming 30% recovery factor, this implies ~150 mmbbl net to Sintana’s 4.9% interest in the block.
• In case of success, Sintana is carried all the way through to production.
• We re-iterate our target price of C$0.90 per share.
Upcoming drilling schedule at other blocks
Drilling at PEL90 with Chevron is expected to start in 2024. Woodside is expected to takethe decision whether to exercise its option to acquire 56% in PEL87 in early 2024 and drill one well that year. Total and Shell are drilling back-to-back exploration wells at the adjacent PEL56 and PEL39 until YE24.
Value build-up
The readthrough valuation of the lasts 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. Total and Shell have achieved a >85% success rate on their first 7 wells. 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.
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