Sintana Energy Inc. (TSX-V: SEI): Mopane-2A encounters gas condensate in the sweet spot plus a new light oil reservoir
• The Mopane-2A well at PEL-83 found a hydrocarbon column of gas-condensate in AVO-3 with a thin net pay in the reservoir sweet spot. Encountering AVO-3 at Mopane-2A confirms the lateral extent of the reservoir. The thin net pay is in line with the geological model. The presence of condensate in high quality reservoir with minimal CO2 and no H2S is another positive.• The well also discovered a hydrocarbon column of light oil in a smaller high quality reservoir, AVO-4. While AVO-4 had been mapped at Mopane-2A, its presence was unconfirmed. This is a positive outcome. There is minimal CO2 and no H2S. The presence of liquids in this reservoir boosts the value of the block for potential farm-in partners.
• The successes at Mopane-1A and Mopane-2A reduce the uncertainty associated with the development. This is important for Galp’s ongoing farm-out process. We value Sintana’s interest in Mopane at C$1.08 per share.
• The rig will now drill the Mopane-3X well. This is an exploration well that will target two large stacked prospects, AVO-10 and AVO-13, in the south east of PEL-83. Results are expected in early February.
• Chevron has spud the Kapana-1X exploration well on PEL 90. We estimate the additional unrisked value of the upcoming drilling at PEL 83 (Galp), PEL 90 (Chevron), and PEL 87 at C$2.80 per share.
• We re-iterate our target price of C$1.85 per share.
Valuation
We value Sintana’s interest in Mopane based on the most recent price paid by Africa Oil for shares in Impact Oil & Gas. We value Sintana on Mopane alone at C$1.08 per share (C$1.22 per share unrisked) net of a worst case 32% capital gain tax. Our total unrisked NAV is ~C$4.54 per share. Our ReNAV is C$1.87 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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