Sintana Energy Inc. (TSX-V: SEI): More drilling in Namibia
• The Mopane-2A appraisal well (the 4th well to be drilled at Mopane) has been spud. The purpose of the well is to appraise the AVO-3 that had been discovered at Mopane-2X located ~8km to the northeast.• This appraisal well has been prioritized following the Mopane-1A success. A positive result could help to firm-up the farm-out price for the block.
• AVO-1 (encountered at Mopane-1X and Mopane-2X ~8 km to the west) has already been appraised by Mopane-1A (~8 km to the southwest).
• The next well in the programme will be the Mopane-3X exploration well to be spud in early April. It will target AVOs 10 and 13 that were visible on the 3D seismic. It could add resources to Mopane.
• We continue to believe that Sintana’s current share price reflects only the value of its interest in the Mopane discovery (PEL 83) that could be crystalized by an partial divestment process initiated by Galp. The continued drilling programme increases the amount of “past cost”, which could boost the price offered by a potential partner. We estimate the additional unrisked value of the upcoming drilling programme at PEL 83 (Galp), PEL 90 (Chevron) and PEL 87 at C$2.80/sh.
• We re-iterate our target price of C$1.85/sh.
Activity on other licences
Success at the Tambotti-1X exploration well being drilled in PEL 56 could have positive readthrough for Sintana’s PEL 90. Rhino Resources/BP/Eni are expected to start drilling an exploration well at PEL 85 imminently. PEL 85 is adjacent to Sintana’s PEL 83 (Mopane) and PEL 79.
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/sh (C$1.22/sh unrisked). Our total unrisked NAV is ~C$4.54/sh. Our ReNAV is C$1.87/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.
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