Sintana Energy Inc. (TSX-V: SEI): New material discovery at Mopane
• The Mopane-3X exploration well has encountered columns of light oil and gas-condensates across the AVO-10 interval, as well as light oil columns at AVO-13 and at a deeper sand.• The sandstone reservoirs are of excellent quality, with high permeability and porosity, and higher-than-estimated pressure. The oil has low viscosity, with minimal CO2 and H2S content.
• This new discovery has multiple positive implications. It could open up a new development area in the southeast of PEL-83, with increased discovered volumes and further exploration potential. The confirmation of high-quality reservoirs addresses industry and investor concerns about the low reservoir quality at Shell's PEL-39. The discovery of light oil is another positive, as it enhances the commercial potential of PEL-83 and reduces the significance of gas in the overall resource mix. This could lead to a simpler and faster development process.
• Although the extent of the resources has not been disclosed, the discoveries at Mopane-3X increase the value of the block and the expected farm-in terms that Galp could achieve.
• As we increase our valuation of Mopane based on expected farm-in terms, we have raised our target price for Sintana to C$2.00 per share.
• Woodside is expected to make a decision about farming into PEL-87 in early April. Sintana holds a 7.3% net interest in the licence and is carried to the Final Investment Decision.
Valuation
We value Sintana’s interest in Mopane based on the most recent price paid by Africa Oil for shares in Impact Oil & Gas, to which we previously applied a 10% discount factor. This discount has now been eliminated to reflect the success at Mopane-3X. We value Sintana’s interest in Mopane alone at C$1.25 per share, net of a worst-case 32% capital gains tax. Our total unrisked NAV is approximately C$4.44 per share, including the unrisked value of PEL-90 with Chevron and PEL-87. Our ReNAV stands at C$1.98 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.
Auctus provides Corporate Broking, Equity Research and Investment Banking services.
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