Sintana Energy Inc. (TSX-V: SEI): Second light oil discovery at PEL83
• Galp Energia has announced a second discovery of light oil in deeper and high quality reservoir sands at the Mopane-1X exploration well on PEL83.• This follows the light oil discovery in shallower sands announced earlier this month.
• On completion of operations, the rig will move to drill Mopane-2X. This is an appraisal well that might also test different targets.
• A DST is then expected to be carried out at Mopane-1X.
• Pending further details on the size of the discoveries, we have increased our chance of development from 40% to 50%.
• We are increasing our target price from C$1.15 per share to C$1.25 per share.
Busy programme on the Shell’s block (south of PEL83)
Shell operates PEL 39 that is located just south of PEL83. While Shell has announced the release of its drilling rig in June 2024, the company is reported to be planning on drilling an appraisal of the Jonker discover and at least one more exploration well by then. Once the rig is released, Shell is reported to be embarking on an extensive 3D seismic campaign covering 10,400 km2. This is significant because the area represents 80% of the block (12,299 km2) and highlights the bullish view of Shell with regards to the prospectivity of the block. At PEL87, Woodside spent ~US$40 mm for a 5,000 km2 3D seismic programme. Assuming a pro rata price for the 3D seismic would suggest that Shell is committing a further ~US$80 mm to seismic on PEL 83.
Value build-up
We continue to value the unrisked value of Sintana’s interests in each block in the Orange basin in line with the farm-out terms secured by Impact for PEL56. This reflects our view that the farminee (TotalEnergies) would value the interests it is acquiring in PEL56 higher than the value of the provided carry plus cash payment. Our unrisked value of each of Sintana’s 4.9% interest in PEL90 and PEL83 is ~US$250 mm or C$0.86/sh and of Sintana’s 7.3% interest in PEL87 is US$365 mm or C$1.26/sh. Assuming 50% chance of commerciality for PEL83 suggest a ReNAV of US$125 mm (C$0.43 per share) for Sintana’s interest in the block. Overall our ReNAV for Sintana is C$1.25 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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