Sintana Energy Inc. (TSX-V: SEI): Second Mopane well confirms initial discovery and encounters new oil pools
• Galp Energia has announced that the Mopane-2X well has encountered light oil in high quality reservoirs across three horizons.• The first horizon (AVO-1) was an appraisal target of the same horizon encountered in the Mopane-1X well. The pressure regime at both wells is consistent, confirming the lateral extension of the discovery made ~8 km to the East.
• The second horizon (AVO-3) and the deeper target are new discoveries.
• The Mopane-1X well had made two discoveries (AVO-1 and AVO-2).
• The successful appraisal of AVO-1 and the additional discoveries increase the overall volumes encountered so far and increase the likelihood of a commercial development on the licence.
• Pending further details on the size of the discoveries, we have increased our chance of development from 50% to 60%.
• 91.6 mm warrants have been exercised at a strike price of C$0.25 per share, boosting the company’s balance sheet by C$22.5 mm. The exercise of these warrants also removes an overhang on the shares.
• We are increasing our target price from C$1.25 per share to C$1.35 per share.
Next steps
The rig will now return to the Mopane-1X well location to conduct a drill stem test until early April. We also anticipate Chevron will commence drilling exploration wells at PEL90 before the end of 2024. In early February, TotalEnergies announced that the Mangetti-1X well had intersected hydrocarbon-bearing intervals in the Mangetti fan prospect, which is a similar but separate system to the Venus oil discovery. The Mangetti well is located immediately to the south of PEL90.
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. 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 60% chance of commerciality for PEL83 suggest a ReNAV of US$150 mm (C$0.52 per share) for Sintana’s interest in the block. Overall our ReNAV for Sintana is C$1.33 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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