Oilman Jim's Letter - International Explorers
HLOGF NBHEF OIGLF RECAF EEENF PTHRF BWLVF SDXEF FOLGF IVCTF BSNLF FHELF ELXPF OGFGF RHCCF CGXEF FECCF GHYLF BRNGF GRGUF TBNRF TRLEF
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This newsletter covers small cap oil, natural gas, helium and hydrogen companies trading in the United States, Canada, Australia and the UK. (The first ticker symbol after the company name is the United States symbol, .CN .TO or .V is Canada, .AX is Australia, and .L is the UK).
Catching up on the more interesting news over the last couple of weeks or so, Helium One Global (HLOGF HE1.L) announced that the Tai-3 helium exploration well had successfully reached total depth, having encountered weathered crystalline Basement, with elevated helium shows up to six times above background identified in the Lower Karoo Group and Basement targets. After encountering some issues with the rig’s hydraulic system, it was reported today that the company has now successfully pulled the drill string out of hole at Tai-3, wireline operations and initial logging are underway and downhole sampling is to commence once logging is complete, with capability for onsite analysis. The company also confirmed today that it is fully funded for the ongoing drilling campaign at Tai, the results of which will soon be published, and remains funded for the follow up well at Itumbula.
Fellow Tanzanian explorer, Noble Helium (NBHEF NHE.AX) announced that preliminary results from its Mbelele-1 exploration well point toward a helium discovery. Petrophysical evaluation of SLB’s wireline logs demonstrates very high porosities and mobilities. Three of the reservoir intervals were selected for representative sampling and a small amount of gas was successfully recovered at surface from each of the three samples, with concentrations of helium estimated to be within the middle of the range of expectations. However, the company considers it prudent to wait for the analysis of the downhole samples, which have been sent for offsite testing under laboratory conditions. All equipment including the rig and all SLB services equipment has now been successfully mobilised to the Mbelele-2 site. Spudding of that well is imminent. Mbelele-2 provides an appraisal opportunity for the Upper and Middle Lake Bed reservoirs encountered at Mbelele-1, as well as targeting the Lower Lake Beds, which are not present at Mbelele-1. On success, Mbelele-2 may be cased and suspended as a future producer.
Chariot (OIGLF CHAR.L) announced that Environmental Impact Assessment approval has been received for Anchois. Chariot raised $18 million in July at 14p and proceeds are to be used primarily for near term drilling and development planning on a new onshore Moroccan licence, Loukos, which is adjacent to Chariot's Lixus and Rissana offshore licences and will give the company potential to accelerate its timeframe to first gas. CHAR says it has already high graded targets for a first phase drilling campaign and drill rigs are available in country. Interim results announced on 19 September 2023 stated that negotiations on partnering for Anchois and the wider Lixus and Rissana offshore licences are in the final stages.
Reconnaissance Energy Africa (RECAF RECO.V) announced on 10 November 2023 that it has closed the sale of its Mexico operations. The deemed purchase price for the transaction is $7.5 million, but key is that it removes the legacy liabilities from RECO’s balance sheet in excess of $100 million. The transaction streamlines its portfolio and enables the company to focus its resources on progressing joint venture partnership efforts and preparing to execute the multi-well, high impact exploration program in Namibia, which is expected to commence Q1 2024. Previous news on 30 October 2023 was that the company and its joint venture partner NAMCOR (the state oil company of Namibia), have been granted approval for the Second Renewal Exploration Period of the 6.3 million acre Petroleum Exploration Licence 73 by the Ministry of Mines and Energy, which covers the period from 30 January 2024 to 29 January 2026. Per the 12 October 2023 Reuters interview with CEO, Brian Reinsborough, the company will start a new 4-6 well drilling campaign early next year, after an initial set of wells proved the existence of an active petroleum system with an estimated 2 billion barrels of oil and 30 trillion cubic feet of gas. The latest fundraising for general corporate and working capital purposes was on 5 September 2023 raising C$1.2 million at a price of C$1.12 per unit, each unit consisting of one share and one share purchase warrant exercisable at C$1.40. News of the well funding is awaited.
88 Energy (EEENF 88E.AX 88E.L) announced a NSAI certified 2C resource estimate of 136 million barrels of hydrocarbon liquids and 628 billion cubic feet of gas for the Alaska Project Phoenix BFF reservoir. This confirms discovery status for that reservoir prior to the planned testing operations at Hickory-1, which, if successful, will enable the certification of additional contingent resources in the shallower reservoirs and move another step closer to appraising the discovery. Testing operations are expected Q1 2024. Additionally, the company announced the execution of a three stage farm-in agreement with a wholly-owned subsidiary of Monitor Exploration to earn up to a 45% non-operated working interest in the onshore Petroleum Exploration Licence 93, located in the Owambo Basin, Namibia. The bulk of the first stage payments are being made in 88E shares.
Alaskan next door neighbour Pantheon Resources (PTHRF PANR.L) announced a placement of approximately $4.15 million at a price of $0.255 per share, equivalent to 20.8p per share, allowing the company to pay the December and March convertible bond payments in cash. Regarding the US listing, Pantheon says it is beginning a programme of transition, restructuring and implementing controls and governance processes to become Sarbanes-Oxley compliant, which is targeted to be completed by the first half of 2025. Key now is serious financing: estimated costs to first production are conservatively estimated at $120 million.
Bowleven (BWLVF BLVN.L) announced full year results. The company owns a 25% non-operated interest in the offshore shallow water Etinde permit, where the JV partners are assessing options for a staged development of the discoveries. The operator, New Age, has signed a conditional agreement to sell operatorship and their 37.5% gross stake in Etinde to Perenco SA and completion is awaited. Meanwhile, Bowleven is running out of money and the company's major shareholder has proposed providing equity capital at a very substantial discount to the share price. It’s an interesting situation and worth keeping an eye on.
SDX Energy (SDXEF SDX.L) announced a successful Ksiri-21 well test. The well, targeting a prospect within the Hoot formation, was drilled to a total vertical depth of 1,955m and the well test resulted in a flow rate of approximately 4 million cubic feet of gas per day. The well will be completed as a producer and brought onstream as soon as possible. Ksiri-21 is said to form the start of a wider drilling campaign of wells, some of which will target low-risk prospects and some will target new areas and play levels, expanding the development footprint. All the wells will be shallow targets charged with biogenic gas. Gas from these wells will supply the existing customers and an additional factory that has been constructed by one of those customers. SDX is the sole independent gas producer in Morocco.
Falcon Oil & Gas (FOLGF FO.V FOG.L) announced a Beetaloo operational update regarding the Shenandoah South 1H well in EP117, which is operated by Falcon’s joint venture partner, Tamboran. Results of the diagnostic fracture injection test are said to provide confidence that the upcoming flow test of the well can replicate or exceed commercial flow tests achieved at the Santos-operated Tanumbirini 2H and Tanumbirini 3H wells in the EP161 acreage. Flow rate results are anticipated to be released in early Q1 2024 and on successful flow testing, the joint venture expects to be in a position to sanction a proposed pilot development in the Shenandoah South region. It’s a big project with trillions of cubic feet of gas estimated.
Invictus Energy (IVCTF IVZ.AX) announced a slight delay to its fluid sampling operation and will provide an update once the operation has been concluded. To date, the company’s announcements regarding the Mukuyu-2 well have been positive and Invictus aims to confirm the presence of moveable hydrocarbons in multiple zones and declare a discovery. This is the second well in IVZ’s Cabora Bassa basin exploration program; the first, Mukuyu-1, which proved a working petroleum system and multiple hydrocarbon bearing reservoirs, de-risked future drilling. Per Invictus, Mukuyu-2, if successful, could be transformational for the company, Zimbabwe and much of southern Africa’s future energy needs.
Blue Star Helium (BSNLF BNL.AX) announced a Voyager drilling update. The company’s initial production well, BBB #33, has been scheduled for drilling and is expected to spud in the week commencing 27 November. It is the first well to be drilled from the initial planned six well inventory. BBB #33 is an offset well to the BBB#1 discovery well which tested the Voyager prospect in November 2021 and encountered a calculated air-free gas concentration of 8.8% helium in a 134 feet gas column. Voyager is located only 6 miles from the historic Model Dome analogue production, which produces a similar high helium gas composition averaging 8% concentration and an independent 2C resource estimate of 643 million cubic feet of helium net to Blue Star has been announced. It is expected that Voyager will ultimately utilise a 20 well development inventory to maximise the contingent resource
First Helium (FHELF HELI.V) announced it has commenced preparations to bring its gas gathering pipeline infrastructure into service in conjunction with the planned installation of the 15-25 well helium processing facility later in 2024. In addition, the company has finished its completion plan for the horizontal helium well, which was drilled and cased in August 2022. First Helium is targeting natural gas pools containing helium, similar to the historical pools found on the western part of the Worsley Trend. Based on an example from publicly available industry data, a single gas pool, the Leduc D3-D Pool, approximately 25km west of First Helium's 15-25 well, produced 46 billion cubic feet of natural gas with approximately 1.0% helium content, over a period of roughly 12 years. Management estimates that the value of the helium produced from this single pool would be approximately $230 million at a price of $500 per thousand cubic feet of helium. The company currently has an inventory of 15 identified multi-zone drilling locations plus multiple follow-ups, all located on First Helium's 100% owned 60,000 acre land base. Management estimates that a successful ten-well program targeting Leduc natural gas with helium content, with anticipated individual well results similar to the 15-25 helium well, could result in total annual revenue exceeding $100 million within five years.
Elixir Energy (ELXPF EXR.AX) announced that the Daydream-2 appraisal well has now spudded and is expected to take around a month to reach its planned total depth of 4,200m. Daydream-2 is an appraisal well located around 5km from the Daydream-1 discovery well drilled by BG Group (now Shell) in 2011, which encountered a thick gas bearing column in the Permian section and flowed gas to surface. After the well has reached its target depth at the base of this section, it will be extensively logged, then cased and suspended pending a stimulation and flow testing program due to commence early in the New Year. The project has an initial contingent resource (2C) of 365 billion cubic feet of gas and 43.5% of the total Daydream-2 well cost will be paid for through the Federal Government’s R&D tax incentive mechanism. The company also has announced the execution of an information sharing agreement with Origin Energy (OGFGF ORG.AX) with respect to Daydream2, which will intersect formations of potential interest for Origin’s activities. Elixir will gather information for Origin, which it would otherwise need to drill its own well to obtain, with Origin compensating Elixir by paying for all incremental costs in gathering this information, plus a further amount of $1 million in non-dilutive funding for Daydream-2. Origin will have the option to enter into similar arrangements in up to five future wells. The data is being acquired for Origin’s overlapping GHG licence.
Royal Helium (RHCCF RHC.V) announced the start of commercial sales with the first trailer loading underway. This commences fulfillment of the company’s offtake agreement with its major North American aerospace customer, which has contracted to purchase Steveville facility volumes over the next several years. Per Royal Helium, this makes the company the first publicly listed helium producer operating in Canada. The plant is engineered to process 15,000 mcf/day of raw gas fed by two of the 100% owned helium wells with an output capacity of approximately 22,000 mcf of 99.999% helium per year. Offtake agreements are at an average price of $538 per mcf. The facility is said to have an ultra-low operating cost due to it being self-powered by fuel gas co-produced from the two helium wells. The plant also benefits from carbon credits, which will provide a material additional cash flow stream. Royal controls over 1 million acres of prospective helium permits and leases across southern Saskatchewan and southeastern Alberta.
CGX Energy (CGXEF OYL.V) and Frontera Energy (FECCF FEC.TO), the majority shareholder of CGX and joint venture partner of CGX in the Petroleum Prospecting License for the Corentyne block offshore Guyana, announced the discovery of a total of 114 feet of net pay at the Wei-1 well, approximately 200km offshore from Georgetown, Guyana. Results demonstrate the potential for a standalone shallow oil resource development across the Corentyne block, the joint venture having discovered total net pay of 342 feet to date on the block. Per the company, Houlihan Lokey, a leading global investment bank and capital markets expert, is supporting active pursuit of strategic options for the Corentyne block, including a potential farm down, as it seeks to develop what is said to be a potentially transformational oil investment in one of the most attractive oil and gas destinations in the world today.
Gold Hydrogen (GHYLF GHY.AX) announced that significant concentrations of hydrogen and helium were detected in the Ramsay 1 well, confirming historic measurements and demonstrating an active hydrogen system in the Ramsay Project area. Testing and laboratory results measured air-corrected hydrogen at 73.3% at 240m below ground level, consistent with the 76% air-corrected concentration of hydrogen reported in the Ramsay Oil Bore 1 in 1931, validating historical results and confirming the presence of a hydrogen play at shallow depths in the Ramsay Project area. Helium was also detected with an air-corrected content of 3.6% at 892m depth, a relatively high concentration, and if found in commercial grades and quantities, could be a significant value-add to the Ramsay Project. The company now is preparing to drill the Ramsay 2 well to further appraise the Ramsay Project’s prospective resource and the well is expected to spud imminently.
Buru Energy (BRNGF BRU.AX) announced a $5 million placement at 11.5 cents to provide funding for long lead items for the 2024 Rafael appraisal drilling program and ongoing Rafael development planning activities. The initial Rafael well was drilled in 2021 on a large structure, with gas encountered in three zones. A test of a portion of the lower Ungani Dolomite zone was successfully flow tested at 7 million cubic feet of gas per day, confirming the conventional discovery. An independent resources report by ERCE Australia in 2022 has estimated that there is a potential 3C gas and condensate accumulation in excess of 1 trillion cubic feet of recoverable gas and over 20 million barrels of condensate, which is sufficient to support a phased project development strategy. This includes a first phase Kimberley gas to power project for domestic consumption, followed by a larger scale petrochemical or liquified natural gas development based on resource appraisal outcomes. The company reported today that Rafael 3D seismic data processing is on schedule to deliver fast track preliminary insights by late November to support appraisal planning and ongoing strategic partner selection activities. Buru also says it is equally excited about its large exploration acreage applications for natural hydrogen and helium, noting the highly encouraging recent initial success of its neighbours Gold Hydrogen (see above).
Grand Gulf Energy (GRGUF GGE.AX) announced that it has engaged Halliburton to design and optimize the Jesse helium discovery completion and stimulation programme. Jesse-1A drill cuttings have been transported to Halliburton for analysis, to formulate and optimize the acid stimulation programme for the forthcoming Jesse-1A re-completion and the Jesse 3 new drill. There is said to be a good short-term availability of rigs in the area and bids have been received from multiple drilling contractors. The company’s Red Helium project is located in Utah, in the proven helium producing Four Corners area of the United States. The project has an independently estimated, gross unrisked P50 prospective resource of 12.7 billion cubic feet of recoverable helium, with over 29,000 acres leased. Its pure-play helium exploration well Jesse-1A discovery was made in June last year returning 1% helium to surface, exceeding pre-drill expectations. The Jesse-3 well and Jesse-1A re-completion are planned for this year, with the ability for near immediate production and monetisation of a commercial success, based on an existing gathering system and binding helium offtake agreement.
Tamboran Resources (TBNRF TBN.AX) announced that results from the diagnostic fracture injection test along with the log analysis of the Mid Velkerri B Shale at the SS-1H location have demonstrated that the deepest regions of the Beetaloo Basin hold the highest quality shale and are most optimal for development. The company says this validates its decision to focus the location of the proposed Pilot Development in the Shenandoah South region and plans to update the market in coming months on its 2024-2025 drilling program that will aim to supply the proposed 40 TJ per day pilot plant. Tamboran announced last month its intention to re-domicile from Australia to the United States, delisting from the ASX. Directors believe the scheme will best position Tamboran for the next phase of its growth by better positioning the company in a deeper capital market where shale investors are more active, providing access to a broader US investor pool, which is more familiar with shale developments and was previously unable or unlikely to invest in non-US securities, improving the valuation of the company and also improving access to lower-cost US debt and equity capital markets. The arguments apply to many companies of this nature and size.
Trillion Energy (TRLEF TCF.CN) announced a best efforts marketed public offering of shares for gross proceeds of up to $10 million. The company intends to use the net proceeds from the offering to fund its 2023-2024 capital program, the payment of certain accounts payable related to the drilling at SASB and for general working capital purposes. Equipment and staff are being mobilised into the M47 c3 & c4 licence areas in Turkey to drill 3,750 12m deep holes which will then be used to shoot dynamite based seismic over the East to Northeast half of the M47 block covering roughly 15,000 hectares. This is said to be critically important, as seismic has never occurred in the area where the new lines will be shot and the location is in close proximity (11 to 12 km distance) to the recently discovered Sehit Aybuke Yalcin and Sehit Esma Cevik oil fields. Acquisition will commence this month, concluding December, followed by processing and interpretation which will take an estimated 5-6 months. A second seismic acquisition program for oil exploration blocks M46C and M46D is planned for 2024 following the completion of the seismic program on the M47 block. Trillion Energy owns 49% of the SASB natural gas field, one of the Black Sea’s first and largest-scale natural gas development projects and a 19.6% interest in the Cendere oil field. The company recently farmed into the oil exploration blocks in Turkey.