2 min read

$SEI.V

3/13/25

Sintana Energy

  • Oil and gas explore company. 49% ownership of 'Inter Oil' company, which has rights to many oil fields off the coast of Namibia.
  • Low risk, carried interest, farm out model.
    • How the oil exploration lifecycle works; quick simplification (2.5 - 5 years):
      • Purchase rights to certain land/ocean packages.
      • Seismic data investment
      • Permitting
      • Drilling
      • Field development planning (FDP) / plan for development and operations (PDO) – approval from local authorities.
      • FEED Study
      • FID

Projects

  • PEL-83, 4.9% interest. Carried until production.
    • Mopane discovery with 5 drill results hitting oil.
      • Guided for 10 billion barrels, after first two results (each with a step out)
      • This likely will be expanded with successful 5th drill result.
      • Projected first oil 2030-2032.
      • Operator is $GALP
        • Looking for farm out partner that can develop it quicker.
        • Selling 40%.
      • Possible other discoveries at PEL-83 in the future (years out).
  • PEL-87, 7.3% interest. Carried until development (FID).
    • Saturn superfan, no drilling yet.
    • Woodside operator. Partnership with Pancontinental.
      • Woodside invested 35M into the seismic study. Option to claim 56% of the project but must decide by 5/18/25.
        • Would be a positive if they do. Pancontinental not big enough to operate themselves and would take time to find another partner pushing drilling to 2026-27.
  • PEL-90, 4.9% interest. Carried through 1 well.
    • First well was a bust; no longer carried.
    • Chevron operator, requesting permitting for 10 wells over next 3 years. Qatar energy was farmed in for 10% recently. Desired block.
    • Expect 3.7M cost per well for their portion.
    • Best case would be reducing interest to be carried through production.
  • PEL-79,
    • NAMCOR operator. Giraffe energy has 33%
    • Sintana has 49% of Giraffe with option to increase to 67%
    • NAMCOR looking to farm out – nothing imminent.
  • KUDU
    • Recent 2M USD 5% acquisition. 1M option to increase to 22% until June 2029.
    • BW Energy 95% operator currently.
  • PEL-82, 4.9% interest.
    • Non-carried.
    • Chevron farmed in as operator, 80%
    • No imminent plans.
  • PEL-103, 13.23%
    • Non-carried.
    • Many years out.
  • WMM-37 in Colombia
    • Court arbitration pending vs Exxon for leaving JV.
    • Cant frack during current administration.

Financials

  • MC 169, 156 EV. 14M cash. No debt.
    • 50M equity prospectus exists.
    • Prospectus would be valuable to stay in PEL-90.
  • Minimal revenues now; pending production after successful exploration.

Thesis:

  • NPV of the PEL-83 block valued between 400M and 2.8B. Many variables.
  • Optionality with other blocks. Settlement in Colombia.
  • Risks with executing the development of PEL-83.
  • We have 10x upside potential, likely at least a 2x with proven oil. Will be a waiting game, possibly years.
  • Minimal downside unless PEL-83 proven uneconomical for some reason.

Fundamental driver(s): Moving toward production at PEL-83, farm out of the 40% share. Or hitting oil at other blocks. Settlement in Colombia could also increase share price.

Expectations have cooled off, suspect due to timing (waiting game) and nearby write offs (uneconomical projects). Good news could flip that and cause signifiant re-rate.

Purchased, 2 units.

Paul Weaver

Charlotte, NC