Spudding of First Well in Oil Block Slated by Year-End
Research Report

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Disclosures for Auctus Advisors, Sintana Energy Inc., December 18, 2024

Copyright and Risk Warnings Sintana Energy Inc (“Sintana” or the “Company”) is a corporate client of Auctus Advisors LLP (“Auctus”). Auctus receives, and has received in the past 12 months, compensation for providing corporate broking and/or investment banking services to the Company, including the publication and dissemination of marketing material from time to time. MiFID II Disclosures This document, being paid for by a corporate issuer, is believed by Auctus to be an ‘acceptable minor non-monetary benefit’ as set out in Article 12 (3) of the Commission Delegated Act C(2016) 2031 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. It is produced solely in support of our corporate broking and corporate finance business. Auctus does not offer a secondary execution service in the UK. This note is a marketing communication and NOT independent research. 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Sintana Energy Inc. (SEI:TSX.V; SEUSF:OTCQX) should benefit from QatarEnergy's recently announced acquisition of a 27.5% working interest in PEL 90, a license covering 5,433 offshore square kilometers in Namibia's Orange Basin, in which Sintana holds a limited carried interest, reported Auctus Advisors Analyst Stephane Foucaud in a Dec. 18 research note. Details of QatarEnergy's deal, which was with Harmattan Energy Ltd., a subsidiary of Chevron Corp. (CVX:NYSE), have not been disclosed.

"We view QatarEnergy's decision to enter PEL 90 as a very positive sign regarding the block's prospectivity," Foucaud wrote. He noted QatarEnergy is a partner of TotalEnergies SE (TTE:NYSE; TTE:EPA) on the adjacent PEL 56 license, the location of the Venus discovery, and a partner of Shell Plc (SHEL:NYSE; SHEL:LON; SHELL:AMS) on PEL 39.

50% Implied Return

On the news, Auctus Advisors reiterated its CA$1.85 per share target price on Ontario, Canada-based Sintana Energy. At the time of the report, the stock was trading at about CA$1.14 per share.

The difference between these prices implies a 50% return for investors.

Roster of Owners

Along with QatarEnergy (27.5%), the other owners of PEL 90 once the acquisition closes, will be Chevron's Harmattan Energy Ltd. (52.5%), , National Petroleum Corp. of Namibia (10%) and Trago Energy (10%), a wholly owned subsidiary of Custos Energy. Sintana has a 49% indirect interest in Trago through its investment in InterOil.

Next for PEL 90

Before year-end, a rig will be mobilized to PEL 90 to drill Kapana-1X, an ultra-deepwater offshore well, in water depths similar to those TotalEnergies drilled at PEL 56, reported Foucaud. Auctus expects that drilling and analysis of Kapana-1X will take about three months and cost about US$100–150 million, again like the wells TotalEnergies drilled required.

"Sintana is carried for these costs," noted the analyst.

Foucaud wrote that this particular play at PEL 90 has been given high priority from a selection of prospects.

"TotalEnergies is looking for basin floor fan prospects at PEL 56, and we believe that the targeted play at PEL 90 is similar," he added.

News Flow From Sintana

Upcoming catalysts for Sintana include news pertaining to Kapana-1X as well as results of high-impact drilling of the Mopane-2A appraisal well on PEL 83. The latter is anticipated in about the middle of Q1/25 given Mopane-2A is slated to be spud in April. (Adjacent to Sintana's PEL 83 and PEL 79, exploration drilling is about to start at PEL 85.)

Valuation Estimates

Foucaud reported that considering only Mopane, Auctus values Sintana at CA$1.08 per share (CA$1.08/share), based on the most recent price Africa Oil Corp. (AOI:TSX; AOIFF:OTCMKTS) paid for a stake in Impact Oil & Gas Ltd.

As for the unrisked value of the upcoming drill program encompassing PEL 83, PEL 90 and PEL 87, Auctus estimates it at CA$2.80/share.