Malcy’s Blog – Oil price, Sound Energy, Aminex, Solo Oil & Pantheon Resources

WTI $39.43 -$1.17, Brent $41.72 -$1.13, Diff -$2.29 +4c, NG $2.88 +14c

By Malcolm Graham-Wood

Oil price

Not much to add to last couple of days as modest supply dramas are being rectified. The IEA has put out its WEO which is as usual of little use, this months media peg is as oil demand plateaus (in 2030 btw) solar will become ‘the king of world electricity markets’. And that coronavirus has erased almost a decade of growth in a single year’.

PS Watch the natural gas price…

Sound Energy

The company announces that it has gained a 24 month extension to the initial period of Sidi Moktar permits onshore Morocco. ONHYM has approved a 24 month extension to the initial period of the Petroleum Agreement in order for the Company to complete the committed work programme. And, in order for the company to complete the committed work programme which remains unchanged.

Mohammed Seghiri, Sound Energy’s Chief Operating Officer, commented:

“We are not alone in dealing with the disruptions brought about by the COVID-19 pandemic and we are pleased that ONHYM have signed an amendment to extend the initial period extension by 2 years in order to complete our exploration operations. We continue to look forward to unlocking the prize of the pre-salt potential that we believe exists in this area.


Aminex has announced that it has received Tanzanian Government approval for the farm-out to ARA Petroleum Tanzania (APT) and the company now anticipates completion within the next few days.

Robert Ambrose, Chief Executive of Aminex commented:
“We are delighted to finally receive Government approval of the Farm-Out and would like to thank all
agencies of the Tanzanian Government that were involved in the process. We would also like to thank ARA
Petroleum for its invaluable assistance and support in securing Government approval of the Farm-Out and
in advancing $5m to the Company over the past 12 months. We now look forward to completing the
transaction within the next few days and handing operatorship over to APT.”

It has not been possible to speak to the company today, they are, probably sensibly, waiting for completion and my numbers are still based on very historic data from the company. Having said that it will be well known that I have had the patience of Job on this deal going ahead and accordingly and having taken all other things into account can see a current target price for Aminex of 3p with more to come once the project valuation can be more accurately be taken into account.  I’m very much looking forward to getting more numbers in the valuation as soon as Aminex start getting busy with the details.

Solo Oil

Aminex’s news yesterday has great read-through value for Solo, whose focus has been to seek value for its shareholders from the Ruvuma project long before the  anticipated before the ONE-Dyas deal was even put in place. As it happened, that deal fell away and the trauma of this year has meant that the ‘Board continues to diligently seek opportunities to grow a sustainable investment business focused on cash generative energy assets’.

This news is very good for Solo, their 25% can be highly valued, as above I can realistically see a decent valuation in whichever value scenario, after all at a minimum this is 3/4 of a TCF of gas in a low capex area with good infrastructure already in place and a ready market at the end of the pipe. Whatever valuation is used, even at a pre-production, pre-development calculation there is now serious upside for Solo.

As someone said yesterday, Jon Fitzpatrick’s investment has just been dealt another ace, now that may be a bit rich and certainly I’m not sure they expected the journey to be like this but for the Solo team right now things are looking up, big time. I can see the shares heading towards the 5p level, after all the 2020 high must be beaten before long.

Pantheon Resources

The company estimates, following analyses of the Kuparuk formation of the Talitha project, 1.4bn barrels in place and Recoverable Prospective Resources of 341m bbls of oil . In their ‘most likely case’ the Company has modelled an illustrative development plan for this zone with 62 producing wells, exploiting 247 MMBO of this resource, and using the WTI current forward price curve, yields a potential NPV10 of over US$1.48 billion, with NPV per barrel of $6.00 and an Internal Rate of Return of 55%.

Having seen other of the company’s estimates they are building a portfolio of high, wide and handsome estimates in all aspects. With monumental upside in these numbers it is now all about a farm-out, if you can get anywhere near the company’s projections this is a no-brainer even with drilling risk.

This is a geological story which is still evolving but clearly until the company signs up a partner, shareholders should exercise some caution in their expectations. Having said that the CEO’s comments are hardly likely to dampen the ardour…

Jay Cheatham, CEO, commented: 

“If we can complete a farm-out in time to drill this winter, Talitha has the potential, if successful, to be the most impactful well of my 50 year career. Having run Arco’s international business and also its upstream Gulf of Mexico area business, you dream about these opportunities. It has taken over a decade of work to delineate and advance this opportunity to “drill ready” status. This appraisal well will test three separate and independent targets which collectively offer the potential for greater than a billion-barrels of recoverable oil. Each of these targets compare in size to large deepwater offshore projects around the world.  In our case they are onshore USA. The Talitha location is adjacent to the major highway and Trans Alaska Pipeline network serving the North Slope, positioning us beautifully in the event of success for a development, even in a low oil price world. Despite our obvious excitement about Talitha, an appraisal well updip from discovered oil, nothing is without risk in this business and commercial success is never guaranteed before drilling.”

(The opinions expressed here are those of the author, a columnist for Share Talk.)

Malcolm Graham-Wood

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Disclaimer: Malcy’s Blog is provided for general information about the international oil and gas industry and the companies that operate within it. It does not constitute investment advice and Malcy does not buy or sell shares, warrants or bonds in any company written about within the blog. Information is taken from publicly available sources and any comment is that of the author who does not take any third party comment in the publication.

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