Energy Co. Has Significant Upcoming Drilling Activity in Namibia

Source: Stephane Foucaud 11/21/2024

Sintana Energy Inc. (SEI:TSX.V; SEUSF:OTCQX) reported significant upcoming drilling activity in Namibia, according to an Auctus Advisors research note.

Auctus Advisors analyst Stephane Foucaud, in a research report published on November 21, 2024, raised his target price on Sintana Energy Inc. (SEI:TSX.V; SEUSF:OTCQX) to CA$1.85 from previous, highlighting significant upcoming drilling activity in Namibia.

Foucaud emphasized the scale of upcoming exploration, stating, “~11 high impact appraisal/exploration wells will be drilled on various licenses in Namibia over the coming months. This is very material and is expected to attract the attention of investors. Sintana provides exposure to three out of the six licenses with high-impact drilling.”

The analyst highlighted potential value catalysts, noting “Sintana’s current share price trades at a discount to the market value of its interests in the Mopane discovery (PEL 83) that could be crystalized by an upcoming partial divestment process initiated by Galp.”

Regarding specific assets, Foucaud detailed upcoming activity: “The 4 well program at PEL 83 is expected to include two exploration wells that could have a material impact on the size of the hydrocarbon volumes on PEL 83. Increasing the size of Mopane by 20% would add CA$0.24/sh.”

The analyst’s valuation is based on comparable transactions. He explained, “Using the last price paid by Africa Oil for 7% in Impact suggests a value of ~US$983 mm for Impact’s ~9.5% carried interests in PEL 56. Adjusting for respective carried interests leads to an unrisked value of US$507 mm for Sintana’s interests in PEL 83.”

Auctus notes that “Our total unrisked NAV for Sintana is ~CA$4.54/sh,” though the firm’s target price of CA$1.85 represents a more conservative valuation.

The share price at the time of the report of CA$0.95 represents a potential return of approximately 95% to the analyst’s target price.

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