IVZ spud date locked in for November

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 13,435,947 IVZ Shares and 6,670,568 IVZ Options and the company’s staff own 1,260,417 IVZ Options at the time of publishing this article. The Company has been engaged by IVZ to share our commentary on the progress of our Investment in IVZ over time. This information is general in nature about a speculative investment and does not constitute personal advice. It does not consider your objectives, financial situation, or needs. Any forward-looking statements are uncertain and not a guaranteed outcome.

We have a spud date.

(well a “month” - but close enough to a firm date for a small cap stock)

Invictus Energy (ASX:IVZ) just confirmed its next big oil and gas well will spud in November.

A nice 90-120 day runway for anticipation to build in the market ahead of a high impact oil and gas drilling event.

(source)

Drilling in November is going to target an entirely new area OUTSIDE of the existing discovery IVZ previously made.

The drill bit is targeting ~1.2Tcf of gas and ~73m barrels of condensate (estimated gross mean unrisked prospective resource).

A simple vertical well, down to 1,500m.

It’s a pretty good time to deliver a new hydrocarbon discovery with so much of global supply offline in the Middle East.

Success on this well could add to IVZ’s discovery made on the western side of the basin in 2023 - which was Sub-Saharan Africa’s second largest discovery of 2023 at ~1.3 Tcf gas / ~230M barrels of oil equivalent.

This year's well AND IVZ’s discovery are both part of the “central fairway” across IVZ’s giant 5.5BN barrel of oil Equivalent Cabora Bassa Basin (prospective resource).

If the discovery is large in November, IVZ could rate multiples above its current share price... or even run higher in anticipation of a large discovery.

Of course - this is high risk oil and gas exploration and the share price might not move, or it could even go down.

(source)

IVZ’s drilling contractor will be undertaking some rig maintenance ahead of spudding, and will do some all important operational readiness campaigns ahead of the big day.

Wellpad construction starts next week.

All of the other smaller contracts (well services, civils and logistics) are currently being prepared for award.

IVZ’s MD and founder Scott Macmillan said in a webinar two months ago that this November exploration well should cost somewhere between US$6-10M. (source)

IVZ had $10.8M AUD ($7.6M USD) cash at June 30th - so it looks like a decent chunk of the well is funded too.

What we really need now as IVZ investors is for oil and gas prices to play ball (i.e. stay high) and keep capital markets interested in what IVZ is about to do.

We think that as long as oil prices are above US$80-100 per barrel then there will be enough capital sloshing around markets to show an interest in IVZ’s 2026 well.

IF oil prices go above US$100 - like they did when the US-Iran conflict kicked off - any well funding shortfalls are easier to fill AND the market should be more likely to re-rate IVZ on a success scenario.

(no matter how good the drill result, the macro background will have a big part to play here on how the market responds.)

Oil prices right now are trading at ~US$80 per barrel.

The last time the world experienced a sustained supply shock out of the Middle East was back in 1973 during a war between Israel and other Middle Eastern countries.

Oil prices rallied hard, came off a bit and then rallied hard again up to ~US$160 per barrel in today’s money.

We have had the first leg up, then the pullback, and maybe now about to have that similar style second run up?

(source)

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

Who knows what the oil price will do - commodity prices are almost impossible to predict with any certainty.

Oil prices aside...

IVZ is going into this drilling event fundamentally in a much different position to when it last drilled its project in 2023.

IVZ will be drilling its well in November already armed with:

1. A PPSA (Petroleum Production Sharing Agreement) signed and locked away with the Republic of Zimbabwe on its ~5.5 billion barrel equivalent (gross mean unrisked estimate) project.
2. Two hydrocarbon discoveries made in 2022 and 2023 - Zimbabwe's first ever oil and gas discovery.

So things are a little bit different to the last two wells IVZ drilled.

We already know there is a working hydrocarbon system in the basin. ✅

Strong enough to host Sub-Saharan Africa’s second largest discovery of 2023 at an estimated ~1.3 Tcf gas / ~230M barrels of oil equivalent in resources. (source)

And this time IVZ holds the “keys” to the entire basin with that signed PPSA with the Republic of Zimbabwe. ✅

(By keys we mean Zimbabwe’s first oil and gas Petroleum Production Sharing Agreement)

All housed in the $106M capped ASX listed company - IVZ.

Anyone sitting on the sidelines waiting to see what IVZ is going to do with its project now has a ~3 month window of opportunity if they want exposure to it.

Remember that deal IVZ signed with the Qataris back in August last year for $37.8M?

That was pre-PPSA and before this year's well was locked in.

Maybe something like that can happen again between now and November, this time from a position of relative strength for IVZ...

Of course this is a dream scenario for us as long term IVZ holders - no guarantees a new funding partner will appear out of nowhere in the coming months.

More on IVZ’s asset

(source)

With this November’s well on a completely NEW target (Musuma-1), IVZ is going for ~1.2 Tcf gas and 73 million barrels of condensate resource (gross mean unrisked).

It will be the first well IVZ drills since making its Mukuyu discovery across two wells in 2022/2023.

The difference with this year’s well is it will be a lot shallower (~1,500m target depth versus ~3,360m depth for the 2022-2023 wells).

AND it should be a lot less technically complex because IVZ already has a “working hydrocarbon system” and will have a lot of data from the Mukuyu discovery to go off when drilling this well.

As a result it should be a lot cheaper than the previous wells IVZ has drilled too.

As mentioned earlier, IVZ’s Managing Director Scott Macmillan said the following in a recent webinar:

"so we're well on track from a costing perspective to deliver a well within that cost range that we provided there of 6 to 10 million."

(source - May Webinar)

IVZ’s rig has been in country on-site “warm stacked” ever since the two wells were drilled in 2022-2023. (source - May Webinar)

Hopefully that means costs come in at the lower end of what Scott said on that webinar.

Especially if there isn’t a lengthy rig move process this time around.

Instead it's just getting the people in country, on site and the rig brought up to temperature properly before IVZ can go drilling.

(thankfully, flying people and parts into Zimbabwe is a lot easier than moving an entire giant rig)

Not long left to go now...

Let the IVZ “meme-stock” reactivation theory begin?

We have a theory that when companies build up a following big enough and become “meme stocks” - they have an army of investors engaged enough for the company’s share price to do great when things are going well and bad when things go wrong or get boring.

In summary, a meme stock:

• Lives rent free in many people's heads.
• People check for announcements regularly from the company (even though they may not admit it).
• Company starts doing something exciting again.
• Past investors come back just in case “it actually happens” this time.

AND if the company actually delivers something material - there are enough eyeballs on the stock to re-rate the stock to a level to reflect the company’s new progress.

And the cycle continues.

Luckily, IVZ has been able to cultivate this following and the share price tends to do well in the lead up to its big drill programs (probably a function of the targets being genuinely massive as well).

IVZ’s share price went from ~20c to ~40c (without a PPSA) the first time around when it went from drilling confirmed to drill rig spinning:

(source)

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

We expect our “reactivation” thesis to really get going now.

Especially with the spud date locked in for November and a clear line of sight to drilling.

(You can read about our reactivation theory in detail here: The reactivation thesis: When meme stocks awaken)

Basically the more of these type posts we see on Reddit, X, Facebook and other social media platforms, the more eyeballs on what IVZ is doing.

AND with a bit of luck, if there is success - more eyeballs = more people willing to reward whatever IVZ delivers.

(of course it works in the opposite direction too if exploration results are negative)

So, more of this over the next few months please:

(source)(source)(source)(source)(source)(source)(source)(source)(source)(source)

It’s important to note this is a thesis, and there’s no exact concrete formula or science behind market moves.

We can get things wrong.

Now it's over to IVZ to drill its well in November, and we will see what happens to its share price this time around:

(source)

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

It looks like the macro is lining up well for IVZ too

It's now been ~5 months since the US-Iran war kicked off.

Which effectively closed the Strait of Hormuz, where ~25% of global oil and ~25% of the world’s LNG pass through. (source)

The last time the world experienced a sustained supply shock out of the Middle East was back in 1973 during a war between Israel and other Middle Eastern countries.

Oil prices rallied hard, came off a bit and then rallied hard again - we have had the first leg up, now the pullback, IF things don’t calm down we could get a similar style second run up:

(source)

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

For now the world has been able to keep a lid on oil prices - mostly by drawing down reserves and above ground inventories.

And from countries like China pulling back on purchases (decreasing the demand for oil to match the disrupted supply). (source)

(source)

IF this supply disruption runs over a longer period of time, who knows what will happen to the oil price.

(source)

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

A quick reminder on what IVZ has right now

IVZ owns 80% of a giant block in the Cabora Bassa Basin in Zimbabwe.

IVZ is exploring and developing what is one of Africa's largest and last untested frontier rift basins.

IVZ has the only Petroleum Production Sharing Agreement (PPSA) signed with the Republic of Zimbabwe.

The PPSA sets the precedent (financial and non-financial framework) for oil and gas investment in the country.

Think of it like how Woodside made an oil and gas discovery in WA in 1971 (the North Rankin gas field on the North West Shelf) and then took 8 years negotiating with the Australian and WA governments on how the development would be shared - the State Agreement was finally signed on 27 November 1979 - the rest is history.

Of course it's a bit early to be calling IVZ the “Woodside of Zimbabwe”, but the origin stories so far are looking pretty similar.

Check out our deep dive on the PPSA here: IVZ signs landmark agreement with Zimbabwe. Drilling in the coming months.

The PPSA was signed back in May:

(source)(source)(source)(source)

So effectively, IVZ is now holding the keys to anyone wanting a piece of a potential 5.5 billion barrel oil equivalent prospective resource estimate.

On a project that has a gross unrisked mean prospective resource of ~5.5 billion barrels of oil equivalent (estimate).

(plus this oil & gas doesn’t have to pass through the Strait of Hormuz to get to China. Just saying...)

(source)

Up until a few years ago, the project had never been drilled.

In September 2022, IVZ started drilling its first well, Mukuyu-1, and by December had "opened up the system" by defining a working hydrocarbon system.

In 2023, IVZ followed it up with Mukuyu-2, which delivered an official gas-condensate discovery.

From the Mukuyu drill campaigns, IVZ confirmed:

• ✅ Gas readings 135x above background levels
• ✅ Multiple potential gas-bearing reservoir units (up to 13 in the Mukuyu-1 sidetrack)
• ✅ ~900m gross interval, with 225m in potential hydrocarbon-bearing zones (upper Angwa target)
• ✅ Multiple seals identified with several hundred-metre thicknesses above the deeper primary targets
• ✅ Elevated fluorescence, indicating condensate or light oil
• ✅ Commercial helium grades up to 0.1% (helium is a valuable by-product)
• ✅ A working conventional hydrocarbon system declared 🛢️
• ✅ An official gas-condensate discovery on Mukuyu-2

IVZ’s Mukuyu discovery was declared by global research firm Wood Mackenzie to be the second-largest discovery in Sub-Saharan Africa for 2023.

The first three companies in the image below are $326BN capped Shell, $255BN capped Total and then our little old IVZ.

Source: IVZ Secures Gas Sample From Major Discovery (March 2024)

The discovery in 2022 happened while Liquefied Natural Gas & oil prices were running - then as prices fell away, so did IVZ’s share price (despite that Mukuyu-2 well delivering a discovery again).

Then IVZ went into a bit of a newsflow vacuum, and with that lack of drilling activity, IVZ’s share price fell away even more.

Now... oil and gas prices are starting to move again.

Which makes for the right macro setup for IVZ to have heading into its November well.

Over to IVZ to deliver now over the next few months.

What we want to see next from IVZ

IVZ’s next well (Musuma-1)

It's now a countdown to IVZ’s next well - the 1.2 Tcf gas + 73M barrel condensate target (unrisked, prospective resource).

IVZ has confirmed drilling will begin in November this year.

Here are the milestones we will be tracking:

• 🔄 Rig mobilisation to site
• 🔲 Confirmation of funding for the well
• 🔲 Drilling starts
• 🔲 Drilling updates
• 🔲 Drilling results

What could go wrong

The key risk in the short-term is “delay risk”.

It is possible that the drilling program slips into 2027 or that it gets missed entirely.

Especially given the Zimbabwe wet season usually kicks off around November which makes drilling more difficult.

The macro environment could change, and it may lead to a delayed drill program - in which case IVZ’s share price could suffer.

Delay risks.

IVZ has been "about to drill" multiple times. If Musuma-1 slips into 2027, the market loses patience.
Source: “What could go wrong” - IVZ Investment Memo 21 April 2026

Other risks

Like any early-stage exploration company, IVZ carries significant risk, here we aim to identify a few more risks.

With the upcoming Musuma-1 well having been estimated to cost between US$6M - US$10M, IVZ’s $10.8M AUD ($7.6M USD) June 30th cash balance will be stretched pretty thin across pre-drill activities and well execution.

If a new funding partner fails to materialise on favourable terms, the company may need to launch an equity capital raise.

Both scenarios will result in dilution for existing shareholders, the question is how much.

Although IVZ already proved a working hydrocarbon system at Mukuyu, Musuma-1 is a completely new geological target. Frontier exploration drilling inherently carries a high statistical probability of failure or encountering uncommercial quantities of gas and condensate.

Much of the current thesis relies on elevated oil prices remaining at or above US$80-US$100 per barrel. A broader macroeconomic pullback or a sharp decline in global energy prices could severely dampen market appetite for frontier exploration.

Investors should consider these risks carefully and seek professional advice tailored to their personal circumstances before investing.

Our IVZ Investment Memo

You can read our IVZ Investment Memo in the link below.

We use this memo to track the progress of all our Investments over time.

Our IVZ Investment Memo covers:

• What does IVZ do?
• The macro theme for IVZ
• Our IVZ Big Bet
• What we want to see IVZ achieve
• Why we are Invested in IVZ
• The key risks to our Investment Thesis
• Our Investment Plan