IVZ - rig on the move to 1.2 Tcf gas + 73M barrel condensate target - drilling in November

Our oil and gas Investment Invictus Energy (ASX: IVZ) is now moving the rig to its giant ~1.2 Tcf gas, 73 million barrel condensate drilling target (Musuma-1).

(one of the ~12 prospects IVZ has on its project - which has a combined ~5.5 Billion barrel of oil equivalent prospective resource)

(source)

IVZ has already signed a “Well services” contract with $106BN capped SLB - the world’s largest oilfield services contractor. (source)

Last week IVZ completed the well pad construction:

(source)

And then today, started moving its rig to site - meaning IVZ is now just weeks away from this year’s big drilling event.

(source)

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

(Which was actually labelled the second-largest discovery in Sub-Saharan Africa for 2023)

The first three companies in the image below are $435BN capped Shell, $289BN capped Total and then our little old IVZ.

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

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 now has a “working hydrocarbon system” and a lot of data from the Mukuyu discovery.

IVZ’s last two wells were the first ever wells put into this project.

So this time around, IVZ should have a far better grip on where/what it is drilling.

We also hope it means this round of drilling can be done for a lot cheaper than the last two wells IVZ drilled too.

IVZ’s MD Scott Macmillan said in a webinar recently the well should cost ~US$6M to US$10M. (source)

IVZ had A$10.9M ($7.6M USD) cash in the bank at 30 June, so IF additional cash is needed, it shouldn't be a $20-30M raise... but something a lot less dilutive - especially with IVZ capped at $100M+.

We think that once the market has clarity on how IVZ will pay for the well - that’s when IVZ’s share price can start trading free of any “cap raise weight”.

Especially with everything happening in oil markets right now.

We wrote about why we think oil prices could run from here in our Quick Take last week here.

Over the weekend we think the risk of a big rally in oil prices only got higher:

In the US/Iran conflict:

US President Donald Trump posted on Sunday that the US could “soon finish the job” against Iran,

BUT there were more reports of ships being hit in the Strait of Hormuz:

(source)

In the Russia / Ukraine conflict:

Ukraine launched 1,000+ drones hitting the St Petersburg oil terminal, the Ruchyi oil depot and a data centre.

(source)

In the Saudi / Yemen conflict:

The Houthis and Saudi Arabia traded strikes again on Sunday.

The Houthis have now declared Aramco sites a “legitimate target” and hit an Aramco building in Dhahran last Tuesday.

Egypt’s parliament is debating whether to send military support to Riyadh.

(source)

So three separate conflicts, all touching oil supply, all escalating at once.

What’s next for 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. (source)

Here are the milestones we will be tracking:

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