PFE’s lithium well re-entry “imminent”
Ready to go.
We’ve been eagerly awaiting this moment.
Today, our US lithium Investment Pantera Minerals (ASX: PFE) said that it will access a Smackover production well and a disposal well allowing for potential DLE pilot plant location.
A re-entry program is “imminent.”
A sample (high grade we hope) from the re-entry program could validate the prospectivity of PFE’s now ~26,000 acre project in the USA’s lithium heartland - the Smackover, Arkansas.
A high grade sample could increase the look through valuation of PFE’s acreage too, given that Standard Lithium (one of PFE’s neighbours) sealed a deal of up to $160M in a JV arrangement with Norway’s $125BN capped Equinor.
Now, we’re well aware that the lithium space is hardly on a tear - with prices depressed many companies are suffering.
We think PFE has been caught up in that as well.
But, the corporate transactions in the area around PFE tell a different story.
Energy majors have ploughed immense sums of money into the Smackover and are paying $100s of millions for access to the region's lithium rich brine projects.
The big money players may know what they’re doing here - Exxon (who is next door to PFE) was behind early lithium ion-batteries in the 1970s. (Source)
Joe Lowry (Mr. Lithium) who leads the excellent Global Lithium podcast is backing Exxon to hopefully make it work in the Smackover:
(Source)
(We think PFE knows what they are doing too)
So let’s see what type of lithium concentrations show up in this upcoming well re-entry program…
How does this news impact our PFE Investment Memo?
Why did we invest in PFE?
PFE right next door to $643BN Exxon
Exxon reportedly spent >US$100M acquiring its project and just started drilling its first well 6 weeks ago with a view of getting to first production by 2027.
Surrounded by (much) bigger players
PFE is also in the same neighborhood as $25BN Albemarle, $383M Standard Lithium, $790M Tetra Technologies.
Cheap re-entry into historical oil wells
PFE doesn't have to drill new wells, instead, it can just re-enter old oil and gas wells and extract lithium brines. This is cheaper to do than drilling whole new wells.
Source: 4 March 2024 PFE Investment Memo
We’re Invested for these reasons and PFE’s work is delivering across these reasons.
However commodity price risk has materialised:
Commodity price risk
Lithium prices have pulled back relatively strongly recently and that is impacting investor interest in small cap lithium companies. There is a chance the lithium price stays low for an extended period of time which would impact PFE’s share price negatively.
We’re hoping material progress eventually brings PFE success into a rebounding lithium price - we think things could be very different in 2025 for lithium and this will make for better market sentiment towards lithium companies like PFE.
Source: 4 March 2024 PFE Investment Memo
What’s next for PFE?
- Receive SLB's 3D subsurface model to guide well targeting (learn more in our Quick Take)
- Re-enter an existing well to test lithium brine grades and characteristics
- Conduct DLE test work on brine samples with technology providers
- Continue expanding land position through further lease acquisitions
Read our latest note on PFE:
Pantera to re-enter wells for lithium brine as oil major neighbour Exxon starts pre-sales of lithium
