Sintana Energy Inc (LON:SEI) President Eytan Uliel caught up with DirectorsTalk to discuss the AREA OFF-1 licence extension and seismic programme in Uruguay, the CAN-200 tender process in Argentina, and the key milestones investors should watch across the company’s Atlantic Margin portfolio.
Q1: Now, Eytan, ANCAP has just extended the initial exploration period for AREA OFF-1 to August 2027. What does the AREA OFF-1 extension mean for the drilling timeline?
A1: Well, in very short terms, it doesn’t change anything. The drilling is still going to happen in accordance with the timeline. We’ve always expected it will happen, or we hope it will happen, in accordance with that timeline.
The current licence period, the initial exploration period, is a four-year period that expires in September of this year. Ordinarily, what would happen is you’d get to the expiration date, you would then make an election to go into the next exploration period, during which time you either have to commit to drill a well, or you have to do some more technical work and relinquish 50% of the block.
However, the environmental authorisation process in Uruguay took a bit longer than expected. Also, an outcome of that process was that the season in which seismic could be acquired was split into two. So, you’re basically not allowed to acquire seismic between May and September to account for the Uruguayan fishing season.
As a result, Chevron, who are now the operator, went to ANCAP and said, look, we’re going to get to September when this first period expires, and we’re not going to have been able to finish the full seismic that we wanted to do. Without that full seismic, we really won’t be in a position to make the optimal well decision. We also don’t want to extend into another period and do more technical work without a well commitment and have to relinquish some of the block.
So, ANCAP, who are a very commercial and good regulator to work with, went away, considered it, and have agreed to a one-year extension.
Really, all that means is that the decision to renew into the next period is deferred a year. By that point in time, the full seismic can have been completed so ideally, Chevron will then be in a position to make a well-drilling decision.
We’ve always said that we hope/expect that a well will get drilled in the 2028 timeframe, and that remains the case. The period will end now in August of 2027, by which time, in making a decision to renew into the next period, Chevron will ideally be in a position to decide on a well.
Q2: The first phase of the 3D seismic acquisition was completed before the end of April, with the second season planned for the fourth quarter of 2026. What work remains, and when do you expect the full data set to be processed and interpreted?
A2: So, the planned seismic campaign over AREA OFF-1 is for about 4,200 square kilometres, and in the first season, about 1,500/1,600 square kilometres was acquired. That’s, as we speak, being processed, and we expect to get results from that before the end of the year. As it turns out, they began with the stuff of most interest so that 1,500/1,600 square kilometres covers most of the two prospects of highest interest on OFF-1.
The seismic that will kick off towards the end of this year and then run through till March or so next year, that will fill in the bits that are missing and then pick up the rest, and that will then also get sent off for processing.
As I say, the current exploration period will run till about August next year, so we expect to see the full results round about then and with sufficient time to enable decisions to be made on the block.
Q3: What must the seismic data show before partners commit to drilling?
A3: Ultimately, it’s Chevron’s decision as the operator and our partner, so I cannot speak for them.
The original technical work that we did on the block was we picked up all the legacy 2D seismic data, we reprocessed it using modern technology, we ran AVO analysis, and we were able to identify new prospects that were AVO-supported. That was off the back of 2D seismic.
I would suggest that what the 3D will need to do is to validate what was seen on the 2D, to validate the AVO expression and to enable the operator to determine where they would want to put a well on these structures.
So that’s, what I think has to happen but again, to stress, ultimately, it’s not my decision; it’s the operator’s decision.
Q4: Now, in Argentina, the government has instructed the National Secretariat of Energy to launch an international tender following Challenger’s expression of interest in CAN-200. What are the next stages of that process, and what level of competition do you anticipate?
A4: One of the most unfortunate parts of Uruguay is it’s fully licensed. We have two licences there, but there are no other opportunities, and we have been looking around the region for some time for business development opportunities that fit our model; the ability to get in early, do early technical work, prove things up and then ultimately bring in a partner.
For various reasons, we thought CAN-200 in Argentina was of interest and Argentina has a process where you can go to the government of Argentina and you can say, look, we’re interested in the licence; here’s our proposal. It then gets taken away, reviewed, and then ultimately the President issues a decree that says, well, I think this is worthwhile pursuing, so now we’re calling an international public tender.
So that’s what’s happened. Anybody is now entitled to show up and to put in a proposal for this licence.
However, because we were the party who initiated this, and this has been something we’ve been working on quietly in the background for the better part of a year and a half, but because we were the party who initiated it, we have certain preferred rights.
If nobody else puts in a proposal, we will get issued the licence based on what we have proposed and if anybody else puts in a proposal, we have a pre-emptive right to look at what’s been proposed. If it’s better than what we proposed, we have a right to match.
So, we’re quite pleased with how this has turned out. We’ve done what our business model is, which is found an interesting opportunity, got in there, secured ourselves an interesting position.
There’s still a long way to go. Anybody can show up and make a proposal now, and they could be good proposals, bad proposals, who knows? I really can’t speculate on the level of competition we may or may not see.
People have been interested in Argentina in the past. Of late, a few of the larger operators have actually been leaving or changing their focus to other parts of Argentina so who knows what will happen?
Certainly, we think it’s a very interesting opportunity and we’ve done what we can to put ourselves into the driver’s seat. It will take another three to six months, and we’ll see how it all unfolds. Quite a way to go yet, though.
Q5: Looking across Uruguay and Argentina, what key milestones should investors watch over the next 12 months?
A5: In Uruguay, the key milestone is outcomes from the Chevron seismic campaign and ultimately, 12 months or so hence, we get to know where things stand on the drilling.
AREA OFF-3, our other block in Uruguay, we continue to work on a farm-out process there. I know people who follow the company, it’s been a longer process than we anticipated but it’s been a longer process for a good reason.
There’s been so much activity in the region. Neighbouring blocks to OFF-3 have now, literally in the last few months, been farmed into by QatarEnergy and Chevron farmed into one. There’s so much activity going on in the region. The chessboard is moving almost weekly at the moment and every time that happens, it opens up a new series of interesting conversations around OFF-3.
It is a slower process than perhaps we previously advertised, but it is an active process. We’re working on it quite diligently and so hopefully, sometime in the next three to six months, we will get to the end of that.
So, that’s something for people to look out for: things happening on OFF-3. So, that’s across Uruguay and Argentina and it goes without saying, for those who follow Sintana Energy as a company, we have a large portfolio of assets in Namibia and one early-stage asset in Angola. There is a large range of things coming up on that side of the Atlantic in many of our other portfolio assets that are hugely value creative.
A lot going on, not just in Argentina and Uruguay on the Latin American side of the margin, but also on the African side, where our portfolio is equally as interesting.
