REG - Sintana Energy Inc - Annual Results
30/04/2026 14:30
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RNS Number : 6450C Sintana Energy Inc 30 April 2026
30 April 2026
Sintana Energy, Inc.
("Sintana" or "the Company")
Audited Annual Results for the year ended December 31, 2025
TORONTO, APRIL 30, 2026 - Sintana Energy Inc. (TSX-V: SEI, AIM: SEI, OTCQX:
SEUSF) ("Sintana" or the "Company") is pleased to announce its audited Annual
Results for the year ended December 31, 2025.
The 2025 Annual Report is set out in full below and is also available on the
Company's website: https://sintanaenergy.com/
For further information, please contact:
Sintana Energy Inc Tel: +44 (0)7 747 845 987
Robert Bose, Chief Executive Officer
Eytan Uliel, President
Zeus - Nomad and Joint Broker Tel: +44 (0) 20 3829 5000
Antonio Bossi / Darshan Patel / George Duxberry
Simon Johnson (Broking)
Cavendish Capital Markets Limited - Joint Broker Tel: +44 (0) 20 3493 8000
Neil McDonald / Derrick Lee / Pearl Kellie
Jonathan Paterson - Investor Relations Tel: +1 475 477 9401
jonathan.paterson@harbor-access.com
CAMARCO - Financial PR Tel: +44 (0) 20 3757 4980
Billy Clegg / Georgia Edmonds / Sam Morris
About Sintana Energy
Sintana Energy is an Atlantic Margin-focused oil and gas company, holding
interests in a diverse portfolio of high-impact assets that spans the Southern
Atlantic conjugate margin. The Company's current portfolio is strategically
positioned in the emerging frontier geographies of Namibia, Uruguay and
Angola, with additional legacy assets in Colombia and The Bahamas. Led by an
experienced team, Sintana Energy is partnered with major industry players, and
benefits from significant carry support, on key licenses across multiple
jurisdictions. Sintana Energy is listed on the TSX-V in Canada under the
symbol "SEI", in the United Kingdom on the LSE-AIM under the symbol "SEI" and
in the U.S. on the OTCQX under the symbol "SEUSF".
For further information, please visit sintanaenergy.com
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT
TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
Management's Letter to Shareholders
Dear fellow Sintana Shareholders,
We are pleased to provide our management report to you, the owners of the
company, for the period 1 January 2025 to 31 December 2025.
On multiple fronts this period represented a milestone year for Sintana, and
has set the stage for what we anticipate will be an exceptional 2026.
NAMIBIA
Through the course of 2025, our position in Namibia as one of the world's
pre-eminent frontier exploration destinations was further cemented. Continued
exploration success across multiple blocks, coupled with increasing levels of
operational and corporate activity, has validated the substantial value that
we see in our Namibian portfolio.
In particular, as 2025 drew to a close, a farm-in to Petroleum Exploration
License 83 ("PEL 83"), which governs blocks 2813A and 2814B in the Orange
Basin offshore Namibia was announced, with TotalEnergies securing a 40% stake
and operatorship. As part of the entry transaction, TotalEnergies has
committed to drill up to three additional exploration and appraisal wells to
further delineate the scope and scale of PEL 83, including with respect to the
Mopane discoveries. TotalEnergies will also provide significant funding toward
the project's development costs. With a 4.9% indirect carried position in PEL
83, we maintain full upside to what is a world-class, multi-billion-barrel
opportunity moving rapidly toward development and production/cashflow, under
the stewardship of one of the world's most capable operators, with no expected
funding obligations for the initial phase of development.
Since period end, momentum has accelerated across our Nambian portfolio, with
several key value catalysts delivered in early 2026. Highlights include:
· On January 21, 2026, we entered into a Letter of Intent
securing exclusivity in relation to a potential investment in PEL 37 in the
Walvis Basin, offshore Namibia. PEL 37 is immediately adjacent to, and north
of PEL 82. We hold an interest in PEL 82 and drilling on that block is being
planned by the operator, Chevron, creating considerable option value from
securing a foothold in the adjacent PEL 37. We are currently progressing
technical, commercial and legal due diligence alongside negotiating potential
terms, with a view to formalising our PEL 37 entry in the near future.
· In February 2026, as part of its 2025 annual results
presentation, TotalEnergies outlined key development milestones for PEL 83
including (i) a Mopane project FID target of 2028, with first oil target for
2032; (ii) a FPSO-based development concept with capacity to deliver ~200,000
bopd; and (iii) up to 1.5 billion barrels of additional exploration upside,
identified across Mopane and the broader PEL 83 block.
· On 23 March 2026, Galp Energia released its Integrated
Management Report 2025, detailing a significant upgrade to 3C contingent
resources at the Mopane discoveries on PEL 83. The previously reported 3C
contingent resource of 875 mmboe (gross) has been upgraded to 1.38 bn boe
(gross), reflecting the success of Galp Energia's prior exploration and
appraisal drilling at Mopane. This represents a 57% increase, and implies
approximately 67 million boe to our indirect interest.
We expect continued value creation across our Namibian portfolio as key
catalysts are delivered through 2026.
ANGOLA
In May 2025, we announced our initial entry into Angola through a strategic
partnership with Corcel Plc. The partnership includes an agreement for Sintana
to acquire an indirect 5% interest plus a net profits interest in the KON-16
block, located in the onshore Kwanza Basin. In our view, KON-16 represents a
highly attractive opportunity, supported by a proven petroleum system with
prospectivity across both post- and pre-salt intervals. The block hosts
multiple exploration targets, including a large, multi-target primary prospect
with estimated unrisked recoverable volumes of several hundred million barrels
of oil.
Following period end, on 26 February 2026 Corcel announced completion of the
acquisition of 326-line km of high resolution 2D seismic data over the KON-16
block. Initial internal review indicates excellent data quality, and clear
imaging of key pre-salt targets. Seismic processing will continue through 2026
to support prospect maturation and drilling preparation. In parallel, Corcel
intends to run a farm-out process ahead of planned exploration drilling. We
expect to enter into formal agreements governing our entry into this asset in
Q2 2026, with closing thereafter subject to regulatory approval, which we
expect will be in H2 2026.
CHALLENGER ENERGY GROUP ACQUISITION
In late December 2025, we successfully completed the acquisition of Challenger
Energy Group Plc, adding significant interests in two, highly prospective
offshore Uruguayan blocks, AREA OFF-1 and AREA OFF-3 to our portfolio. These
assets share geologic similarities with our assets in the Namibian conjugate
margin, and AREA OFF-1 is supported by an established, high-value partnership
with Chevron, to carry the cost of an extensive 3D seismic acquisition
program, as well as a portion of the potential future exploration and drilling
costs.
In Challenger we saw a business that was closely aligned with our strategy and
investment approach. It was a unique and compelling opportunity to expand and
diversify our platform in line with our business model and strategy. We
believe the transaction now positions Sintana as a leading Atlantic-margin
exploration player.
Since year end, on 3 March 2026, the planned 3D seismic acquisition on AREA
OFF-1 commenced. The survey is being carried out by Viridien using the BGP
Prospector vessel and will cover a total of approximately 4,300 km(2).
Fieldwork will be conducted over two seasons (February-April 2026 and November
2026-April 2027), with the majority of data relevant to key prospects expected
to be acquired during the first season. Fast-track results from the first
season are expected in Q4 2026, with full PSDM results anticipated in Q2 2027.
Our enthusiasm for Uruguay was further reinforced on 25 March 2026 when ANCAP,
Uruguay's state-owned oil company and regulator, advised that Qatar Energy has
farmed into offshore blocks AREA OFF-2 (30%) and AREA OFF-7 (30%) (both
operated by Shell), and Chevron has farmed into AREA OFF-7 (30%), in each case
as a non-operating partner. AREA OFF-2 is adjacent to Sintana's AREA OFF-3,
and AREA OFF-7 lies immediately outboard. These transactions expand Chevron's
presence and mark Qatar Energy's entry into Uruguay, further strengthening the
roster of major oil and gas operators alongside Shell, APA, YPF, and ENI.
Sintana remains the only junior company with a position in this rapidly
emerging exploration basin.
CORPORATE
Alongside the completion of the Challenger acquisition, we implemented a
number of Board changes and integrated the Challenger management team into our
operations. The result is a streamlined executive team and Board with deep
sector expertise and extensive capabilities on both sides of the Atlantic.
The combination of the Sintana and Challenger balance sheets positioned us to
begin 2026 with a strong financial foundation and enhanced access to capital
to support both portfolio development and disciplined opportunistic growth.
On 4 February 2026 we reached an agreement to resolve arbitration with
ExxonMobil in relation to the VMM-37 block in Colombia. The settlement
provides for total cash payments of $9 million, of which $3 million has been
received, with the remaining $6 million expected by year end (subject to
approval by the relevant Colombian governmental authorities) and further
strengthening our balance sheet.
OUTLOOK
Sintana now holds interests in eight licences in Namibia and Uruguay, with
additional pending interests PEL 37 (Namibia) and KON-16 (Angola), alongside
legacy assets in Colombia (in the process of being monetized) and The Bahamas.
The portfolio offers shareholders diversified exposure across geologic plays,
basins, operators, and jurisdictions, anchored by the significant Mopane
discoveries and supported by high-impact catalysts across the asset base.
Through the remainder of 2026 and into 2027, we expect new wells to be drilled
on PEL 83, additional drilling activity on multiple other portfolio assets,
and seismic acquisition and further farm-ins and corporate activity across
several blocks. Few companies of our scale have a comparable level of exposure
to substantial near-term value catalysts, positioning us to continue to
deliver meaningful value for our shareholders.
2025 underscored Sintana's ability to act decisively, partner with leading
industry players, and leverage our portfolio to create value. In 2026, we will
continue to advance activity across our portfolio, optimize and expand it, and
execute on our strategy. Our goal remains clear and simple: generate outsize,
capital-efficient returns for shareholders.
We thank our Board and our shareholders - longstanding and new - for their
continued support and commitment. We also wish to recognize our small but
highly dedicated team, whose efforts across a wide range of initiatives in
2025 were instrumental to our progress.
We're extremely proud of what has been a transformative year for Sintana, and
enter 2026 with strong momentum. We are excited about the opportunities ahead.
Sincerely,
Robert
Bose
Eytan Uliel
Chief Executive Officer & Executive
Director President & Executive Director
Date: 30 April 2026
Sintana's Business
Sintana Energy Inc ("Sintana" or the "Company") is the Canadian parent company
of a group of companies focussed on the acquisition, exploration, potential
development, and ultimately the monetisation of a diversified portfolio of
interests in high-impact oil and gas assets primarily focussed on emerging
frontier geographies.
The portfolio is currently comprised of:
· indirect interests in four large, highly prospective
petroleum exploration licences ("PELs") in the Orange Basin, offshore Namibia,
including an indirect carried interest in PEL 83, home of the Mopane
discoveries that were made in 2023 and 2024, as well as indirect interests in
PELs 79, 87 and 90;
· an indirect interest in one PEL offshore Namibia in the
Walvis Basin (PEL 82), and one PEL onshore Namibia in the Waterberg Basin (PEL
103), as well as a potential indirect interest in an additional PEL offshore
Namibia in the Walvis Basin (PEL 37) (subject to completion of a transaction
to acquire that interest, pursuant to a Letter of Intent which was entered
into by the Company on 19 January 2026);
· direct interests in two offshore blocks in Uruguay, being
AREA OFF-1 in the Punta del Este Basin and AREA OFF-3 in the Pelotas Basin
(these interests having become part of the portfolio on completion of the
acquisition of Challenger Energy Group Plc in December 2025);
· an indirect interest in the KON-16 licence in the onshore
Kwanza Basin in Angola (subject to completion of the transaction to acquire
that interest, a letter of intent initially entered into by Sintana in May
2025); and
· legacy assets onshore in the Middle Magdalena Basin,
Colombia (in the process of being monetized), and offshore The Bahamas.
The Company's shares are traded on the Toronto Stock Exchange's Venture
Exchange ("TSX-V") in Canada under the symbol "SEI", on the London Stock
Exchange's AIM Market ("AIM") in the United Kingdom under the symbol "SEI",
and on the OTCQX market in the United States under the symbol "SEUSF".
A. Business Highlights
Sintana considers that its portfolio of interests in high-impact assets has
the following attributes:
A diversified portfolio
· Interests in multiple licences, in Namibia and Uruguay,
with an additional potential licence in Namibia, and a pending interest in
Angola, alongside legacy assets in Colombia and The Bahamas, providing
diversified exposure to a range of geologic plays, basins, operators and
jurisdictions. The portfolio is also diversified by asset maturity, anchored
by an interest in the significant Mopane discoveries (PEL 83, Orange Basin,
Namibia), and supported by high-impact exploration and commercial catalysts
across the asset base.
Exposure to near-term high value activity
· The portfolio is currently focussed on Namibia and
Uruguay - both global exploration "hot spots", where significant activity,
including exploration and appraisal drilling and seismic acquisition, is
expected to occur over the next 24 months.
Established partnerships in place
· In Namibia, Sintana holds interests in licences
benefitting from partnerships with well-regarded industry participants
including Chevron, TotalEnergies, Galp Energia, Pancontinental, Qatar Energy
and NAMCOR. In Uruguay, Sintana is partnered with Chevron on the AREA OFF-1
block and, in Angola, Sintana will be partnered with Corcel on the KON-16
block (subject to completion of the transaction to acquire an interest in that
block).
Reduced capital exposure through carries
· The Company's core strategy is to create and maintain a
portfolio of interests that are predominantly carried through exploration,
appraisal and development by experienced, international operators, thereby
providing shareholders with upside exposure from projects and prospects where
limited capital is required from the Company. Currently, Sintana benefits from
full or partial carried interest positions in relation to four of its five
offshore licence interests in Namibia (including on PEL 83 where the Mopane
discoveries have been made), as well as on AREA OFF-1 in Uruguay.
Execution capability
· Sintana considers that it has strong technical and
commercial capabilities that can be brought to bear on managing its portfolio
and ultimately creating significant returns for shareholders. In particular,
the Company has a management team and Board with deep sector experience and
expertise.
Potential realisation opportunities
· The Company's portfolio provides exposure to high-impact
exploration prospects and, in the case of Mopane, discoveries of significant
scale. The Company believes that the resulting ability to potentially realise
multiple value uplifts from prospect to discovery and/or final investment
decision via monetisation (including sale or divestment of key assets)
significantly enhances the opportunities for shareholder returns.
B. Business History & Development
The Company was incorporated on 22 February 1994 in the Province of Alberta,
Canada. Historically the Company operated under several different names,
ultimately changing its name to Sintana Energy Inc. on 6 August 2015. The
Company was first admitted to trading on the TSX-V in Canada in August 2015 as
a consequence of a Canadian plan of arrangement (equivalent to a "reverse
takeover" transaction in the United Kingdom) and was subsequently admitted to
trading on the OTCQX market in the United States on 1 October 2024.
From its inception until September 2021, the Company had interests in various
hydrocarbon assets and projects in Canada, the United States and Colombia.
With the exception of its legacy assets in Colombia, all of these interests
have subsequently been sold, relinquished or otherwise discontinued.
On 13 September 2021, the Company entered into an agreement for the
acquisition of 49% of the outstanding shares of Inter Oil, a private Namibian
company. This transaction completed on 8 March 2022. Inter Oil, through wholly
owned subsidiaries, indirectly holds a strategic portfolio of interests in
five exploration licences in Namibia (four offshore and one onshore), and thus
the Inter Oil acquisition provided the Company with the foundation of its
current portfolio of interests in Namibia.
The Namibian portfolio was further expanded when, on 10 June 2024, the Company
completed an acquisition of a 49% interest in Giraffe, a private Namibian
company and the owner of a 33% interest in PEL 79, thereby providing an
indirect 16% interest in PEL 79.
In May 2025, the Company entered into an agreement with Corcel, a UK-listed
company, for the acquisition of a 5% indirect participation interest together
with a net profits interest in the KON-16 licence, which is located onshore in
the Kwanza Basin, Angola. Formal documentation in relation to this transaction
is expected to be entered into in Q2 2026, and completion of the transaction
thereafter will follow once regulatory approval is obtained, which is expected
in Q3 or Q4 2026.
The Company's portfolio was further expanded to include direct interests in
two sizeable assets offshore Uruguay (and legacy assets in The Bahamas), as a
result of the completion of the acquisition of Challenger, a UK-listed
company, on 16 December 2025. Shortly after that acquisition was completed,
on 23 December 2025 the Company's shares were admitted to trading on the
Alternative Investment Market of the London Stock Exchange (the AIM).
Subsequent to period end, Sintana entered into a Letter of Intent securing a
period of exclusivity in relation to a potential investment that would provide
an indirect interest in PEL 37 in the Walvis Basin, offshore Namibia. PEL 37
is immediately adjacent and to the north of PEL 82, where drilling is being
planned by the operator, Chevron. As at the date of this Annual Report, the
Company continues to undertake due diligence as to the technical and
commercial merits of this opportunity, and in parallel is seeking to negotiate
suitable transaction terms.
C. Strategy and Future Activities
The Company's strategy is to secure interests in high-impact oil and gas
assets in multiple jurisdictions and basins, particularly where major
international oil and gas companies have established a presence and
significant exploration activity, including seismic campaigns and well
drilling, is underway and/or expected to commence in the near-term. The
Company considers that it has the footprint, technical capabilities and scale
to grow further selectively and to deploy its expertise in oil and gas
projects in frontier locations. In so doing, the Company believes it can
attract increased interest from investors to the large, broad, and diversified
portfolio of high-impact assets that the Company holds.
A core component of Sintana's strategy is to acquire, or structure, its
interests and capitalise on opportunities in a way that sees costs associated
with such interests carried through near-term exploration, appraisal and
development by experienced, international operators, thereby providing
shareholders with exposure to high‑impact projects and prospects with
comparatively limited additional capital required from the Company. The
Company currently holds interests in licences in both Namibia and Uruguay in
partnership with operators including Chevron, TotalEnergies, Galp Energia,
Qatar Energy, Pancontinental and NAMCOR, and currently benefits from full or
partial carried interests in five of its licence interests, including on PEL
83 where the Mopane discoveries are located.
Equally, another core component of Sintana's strategy is to ultimately create
significant returns for its shareholders through the successful monetisation
of its assets by way of divestments and asset sales. The Company believes it
has the track record, industry knowledge and networks, and broad commercial
capabilities necessary to execute on this aspect of its strategy.
In furtherance of its strategy, in the future the Company may: (i) seek to
secure interests in new assets, either in existing or new jurisdictions; (ii)
increase its proportionate interests in assets which it currently holds; (iii)
enter into new partnerships, or expand existing partnerships, in order to more
fully exploit the potential of its various assets; and/or (iv) sell, dispose
of, trade, or otherwise monetise all or some of its assets, all or in part.
D. Asset Holding Overview
The following diagram illustrates the manner in which Sintana's portfolio of
assets is held:
Notes:
This diagram only includes principal entities associated with ownership of
assets and does not include various dormant or legacy entities not associated
with holdings of any assets.
1. Subject to completion of the transaction relating to the
acquisition of the interest in KON 16.
2. Subject to completion of a transaction relating to the
acquisition of an interest in PEL 37.
E. Assets
The following tables provide a summary overview of Sintana's current
portfolio. Additional details on Sintana's portfolio of assets are set out in
the section of this Annual Report entitled "Asset Profiles", and key
developments during 2025 in relation to individual assets are set out in the
Management Discussion & Analysis of the Company's 2025 Financial
Statements.
Table A: Overview of Sintana's current portfolio of assets.
Licence Location Licence Area Gross / net km(2) Operator Sintana Indirect Interest (%) Status
Namibia
PEL 83 Orange Basin, offshore 9,954 / 488 TotalEnergies 4.9((1) TotalEnergies farming in process of farming-in to operatorship; 3 well
) (Carried through development) appraisal campaign planned for 2026/2027; target FID 2028 and first oil 2032
PEL 87 Orange Basin, offshore 10,970 / 806 Pancontinental 7.35((1) Evaluation of exploration opportunities continuing and Pancontinental is
) (Carried through FID) soliciting interest in a farmout
PEL 90 Orange Basin, offshore 5,433 / 266 Chevron 4.9((1) Evaluation of exploration opportunities continuing, with Chevron considering
) (Exploration (ceased) & appraisal carry) drilling of exploration well in the next 12 months
PEL 79 Orange Basin, offshore 13,829 / 2,236 NAMCOR 16.17((1)) Evaluation of exploration opportunities continuing
PEL 82 Walvis Basin, offshore 11,444 / 560 Chevron 4.9((1) Evaluation of exploration opportunities continuing with Chevron considering
) (Exploration and appraisal carry) drilling of exploration well in 2026/2027
PEL 103 Waterberg Basin, onshore 5,788 / 765 Apprentice Investments 13.23((1)) Evaluation of exploration activity continuing
Uruguay
AREA OFF-1 Punta del Este Basin, offshore 14,557 / 5,830 Chevron 40 3D seismic acquisition ongoing
(direct interest) (Sintana's interest is carried)
AREA OFF-3 Pelotas Basin, offshore 13,252 / 13,252 Sintana 100 Evaluation of exploration opportunities continuing, and current partnering
(via Uruguayan subsidiary entity)
(direct interest) process
Table B: Overview of assets that, as at the date of this Annual Report, are
subject to announced transactions yet to be completed, but which the Company
expects are likely to be added to its portfolio.
Licence Location Licence Area Gross / net (km(2))((2)) Operator Sintana Indirect Interest (%) Status
Angola
KON-16((2)) Kwanza Basin, onshore 1,000 / 500 Corcel 5.0((1)) Heads of Agreement signed; formal documentation expected to be signed around
end April 2026; completion pending regulatory approvals; seismic acquisition
completed, interpretation ongoing
Namibia
PEL 37((3)) Walvis Basin, offshore 17,295 / 5,188 Paragon c.30((1)) Letter of Intent signed; due diligence ongoing
Table C: Overview of assets that are considered legacy assets and which the
Company is presently seeking to monetise and/or exit.
Licence Location Licence Area Operator Sintana Interest Status
Gross / net (km(2))((2))
(%)
Colombia
VMM-37 Middle Magdalena Valley Basin, onshore Colombia 175 / 175 Patriot N.A Settlement agreement with Exxon reached pursuant to which Sintana will be paid
$9m gross in two instalments, and will exit the asset - completion expected
during 2026
The Bahamas
Bain, Cooper, Donaldson and Eneas((4)) The Bahamas, Offshore 12,600 / 12,600 Sintana 100 Renewal application for licences pending; Sintana investigating monetisation
(via Bahamian subsidiary entity) options, including legal remedies
Notes to above Tables A, B and C:
1. Indirect interest - licence interest is indirectly held by
the Company through corporate ownership of subsidiaries
2. The Company has entered into a Heads of Agreement with
Corcel for this transaction, with formal documentation expected to be signed
in Q2 2026, and with the transaction is subject to certain conditions
precedent, including regulatory approval. The Company expects that the
transaction will complete in Q3 or Q4 2026.
3. The Company has entered into a Letter of Intent providing
for an exclusivity period in relation to a potential acquisition of a c.30%
interest in PEL 37 - due diligence is currently ongoing; the Company expects
that, subject to due diligence, it will enter into a definitive agreement in
H1 2026, subject to certain conditions precedents, including regulatory
approval. The Company expects that the transaction will complete in Q3 or Q4
2026.
4. Four individual licences offshore The Bahamas, commercially
cojoined under the terms of the licences.
F. Board and Senior Management
The Board comprises the following persons:
Keith Dean Spickelmier (age 64), Non-Executive Chairman
Mr. Spickelmier was the Co-founder/Executive Chairman of the Company but he
transitioned to a non-executive role as of 16 December 2025. Mr. Spickelmier
is also Co-founder of Blockmetrix LLC, a Bitcoin mining company and
Co‑founder/Chairman of Discovery Energy Corp. a company whose business is
exploring in the Cooper Basin, South Australia. He was the Co-founder of
Mallard Cablevision, and the Founder/ Chairman of Westside Energy Corporation.
Mr. Spickelmier was also the Co-founder of JK Acquisition, a special purpose
acquisition company which traded on the American Stock exchange in 2006. Mr.
Spickelmier serves on the board of directors of Burgundy Xploration, LLC, an
oil and gas company with assets on the North Slope of Alaska, and is the
Chairman of Helix Exploration PLC, an AIM listed industrial gas exploration
company with assets in Montana. He holds a B.A. from the University of
Nebraska at Kearney and a J.D. from the University of Houston. He previously
practiced law from 1986 to 2000.
Arjun Robert Bose (age 52), Chief Executive Officer and Executive Director
Mr. Bose has more than 28 years of relevant experience. He is the Chief
Executive Officer and a member of the Board. Additionally, Mr. Bose is the
Managing Member of Charlestown Energy Partners, a private investment vehicle
associated with a New York-based family office that has been making
investments globally in the upstream business since 2016. Mr. Bose is also
the Executive Chairman of New Zealand Energy, Corp., a company providing gas,
gas storage and liquids solutions to support the domestic energy economy in
New Zealand, and is also on the Board of Managers of Black Bayou Energy Hub,
a private company developing a gas storage platform on the Gulf Coast of the
U.S. Prior to joining Charlestown, Mr. Bose spent 17 years in the Investment
Banking Group at Scotiabank, latterly as Managing Director and Industry Head,
Global Power & Utilities. Mr Bose holds a BA (Honours) in Economics from
Queen's University, Kingston, Ontario.
Eytan Michael Uliel (age 54), President and Executive Director
Mr. Uliel has more than 27 years of relevant experience. He was the Chief
Executive Officer of Challenger Energy Group plc from May 2021 until the
Challenger Group was acquired by the Sintana Group in December 2025, having
previously served as the Challenger Group's Commercial Director since 2014.
Mr. Uliel is a finance executive with a specific background in the oil and gas
industry. He has significant oil and gas industry experience in mergers and
acquisitions, capital raisings, general corporate advisory work, public market
takeovers and transactions, financial controls and audit, private treaty
acquisitions and farm- in / farmout transactions. Mr. Uliel has also held
non-executive roles in various ASX and SGX listed companies and various
substantial private companies and funds. He holds a combined B.A. / LLB degree
from the University of New South Wales, Sydney, Australia.
Iain Charles McKendrick (age 61), Senior Independent Non-Executive Director
Mr. McKendrick has over 30 years of relevant experience. He was the
non-executive Chairman of Challenger Energy Group plc from March 2023 until
Challenger was acquired by the Company in December 2025. Mr. McKendrick has
previously held executive and non-executive Board positions across several
listed companies. He was previously with NEO Energy, was Chief Executive
Officer of Ithaca Energy, was Executive Chairman of Iona Energy, and spent
several years with TotalEnergies, including acting as Commercial Manager of
Colombia.
Douglas (Doug) Glenn Manner (age 70), Non-Executive Director
Mr. Manner is a Founder of the Company, prior to which he acted as Chief
Executive Officer and Director of Westside Energy Corporation, Senior Vice
President and Chief Operating Officer of Kosmos Energy, LLC. (a private energy
company exploring for oil and gas in the offshore regions of West Africa), and
as President and Chief Operating Officer of White Stone Energy, a Houston
based oil and gas advisory firm. He is the Former COO of Gulf Canada
Resources, managing operations in 20 countries with 150,000 boepd and the
Former CEO of Bellwether Resources, (South America exploration). Mr. Manner
previously held senior executive positions with Ryder Scott Petroleum
Engineers and Amoco Production Company. Mr. Manner has served on the boards of
directors for Gulf Midstream Services, ROC Oil Blizzard Energy, Rio Vista
Energy, Resolute Energy, Cordero Energy, Zenas Energy and Petrovera Energy
Company. Mr. Manner holds a Bachelor's of Science degree in mechanical
engineering from Rice University and is a professional engineer certified by
the Texas Board of Professional Engineers and the Association of Professional
Engineers, Geologists and Geophysicists of Alberta. He is a member of the
Society of Petroleum Engineers and a previous member of the Petroleum Society
of Canada.
Knowledge Raymond Katti (age 52), Non-Executive Director
Mr. Katti resides in Namibia and is a recognised pioneer in the Namibian oil
and gas sector. He founded and served as Chief Executive Officer of Kunene
Energy (Pty) Ltd and was a founding shareholder and director of UNX Energy,
which was subsequently acquired by HRT Participações em Petróleo S.A.
Following the acquisition, he held the position of Business Development
Manager for HRT in Namibia. In addition to his extensive experience in the
upstream oil and gas industry, Mr. Katti serves as a director of Kombat Copper
Mine and of Intaka Technologies, a healthcare technology company. Mr. Katti
brings deep knowledge of Namibia's oil, gas, and mining sectors, as well as
strong familiarity with the country's business environment, regulatory
framework, and local practices, to the Board and management team. He holds a
Bachelor of Commerce degree in Accounting, Economics, and Auditing from the
University of Namibia and completed his professional articles with
PricewaterhouseCoopers (PwC).
In addition to the Executive Directors named above (Mr. Bose and Mr. Uliel),
the Company's senior management team comprises the following:
Jonathan Paul Gilmore (age 48), Chief Financial Officer and co-Company
Secretary
Mr. Gilmore is the Chief Financial Officer and co-Company Secretary. He has
extensive international, technical, corporate, and commercial finance
experience within the natural resources sector. Mr. Gilmore's prior experience
includes five years in audit managerial roles with EY London, focusing on
mining and energy clients; internal audit and financial controller roles for
mining and processing operations at Glencore's Kamoto Copper Company in the
DRC; and serving as a Commercial Business Partner at Cushman & Wakefield
in the UK. He joined Columbus Energy Resources Plc as Group Financial
Controller in September 2018, ahead of its merger with Challenger Energy in
2020. Mr. Gilmore holds a Bachelor of Commerce (Accounting) from the
University of Western Sydney and is a Fellow of the Institute of Chartered
Accountants Australia and New Zealand.
Sean Austin (age 73), Financial Controller, co-Company Secretary &
Treasurer
Mr. Austin has over 40 years of both domestic and international industry
experience focussed on finance, accounting and administration. Working with
Mr. Spickelmier, he is also currently the Controller for Discovery Energy
Corp., an Australia focussed exploration and production company. Prior to
joining the Company, he worked with Mr. Manner as a Director, VP and Chief
Financial Officer for Irvine Energy USA, a wholly owned subsidiary of a UK
public company. At Westside Energy, working with Mr. Spickelmier and Mr.
Manner, he was a VP and Chief Financial Officer, Corporate Secretary and
Treasurer. For more than two decades, Mr. Austin was employed by HESS and held
senior management positions in New York, London and Houston. From 1995 to
1999, he was Vice President and Corporate Controller and subsequently was Vice
President - Worldwide Exploration & Production Finance and Administration.
He holds a BBA in Accounting from the University of Notre Dame and a MBA from
the Amos Tuck School, Dartmouth College.
Randolph (Randy) Hiscock (age 65), Technical Lead & Uruguay Managing
Director
Mr. Hiscock has extensive global energy expertise with specific focus on Latin
America and the Caribbean. Mr. Hiscock has a proven track record of
discovering hydrocarbons, deal/acreage delivery and offshore exploration
management in Guyana, Brazil and Atlantic Canada. He was Shell's General
Manager for the Americas New Venture and Business Development for
approximately 10 years based in Houston. Before Shell, he was EnCana's South
American VP for Exploration. Mr. Hiscock has a Master of Science (Geology) and
an MBA in International Oil &Gas Studies from Memorial University in
Canada and is a member of AAPG and PESGB.
Asset Profiles
Following are summary profiles for each asset in Sintana's portfolio.
Key developments during 2025 in relation to individual assets are discussed in
the Management Discussion & Analysis of the Company's 2025 Financial
Statements.
PEL 83
Asset PEL 83 (Mopane)
Location Namibia offshore, Orange Basin
Size 9,954 km(2)
Ownership TotalEnergies - 40%; Galp - 40%; Custos - 10% (Sintana 49% of Custos); Namcor
- 10%
Operator TotalEnergies((1))
Carry Custos carried through FID and development resulting in no expected capital
exposure
Resource Current Galp 3C reserve c. 1.3 billion barrels (gross); block potential stated
by Galp to be up to 10 billion barrels resource potential((2))
Key Attributes · Extensive Seismic, 5 exploration wells
· Significant Light Oil Columns of High-Quality Reservoir Sands
· Production testing at Mopane-1X achieved maximum infrastructure
constrained flow rates (c.14,000 boepd)
Stage Appraisal, FID target 2028; first oil target 2032
Next Steps 3 new wells 2026 & 2027
Source: Galp Energia News Releases, Wood Mackenzie's 2025 Annual Exploration
Survey
1. TotalEnergies is operator elect, subject to completion of
Galp's announced farm-out of a 40% interest and operatorship to TotalEnergies-
transaction subject to regulatory approvals in Namibia
2. Source: Galp announcements and Galp CPR
PEL 87
Asset PEL 87
Location Namibia offshore, Orange Basin
Size 10,947 km(2)
Ownership Pancontinental - 75%; Custos - 15% (Sintana 49% of Custos); Namcor - 10%
Operator Pancontinental
Carry Custos carried through FID
Key Attributes · Contains one of the largest hydrocarbon complexes in Africa,
comparable in setting to Venus and Mopane, with multiple stacked, high-quality
reservoir targets
· In mid-2023 the operator completed a 6,593 km2 3D seismic survey
at an estimated cost of US$35 million- confirmed a large (2,400 km2)
Aptian/Albian age above the Barremian‑Aptian source rock (Kudu Shale) which
contains several reservoir sands with thickness generally between 200 to 300m
· Current focus is on two primary exploration leads within the
Saturn Complex
Stage Exploration
Next Steps Process is underway by operator to renew the licence and to secure a farm-in
partner to fund exploration drilling - multiple prospects/leads will be
targeted by a single well
PEL 90
Asset PEL 90
Location Namibia offshore, Orange Basin
Size 5,433 km(2)
Ownership Chevron - 80%; Trago - 10% (Sintana 49% of Trago); Namcor - 10%
Operator Chevron
Carry None
Key Attributes · Located next to the Venus Superfan, Sub-Saharan Africa's largest
oil discovery
· Chevron-led seismic and drilling programs provide valuable
regional data and technical de‑risking
· Kopana-1X well reached its target depth (TD) in mid-January 2025;
well did not encounter commercial hydrocarbons (Trago was carried through this
well)
Stage Exploration
Next Steps Chevron has announced its intention to proceed with planning and drilling
operations associated with the Nabba-1X well expected to be drilled in Q4 2026
(Sintana will not be carried for future exploration drilling on this block,
but will be carried for a subsequent appraisal drilling)
PEL 79
Asset PEL 79
Location Namibia offshore, Orange Basin
Size 13,829 km(2)
Ownership Namcor - 67%; Giraffe - 33% (Sintana - 16.2% through 49% of Giraffe + an
option to increase its Giraffe ownership to 67%)
Operator Namcor
Carry Yes
Key Attributes · PEL 79 is located east of PEL 3, operated by BW Energy, home to
the Kudu Gas Field - potential for the extension of the Kudu trend into this
block
· Work to date included 4,760 km(2) of 2D seismic; 1,137 km(2) of
3D seismic; and 1 well with gas shows from Kudu source rock
· Prior analysis identified 19 prospects and leads, including the
drill-ready Meerkat and Sitatunga, which could hold substantial un-risked oil
and gas volumes and can be evaluated with a single well
Stage Exploration
Next Steps Licence extension July 2026; define commercial strategy
PEL 82
Asset PEL 82
Location Namibia offshore, Walvis Basin
Size 11,464 km(2)
Ownership Chevron - 80%; Namcor - 10%; Custos - 10% (Sintana - 4.9% through 49% of
Custos)
Operator Chevron
Carry Custos is carried for the upcoming exploration well
Key Attributes · PEL 82 is considered one of the most technically advanced
offshore opportunities in Namibia outside the Orange Basin
· 3D seismic coverage (~7,920 km(2)) spans 70% of the total licence
area (11,464 km(2))
· The Wingat-1 well (2013) confirmed regional extension and active
petroleum systems in the Walvis Basin, recovering 38-41 degree API oil to
surface
Stage Exploration
Next Steps Chevron assessing potential drill of a "basin opening" well, likely in the
next 12 months
PEL 37
Asset PEL 37
Location Namibia offshore, Walvis Basin
Size 17,295 km(2)
Ownership Paragon - 100%; Sintana has entered into a Letter of Intent which provides for
a period of exclusivity to diligence potential investment for a 30% indirect
interest in PEL 37 in the Walvis Basin((1))
Operator Paragon
Carry None
Key Attributes · Relatively shallow water (100 - 1500m) with identified prospects
at water depths between 300 and 600 m
· High-impact opportunity with multiple large fans directly
overlying a proven, mature oil‑prone Aptian source rock
· Provides additional optionality associated with upcoming activity
on PEL 82 where Chevron holds 80% and operatorship
Stage Exploration
Next Steps Due diligence and investment decision
1. LOI entered into for exclusivity on potential investment
for a 30% indirect interest in PEL 37, transaction pending DD and formal
documentation - expected 1H 2026, with completion thereafter subject to
conditions precedent, including regulatory approvals - expected in Q4 2026
PEL 103
Asset PEL 103
Location Namibia onshore, Waterberg Basin
Size 5,788 km(2)
Ownership Apprentice - 73%; Custos - 27% (Sintana - 13.2% though 49% of Custos)((1))
Operator Apprentice
Carry Yes
Key Attributes · The Waterberg basin shares similarities with ReconAfrica's
Kavango Basin acreage, as confirmed by Recon's initial Strat Test well (6-2)
· PEL 103 is ~55 km southwest of ReconAfrica and contains Permian
sediments likely holding similar hydrocarbons
· Only a small portion of the Basin has been drilled; more untested
sub-basins likely exist
· The Naingopo-11-1 well, drilled to assess the Damara Fold Belt's
potential, revealed oil indications, confirming an active petroleum system
Stage Exploration
Next Steps Licence renewal((1)); exploration work
1. PEL 103 initial exploration period ended 8 November 2025,
renewal has been verbally approved but awaiting signature
Sources: (1) Netherland, Sewell & Associates, Inc. and ReconAfrica
Presentations
AREA OFF-1
Asset AREA OFF-1
Location Uruguay offshore, Punte Del Este Basin
· Distance offshore: 100 - 150 kms
· Water depth: 50 - 1,000 m
Size 14,557 km(2)
Ownership Chevron - 60%; Custos - 40%
Operator Chevron
Carry Sintana carried for cost of 3D seismic and 50% of cost of 1st well (if
drilled)
Resource · ~1.2 bnboe Gross Prospective (mean)
· Upside ~2.8 bnboe (3U)
· Multiple prospects
Key Attributes · Wells: Lobo and Gaviotin (1970's)
· 2D seismic: ~5,000 kms, 2,075 kms reprocessed by Sintana in 2023
· 3D seismic: None (Chevron farm-in enable accelerated 3D)
Stage Exploration
Next Steps 3D seismic acquisition underway; targeting well decision 2028
AREA OFF-3
Asset AREA OFF-3
Location Uruguay offshore, Pelotas
· Distance offshore: 75 - 150 kms
· Water depth: 25 - 1,000 m
Size 13,252 km(2)
Ownership Sintana - 100%
Operator Sintana
Carry None
Resource · ~0.4 bnboe Gross Prospective (mean)
· Upside ~0.9 bnboe (3U)
· Multiple prospects, exploration upside
Key Attributes · Wells: None on block
· 2D seismic: ~4,000 kms, 2,075 kms reprocessed by Sintana in 2023
· 3D seismic: 1,250 km2 (~40% block coverage (legacy PGS 2012,
reprocessed in 2025)
· Strategic location, adjacent to Shell's AREA OFF-2, with
overlapping common prospect (Amalia)
· Adjacent play fairway and depositional setting analogous to the
recent) Brazil ANP bid blocks acquired by Petrobras, Chevron, Shell and CNOOC
Stage Exploration
Next Steps Farm out process; additional technical work
KON-16
Asset KON-16
Location Angola onshore, Kwanza Basin
Size 1,000 km(2)
Ownership Corcel - 95%; Sintana - 5%((1))
Operator Corcel
Carry None; Sintana has future royalty interest in addition to equity
Key Attributes · The Kwanza Basin is under-explored; first discovery in 1955 with
peak drilling in 1960's/70's, most recent exploration well was drilled in 1982
· 6 modern 2D Seismic lines (2010 TGS) and 1 exploration well
drilled in 1960 (oil and gas shows)
· KON-16 offers multiple exploration prospects, including a large
multi-target play with formations similar to the 2012 Cobalt Cameia discovery
offshore Angola
· Other primary targets match the Tuenza well reservoirs; shallower
secondary targets are also productive elsewhere in the basin
Stage Exploration; Corcel 2D seismic completed Q1 26
Next Steps Corcel seeking to farm-down to fund a work program which will include the
drilling of one exploration well
1. Head of terms entered into for acquisition of interest in
Angola asset, transaction pending formal documentation - expected around end
April 2026, with completion thereafter subject to conditions precedent
including regulatory approvals - expected Q4 2026
Environmental, Social and Governance
A. Environmental & Social Responsibility
Sintana operates its assets under stringent regulatory frameworks across all
jurisdictions where hydrocarbon exploration and development activities are
conducted. These regulations encompass all aspects of health, safety,
environment and security ("HSE&S"). As a minimum standard, the Company
complies fully with all applicable laws and regulations and where the Company
has adopted more rigorous internal codes of practice, these higher standards
prevail.
To oversee and support these commitments, the Company has established a
Technical & HS&E Committee, which ensures that policies and practices
remain robust and aligned with international best practice. The Company
maintains robust HSE&S policies, procedures and management systems
appropriate to the current and future stages of development of its relevant
interests, including in particular in relation to those where a member of the
Company is the operator. These systems are subject to ongoing review to ensure
relevance, effectiveness and alignment with international best practice. The
Company takes pride in its strong HSE&S track record.
The Company is committed to providing a safe, healthy and secure working
environment for employees, contractors, consultants, service providers and
visitors and aims to be an employer and partner of choice, contributing
positively to the communities and nations where it operates. The Company
acknowledges its duty of care to employees, contractors, suppliers and the
communities in which it operates, and understands that its licence to operate
depends on building trust and partnerships with all stakeholders, including
local communities, partners and regulators / Governments. Business is
conducted with integrity, transparency and in accordance with the highest
ethical standards. Professional development is actively supported, and the
Company fosters a respectful and collaborative working environment.
The Company recognises the environmental impact of its activities and is
committed to measuring, managing and mitigating that impact wherever possible.
Environmental responsibility remains a core priority and the Company is
committed to minimising its ecological footprint and aims for zero
environmental incidents.
B. Corporate Governance
Sintana operates in the energy sector, which is governed by stringent laws and
regulations imposed by host Governments and international regulators, as well
as often being the subject of intense public scrutiny. Additionally, as
Sintana's shares are traded on the Toronto Stock Exchange Ventures market, the
AIM Market of the London Stock Exchange, and the OTCQX Ventures Market in the
United States, the Company is subject to various additional rules and
regulations associated with being a publicly traded entity. Consequently, the
Board is dedicated to upholding the highest standards of corporate governance
at all times.
This includes complying with the corporate governance requirements of the
TSX-V and applicable securities laws and policies in Canada, and complying,
where it is able to, with the ten principles set out in the corporate
governance guidelines for smaller quoted companies published by the QCA Code.
In particular, the Directors are responsible for overseeing and embedding
effective internal controls and promoting a culture of positive business and
operational risk management including to ensure that proper accounting records
are maintained, and that the financial and other information upon which
business decisions are made, and which is issued for publication, is reliable
and that the assets of the Company are safeguarded.
The Board formally meets at least twice per annum to review performance.
There were five formal meetings of the Board of Sintana in the period 1
January 2025 to 31 December 2025. In addition, there were a number of other
ad-hoc gatherings of the Board through the period.
The Board has established several committees, being the audit and risk
committee, the remuneration committee, the nomination committee and the
technical and HSE committee. Each committee has formally delegated duties and
responsibilities, as described below.
Audit and Risk Committee
The audit and risk committee has responsibility for reviewing and challenging
the process for identification of risks, risk management frameworks and
monitoring the integrity of the Company's financial statements, including
monitoring the preparation of the annual and interim accounts, reports and any
other formal announcement relating to its financial performance or prospects.
The audit and risk committee has the responsibility for reviewing significant
financial reporting issues, reviewing the effectiveness of the Company's
internal control and risk management systems, compliance and fraud systems,
monitoring the effectiveness of the internal audit function (if established)
and overseeing the relationship with the external auditors (including advising
on their appointment, agreeing the scope of the audit and reviewing the audit
findings). The audit and risk committee advises the Board independently of
executive directors and external auditors when it considers the Company's
corporate reporting. The audit and risk committee also has unrestricted access
to the Company's external auditors.
The audit and risk committee is required to have at least three members and
include members who, have between them, relevant financial experience and an
overall understanding of management practices including risk management
activities, both generally and in the Group's relevant industry.
The audit and risk committee currently comprises two non-executive directors
and one executive director, Mr. Spickelmier, Mr. Uliel and Mr. McKendrick, and
is chaired by Mr. Spickelmier. The audit and risk committee meets at least
four times a year at appropriate times in the reporting and audit cycle, and
otherwise as required.
Remuneration Committee
The remuneration committee has responsibility for determining and agreeing
with the Board the policy for the remuneration of the Chairman, the Executive
Directors and other designated senior executives. Within the terms of the
remuneration policy in accordance with the principles and provisions of the
QCA Code framework, the committee determines the total individual remuneration
schemes that motivate management and promote the long-term growth of
shareholder value with packages of such persons including, where appropriate,
bonuses, incentive payments and Share Options, RSUs or other share awards. The
remuneration of Non-Executive Directors shall be a matter for the Chairman and
the Executive Directors and shall be within the limits set in the Articles. No
Director is involved in any decision as to his or her own remuneration.
The remuneration committee currently comprises two non-executive directors,
Mr. McKendrick and Mr. Manner, and is chaired by Mr. McKendrick. The
remuneration committee meets at least twice a year and otherwise when
required.
Nomination Committee
The nomination committee has responsibility for reviewing the structure, size
and composition (including the skills, knowledge, experience and diversity) of
the Board and giving consideration to succession planning. It is responsible
for: (i) identifying and nominating, for the approval of the Board, candidates
for vacancies on the Board when they arise; (ii) the structure and
composition of the Board committee; and (iii) for monitoring the leadership
needs of the organisation, both executive and non-executive to ensure the
continued ability of the organisation to compete effectively in the market. It
will keep up-to-date and informed about strategic issues and commercial
changes affecting the Company.
The nomination committee currently comprise two non-executive directors and
one executive director, Mr. McKendrick, Mr. Manner and Mr. Bose, and is
chaired by Mr. McKendrick. The nomination committee meets at least once a year
and otherwise as required.
Technical & HSE Committee
The Technical & HSE committee will have responsibility for continual
monitoring of the principal technical risks faced by the Company, technical
aspects of the Company's portfolio of assets, technical evaluation of
potential new assets and technical work undertaken on existing assets, and
monitoring of the Company's HSE performance, including incidents and
reporting. The Technical & HSE committee is also responsible for
recommending technical risk management and HSE policies to the Board.
The Technical & HSE Committee currently comprises one non-executive
director, Mr. Manner, and two executive directors Mr. Bose and Mr. Uliel, and
is chaired by Mr. Manner. In addition, the Technical and HSE committee is
authorised to seek information from any officer or employee, and to invite
Company technical personnel and external advisors to meetings. The Technical
& HSE committee meets required.
C. Share Dealing Code and Insider Trading and Blackout Policy
The Company has adopted a share dealing code which is compliant with Article
19 of MAR and Rule 21 of the AIM Rules. The share dealing code applies to any
person discharging management responsibility, including the Directors and
senior management and any closely associated persons and applicable employees.
The Company also has an adopted insider trading and blackout policy which
ensures compliance with Canadian securities laws and requirements under the
TSX-V. In the event of conflict of both policies, the policy that imposes
stricter restrictions prevails.
The share dealing code, together with the insider trading and blackout policy,
impose restrictions beyond those that are imposed by law (including by the
FSMA, MAR and other relevant legislation) and its purpose is to ensure that
persons discharging managerial responsibility and persons connected with them
do not abuse, and do not place themselves under suspicion of abusing,
price-sensitive information that they may have or be thought to have. The
share dealing code sets out a notification procedure which is required to be
followed prior to any dealing in the Company's securities.
D. Dividend Policy
The Company does not currently intend to pay a dividend to its shareholders
for the foreseeable future (and has not previously paid any dividends).
Payment of future dividends, if any, will be at the discretion of the Board.
E. Internal Control
The Directors acknowledge their responsibility for Sintana's system of
internal control and for reviewing its effectiveness. The system of internal
control is designed to manage the risk of failure to achieve the Company's
strategic objectives. It cannot totally eliminate the risk of failure but will
provide reasonable, although not absolute, assurance against material
misstatement or loss.
F. Anti-bribery and Corruption ('ABC')
Sintana enforces a zero-tolerance policy for bribery, corruption, or unethical
conduct in our business. Our policies mandate compliance with applicable
anti-bribery and corruption ("ABC") laws in the jurisdictions where we
operate. We have implemented a documented system of ABC policies and
procedures that provide a consistent framework across the Company and all its
operations, ensuring our employees are aware of potential threats and
maintaining appropriate governance of ABC matters. In 2025, all employees were
required to attend mandatory ABC training.
G. Anti-Money Laundering ('AML')
Sintana is acutely aware of the risks posed by money laundering and terrorist
financing. These criminal activities not only threaten society but also impact
the Company, its partners, shareholders, and staff. The Company exercises the
highest level of vigilance in all its operations to combat these threats. This
vigilance also applies to third-party associates involved with the Company.
Annual AML training is mandatory for all Sintana staff.
Independent Auditor's Report
To the Shareholders of Sintana Energy Inc.:
Opinion
We have audited the consolidated financial statements of Sintana Energy Inc.
and its subsidiaries (the "Company"), which comprise the consolidated
statements of financial position as at December 31, 2025 and December 31,
2024, and the consolidated statements of loss and comprehensive loss, cash
flows and changes in shareholders' equity for the years then ended, and notes
to the consolidated financial statements, including material accounting policy
information.
In our opinion, the accompanying consolidated financial statements present
fairly, in all material respects, the consolidated financial position of the
Company as at December 31, 2025 and December 31, 2024, and its consolidated
financial performance and its consolidated cash flows for the years then ended
in accordance with IFRS(®) Accounting Standards as issued by the
International Accounting Standards Board.
Basis for Opinion
We conducted our audits in accordance with Canadian generally accepted
auditing standards. Our responsibilities under those standards are further
described in the Auditor's Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Company
in accordance with the ethical requirements that are relevant to our audits of
the consolidated financial statements in Canada, and we have fulfilled our
other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the consolidated financial statements, which
indicates that the Company incurred a net loss and had negative cash flows
from operations during the year ended December 31, 2025 and, as of that date,
the Company had an accumulated deficit. As stated in Note 1, these events or
conditions, along with other matters as set forth in Note 1, indicate that a
material uncertainty exists that may cast significant doubt on the Company's
ability to continue as a going concern. Our opinion is not modified in respect
of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the consolidated financial statements of
the current period. These matters were addressed in the context of our audit
of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Acquisition of Challenger Energy Group Plc ("Challenger")
Key Audit Matter Description
We refer to Note 3.1 of the financial statements. During 2025, the Company
completed a transaction with Challenger involving the acquisition of all the
outstanding Challenger shares in exchange for shares of the Company. The
Company concluded that the transaction did not meet the definition of a
business under IFRS and therefore accounted for the transaction as an asset
acquisition rather than a business combination.
Significant auditor judgment was required to evaluate the Company's
determination that the transaction did not meet the definition of a business
under IFRS. In addition, specialized skill and knowledge was required in
evaluating the relevant IFRS guidance to assess the concentration of fair
value in the assets acquired. Lastly, judgment was required in allocating the
total consideration transferred to the identifiable assets acquired based on
relative fair values.
Audit Response
We responded to this matter by performing audit procedures over the allocation
of purchase consideration and accounting for the acquisition of Challenger.
Our audit work in relation to this included, but was not restricted to, the
following:
· We analyzed the signed purchase agreement to obtain an
understanding of the key terms and conditions and to identify the necessary
accounting considerations.
· We involved internal and external valuation professionals
with specialized skills and knowledge, who assisted in assessing:
· the appropriateness of the valuation methodologies
utilized;
· the reasonableness of certain valuation assumptions
applied;
· the mathematical accuracy of the valuation calculations
utilized in fair value analysis; and,
· the reasonableness of the discount rates applied in
determining the fair value of assets.
Other Information
Management is responsible for the other information. The other information
comprises Management's Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other
information and we do not express any form of assurance conclusion thereon.
In connection with our audits of the consolidated financial statements, our
responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audits or otherwise
appears to be materially misstated. We obtained Management's Discussion and
Analysis prior to the date of this auditor's report. If, based on the work we
have performed on this other information, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the
Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the
consolidated financial statements in accordance with IFRS Accounting Standards
as issued by the International Accounting Standards Board, and for such
internal control as management determines is necessary to enable the
preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible
for assessing the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to
liquidate the Company or to cease operations, or has no realistic alternative
but to do so.
Those charged with governance are responsible for overseeing the Company's
financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial
Statements
Our objectives are to obtain reasonable assurance about whether the
consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor's report
that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with Canadian
generally accepted auditing standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing
standards, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
· Identify and assess the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal
control.
· Obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control.
· Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by
management.
· Conclude on the appropriateness of management's use of the going
concern basis of accounting and, based on the audit evidence obtained, whether
a material uncertainty exists related to events or conditions that may cast
significant doubt on the Company's ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw
attention in our auditor's report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor's report. However, future events or conditions
may cause the Company to cease to continue as a going concern.
· Evaluate the overall presentation, structure and content of the
consolidated financial statements, including the disclosures, and whether the
consolidated financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
· Plan and perform the group audit to obtain sufficient appropriate
audit evidence regarding the financial information of the entities or business
units within the Company as a basis for forming an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and
review of the audit work performed for the purposes of the group audit. We
remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audits and significant audit
findings, including any significant deficiencies in internal control that we
identify during our audits.
We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the consolidated
financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor's report unless law or
regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated in
our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor's
report is Scott Laluk.
MNP LLP
Chartered Professional Accountants
Calgary, Alberta
April 29, 2026
Corporate Directory
Directors
Keith Spickelmier
Non-Executive Chairman
Robert Bose
CEO & Executive Director
Eytan Uliel
President & Executive Director
Iain McKendrick
Non-Executive Director
Douglas Manner
Non-Executive Director
Knowledge Katti
Non-Executive Director
Co-Company Secretaries
Jonathan Gilmore
Chief Financial Officer
Sean Austin
Financial Controller & Treasurer
Registered Office
3300, 421
7th Avenue S. W.
Calgary, Alberta
Canada T2P 4K9
Principal Office
Office 4.01
88 Kingsway
London, United Kingdom, WC2B 6AA
Company Website
www.sintanaenergy.com
Listings
Exchange: TSX Venture
Trading Symbol: SEI
Cusip Number: 82938H
Exchange: OTCQX
Trading Symbol: SEUSF
Cusip Number: 82938H
Fiscal Year End: Dec 31
Exchange: AIM
Trading Symbol: SEI
ISIN Number: CA82938H1073
Auditors
MNP LLP
2000, 112 - 4th Avenue SW
Calgary, Alberta, Canada, T2P 0H3
Registrar and Transfer Agent
Computershare Trust Company of Canada
320 Bay Street, 14th Floor
Toronto, Ontario, Canada, M5H 4A6
UK Depository
Computershare Investor Services PLC
The Pavilions, Bridgwater Road
Bristol, United Kingdom, BS13 8AE
Nominated Advisor
Zeus Capital Limited
82 King Street
Manchester, United Kingdom, M2 4WQ
Canadian Legal Counsel
Fogler, Rubinoff LLP
Scotia Plaza
40 King Street West, Suite 2400
Toronto, Ontario, Canada, M5H 3Y2
UK Legal Counsel
Pinsent Masons LLP
30 Crown Place, Earl Street
London, United Kingdom, EC2A 4ES
Independent Auditor's Report
To the Shareholders of Sintana Energy Inc.:
Opinion
We have audited the consolidated financial statements of Sintana Energy Inc.
and its subsidiaries (the "Company"), which comprise the consolidated
statements of financial position as at December 31, 2025 and December 31,
2024, and the consolidated statements of loss and comprehensive loss, cash
flows and changes in shareholders' equity for the years then ended, and notes
to the consolidated financial statements, including material accounting policy
information.
In our opinion, the accompanying consolidated financial statements present
fairly, in all material respects, the consolidated financial position of the
Company as at December 31, 2025 and December 31, 2024, and its consolidated
financial performance and its consolidated cash flows for the years then ended
in accordance with IFRS(®) Accounting Standards as issued by the
International Accounting Standards Board.
Basis for opinion
We conducted our audits in accordance with Canadian generally accepted
auditing standards. Our responsibilities under those standards are further
described in the Auditor's Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Company
in accordance with the ethical requirements that are relevant to our audits of
the consolidated financial statements in Canada, and we have fulfilled our
other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1 in the consolidated financial statements, which
indicates that the Company incurred a net loss during the year ended December
31, 2025 and, as of that date, the Company had an accumulated deficit. As
stated in Note 1, these events or conditions, along with other matters as set
forth in Note 1, indicate that a material uncertainty exists that may cast
significant doubt on the Company's ability to continue as a going concern. Our
opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the consolidated financial statements of
the current period. These matters were addressed in the context of our audit
of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Except for the matter described in the Material Uncertainty Related to Going
Concern section, we have determined that there are no other key audit matters
to communicate in our report.
Other information
Management is responsible for the other information. The other information
comprises Management's Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other
information and we do not express any form of assurance conclusion thereon.
In connection with our audits of the consolidated financial statements, our
responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audits or otherwise
appears to be materially misstated. We obtained Management's Discussion and
Analysis prior to the date of this auditor's report. If, based on the work we
have performed on this other information, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the
consolidated financial statements
Management is responsible for the preparation and fair presentation of the
consolidated financial statements in accordance with IFRS Accounting Standards
as issued by the International Accounting Standards Board, and for such
internal control as management determines is necessary to enable the
preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible
for assessing the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to
liquidate the Company or to cease operations, or has no realistic alternative
but to do so.
Those charged with governance are responsible for overseeing the Company's
financial reporting process.
Auditor's responsibilities for the audit of the consolidated financial
statements
Our objectives are to obtain reasonable assurance about whether the
consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor's report
that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with Canadian
generally accepted auditing standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing
standards, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
· Identify and assess the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal
control.
· Obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control.
· Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by
management.
· Conclude on the appropriateness of management's use of the going
concern basis of accounting and, based on the audit evidence obtained, whether
a material uncertainty exists related to events or conditions that may cast
significant doubt on the Company's ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw
attention in our auditor's report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor's report. However, future events or conditions
may cause the Company to cease to continue as a going concern.
· Evaluate the overall presentation, structure and content of the
consolidated financial statements, including the disclosures, and whether the
consolidated financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
· Plan and perform the group audit to obtain sufficient appropriate
audit evidence regarding the financial information of the entities or business
units within the Company as a basis for forming an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and
review of the audit work performed for the purposes of the group audit. We
remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audits and significant audit
findings, including any significant deficiencies in internal control that we
identify during our audits.
We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the consolidated
financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor's report unless law or
regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated in
our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor's
report is Scott Laluk.
Calgary, Alberta
April 29, 2026
Chartered Professional Accountants
SINTANA ENERGY INC.
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2025 AND 2024
(EXPRESSED IN UNITED STATES DOLLARS, UNLESS OTHERWISE STATED)
AUDITED
Consolidated Statements of Financial Position
(Expressed in United States Dollars, Unless Otherwise Stated)
As at December 31, 2025 2024
ASSETS
Current assets
Cash and cash equivalents 10,315,705 12,591,728
Accounts receivable and other assets (note 7) 1,647,503 252,839
Restricted cash (note 8) 707,656 -
Total current assets 12,670,864 12,844,567
Non-current assets
Investment in joint venture (note 9) 9,692,658 9,070,018
Intangible assets (note 10) 39,288,794 -
Tangible assets (note 11) 41,374 -
Accounts receivable and other assets (note 7) 431,155 -
Total assets 62,124,845 21,914,585
SHAREHOLDERS' EQUITY AND LIABILITIES
Current liabilities
Accounts payable and accrued liabilities (notes 12 and 22) 4,259,512 157,049
Current income tax payable (note 21) 58,298 201,710
Deferred compensation (note 22) 604,939 954,939
Asset retirement obligation (note 13) 2,703,739 71,308
Total current liabilities 7,626,488 1,385,006
Non-current liabilities
Deferred income tax liability (note 21) 364,124 353,824
Total liabilities 7,990,612 1,738,830
Shareholders' equity 54,134,233 20,175,755
Total shareholders' equity and liabilities 62,124,845 21,914,585
The accompanying notes are an integral part of these consolidated financial
statements.
Nature of operations and going concern (note 1)
Subsequent events (note 25)
Approved on behalf of the Board:
(signed) (signed)
Robert Bose Eytan Uliel
Director Director
Consolidated Statements of Loss and Comprehensive Loss
(Expressed in United States Dollars, Unless Otherwise Stated)
Year ended
December 31,
2025 2024
Operating expenses
Exploration and evaluation expenditures (note 19) 106,479 2,091,088
Foreign exchange (gain) loss 104,699 (1,396,702)
General and administrative (notes 20 and 22) 10,258,135 7,361,576
Net loss before gain on accounts payable, interest income and joint venture (10,469,313) (8,055,962)
loss
Gain on accounts payable (note 12) - 45,856
Interest income 335,665 621,033
Joint venture loss (note 9) (31,360) (84,165)
Net loss before income taxes (10,165,008) (7,473,238)
Income tax expense
Current income tax expense (note 21) (65,257) (201,764)
Deferred income tax recovery (expense) (note 21) 6,369 8,600
Total income tax expense (58,888) (193,164)
Net loss for the year (10,223,896) (7,666,402)
Net loss attributable to:
Common shareholders (10,209,978) (7,687,955)
Non-controlling interest (13,918) 21,553
Net loss for the year (10,223,896) (7,666,402)
Other comprehensive loss
Items that will be reclassified subsequently to loss
Exchange difference on translating foreign operations 1,015,349 (2,615,700)
Other comprehensive loss for the year 1,015,349 (2,615,700)
Net comprehensive loss for the year (9,208,547) (10,282,102)
Net comprehensive loss attributable to:
Common shareholders (9,194,629) (10,303,655)
Non-controlling interest (13,918) 21,553
Net comprehensive loss for the year (9,208,547) (10,282,102)
Loss per share - basic and diluted (note 18) (0.03) (0.02)
Weighted average number of common shares
outstanding - basic and diluted (note 18) 381,503,896 360,996,016
The accompanying notes are an integral part of these consolidated financial
statements.
Consolidated Statements of Cash Flows
(Expressed in United States Dollars, Unless Otherwise Stated)
Year ended
December 31,
2025 2024
Operating activities
Net loss for the year (10,223,896) (7,666,402)
Adjustment for:
Joint venture loss (note 9) 31,360 84,165
Share-based compensation (notes 16 and 17) 5,978,695 4,040,963
Share-settled compensation 373,477 -
Gain on accounts payable (note 12) - (45,856)
Foreign exchange 104,699 (1,396,702)
Deferred income tax recovery (expense) (note 21) (6,369) (8,600)
Non-cash working capital items:
Accounts receivable and other assets (431,257) (34,289)
Accounts payable and accrued liabilities 1,010,954 (27,300)
Current income tax payable (143,411) 201,764
Deferred compensation (350,000) (1,000,811)
Net cash used in operating activities (3,655,748) (5,853,068)
Investing activities
Additional funding in joint venture (note 9) (219,589) (116,945)
Cash acquired from the acquisition of Challenger Energy Group Plc (note 3.1) 4,451,617 -
Acquisition costs from the acquisition of Challenger Energy Group Plc (note (3,745,627) -
3.1)
Cash acquired from the acquisition of Giraffe (note 3.2) - 111
Net cash used in investing activities 486,401 (116,834)
Financing activities
Options exercised (note 16) 403,481 109,621
Warrants exercised (note 15) - 15,879,240
Net cash provided by financing activities 403,481 15,988,861
Net change in cash and cash equivalents (2,765,866) 10,018,959
Effects of exchange rate changes on cash and cash equivalents 489,843 (667,436)
Cash and cash equivalents, beginning of year 12,591,728 3,240,205
Cash and cash equivalents, end of year 10,315,705 12,591,728
Cash 9,510,895 11,818,802
Cash equivalents 804,810 772,926
Total cash and cash equivalents 10,315,705 12,591,728
The accompanying notes are an integral part of these consolidated financial
statements.
Consolidated Statements of Changes in Shareholders' Equity
(Expressed in United States Dollars, Unless Otherwise Stated)
Number
of common Non- Other
shares Share Contributed controlling comprehensive
# capital Warrants surplus interest Deficit loss Total
Balance, December 31, 2023 282,360,668 93,603,754 3,519,636 6,987,695 - (92,761,277) (884,732) 10,465,076
Acquisition of non-controlling interest (note 3.2) - - - - (2,383) - - (2,383)
Warrants exercised (note 15) 87,176,546 19,333,984 (3,454,744) - - - - 15,879,240
Restricted shares vested and converted to common shares (note 17) 3,900,000 332,518 - (332,518) - - - -
Options exercised (note 16(v)) 1,146,907 207,037 - (97,416) - - - 109,621
Warrants expired - - (64,892) 64,892 - - - -
Share-based compensation - stock options (note 16(iv)) - - - 2,508,425 - - - 2,508,425
Share-based compensation - restricted shares (note 17) - - - 1,497,878 - - - 1,497,878
Net loss and comprehensive loss for the year - - - - 21,553 (7,687,955) (2,615,700) (10,282,102)
Balance, December 31, 2024 374,584,121 113,477,293 - 10,628,956 19,170 (100,449,232) (3,500,432) 20,175,755
Restricted shares vested and converted to common shares (note 17) 2,400,000 2,290,796 - (2,290,796) - - - -
Options exercised (note 16(v)) 4,128,090 811,895 - (408,414) - - - 403,481
Acquisition of Challenger Energy Group PLC (note 3.1) 126,731,086 35,950,774 - - - - - 35,950,774
Share settled compensation 2,512,943 837,827 - - - - - 837,827
Share-based compensation - stock options (note 16(iv)) - - - 2,136,605 - - - 2,136,605
Share-based compensation - restricted shares (note 17) - - - 3,838,338 - - - 3,838,338
Share options cancelled - - - (93,999) - 93,999 - -
Net loss and comprehensive loss for the year - - - - (13,918) (10,209,978) 1,015,349 (9,208,547)
Balance, December 31, 2025 510,356,240 153,368,585 - 13,810,690 5,252 (110,565,211) (2,485,083) 54,134,233
The accompanying notes are an integral part of these consolidated financial
statements.
Notes to Consolidated Financial Statements years ended December 31, 2025 and
2024
1. Nature of operations and going concern
Sintana Energy Inc. ("Sintana" or the "Company") is a Canadian crude oil and
natural gas ('hydrocarbons") exploration and development company listed on the
TSX Venture Exchange ("TSXV") under the symbol "SEI", and on the OTCQX market
in the United States under the symbol "SEUSF". Following the acquisition of
Challenger Energy Group Plc, which completed on December 16, 2025, the Company
was also admitted to trading on the London Stock Exchange's AIM market, with
its common shares admitted to trading on 23 December 2025. The registered
office of the Company is located at The Canadian Venture Building, 82 Richmond
Street East, Toronto, Ontario, Canada, M5C 1P1 and the corporate headquarters
and principal place of business of the Company is 88 Kingsway, London, WC2B
6AA, United Kingdom. Sintana is primarily engaged in hydrocarbons exploration
and development activities in Namibia, Uruguay and Angola and also holds
legacy interests in Colombia and the Bahamas that are non-core operations to
the Group.
The Company primarily focuses on the acquisition, exploration, and potential
development of crude oil and natural gas resources. The Company's primary
assets in Namibia are held through its 49% interest in all of the issued and
outstanding shares of Inter Oil (Pty) Ltd. ("Inter Oil") and through its 49%
interest in all of the issued and outstanding shares of Giraffe Energy
Investments (Pty) Ltd. ("Giraffe"). The Company's assets in Uruguay are held
through its 100% interest in Challenger Energy Resources Limited
("Challenger"). Inter Oil is a private Namibian company which indirectly holds
a strategic portfolio of offshore petroleum exploration licenses ("PEL")
including (i) a 15% (Sintana: 7.35%) limited carried interest in PEL 87; and
(ii) a 10% (Sintana: 4.9%) limited carried interests in each of PELs 82, 83
and 90. Inter Oil also holds a 30% (Sintana: 14.7%) interest in a subsidiary
which, in turn, holds a 90% interest in onshore PEL 103. Giraffe holds a 33%
Sintana 16.7%) limited carried interest in PEL 79 which governs Namibia
offshore blocks 2815 and 2915. principal investments in Uruguay are a 40%
interest in the OFF-1 licence and a 100% interest in the OFF-3 licence.
Sintana's portfolio of assets are an early stage of exploration and
development and thus do not generate revenues, Sintana raises financing for
its business activities. Sintana did not earn any operating income in 2025 and
2024. For the year ended December 31, 2025 the Company incurred a loss of
$10,223,896 (2024 - $7,666,402), had negative cash flows from operations of
$3,655,748 (2024 - $5,853,068), and had an accumulated deficit of $110,565,211
(2024 - $110,449,232). Sintana had working capital of $5,044,376 at December
31, 2025 (2024 - $11,459,561).
These consolidated financial statements have been prepared on a basis which
contemplates that the Company will continue in operation for the foreseeable
future and will be able to realize its assets and discharge its liabilities in
the normal course of business. Accordingly, they do not give effect to
adjustments that would be necessary should the Company be unable to continue
as a going concern. The Company's ability to continue as a going concern is
dependent upon obtaining additional financing as and when required and
eventually achieving profitable production. The certainty of funding for
future expenditures and availability of additional financing sources cannot be
assured at this time. These material uncertainties may cast significant doubt
on the Company's ability to continue as a going concern and, accordingly, the
ultimate use of accounting principles applicable to a going concern. These
consolidated financial statements do not reflect any adjustments to the
carrying values of assets and liabilities and the reported expenses
and statement of financial position classifications that would be necessary
should the going concern assumption be inappropriate.
It is noted that subsequent to the year end, on February 4, 2026, the Company
announced that its relevant subsidiaries had entered into an agreement with a
subsidiary of ExxonMobil to resolve the previously announced arbitration
relating to the VMM-37 block in Colombia's Middle Magdalena Basin. Under the
agreement, the Company agreed to conditionally assign its interests in VMM-37
in exchange for total cash consideration of $9 million, of which $3 million
has been received to date net of bank charges, with the remaining $6 million
payable upon receipt of governmental approvals and satisfaction of certain
contractual conditions. The Company is working with ExxonMobil to obtain the
required approvals and currently expects the balance to be received prior to
the end of 2026, although there can be no assurance that all conditions will
be satisfied. This subsequent event provides a material level of increased
liquidity to the Company which, in addition to the Company's existing cash
resources, supports the going concern assumption referred to above.
2. Material accounting policies and information
(a) Statement of compliance
These consolidated financial statements have been prepared in accordance with
IFRS(®) Accounting Standards as issued by the International Accounting
Standards Board ("IASB") and interpretations of the IFRS Interpretations
Committee. The Board of Directors approved these consolidated financial
statements on April 29, 2026.
(b) Functional and presentation currency
Following the acquisition of Challenger and its subsidiaries and the Company's
subsequent admission to AIM in the United Kingdom, Sintana Energy Inc. has
elected to change the presentation currency of its consolidated financial
statements from Canadian Dollars ("CAD") to United States Dollars ("USD"),
including comparative information for the year ended December 31, 2024.
The change in presentation currency was made as the expanded Company is
primarily invested in offshore assets along the Atlantic Margin, where the
majority of expected input costs are denominated in USD, and any future
revenues or proceeds from asset sales, farm-downs or production are likely to
be realized in USD. In addition, given the Company's listing on the TSXV,
OTCQX and AIM, USD was considered to be a more appropriate presentation
currency for the enlarged and diverse shareholder base.
Transactions in foreign currencies are translated into each subsidiary's
functional currency at exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are
translated into the functional currency at the period-end exchange rate.
Non-monetary items measured at historical cost are translated at the exchange
rate at the date of the transaction, and non-monetary items measured at fair
value are translated at the exchange rate at the date the fair value was
determined. Foreign exchange differences arising on translation are recognized
in the consolidated statement of loss and comprehensive loss, except for
differences arising on the translation of foreign operations, which are
recognized in other comprehensive income.
(c) Basis of presentation
These consolidated financial statements have been prepared on a historical
cost basis except for the revaluation of certain financial instruments. In
addition, these consolidated financial statements have been prepared using the
accrual basis of accounting except for cash flow information.
In the preparation of these consolidated financial statements, management is
required to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities
at the date of these consolidated financial statements and the reported
amounts of expenses during the period. Actual results could materially differ
from these estimates.
(d) Basis of consolidation
The consolidated financial statements incorporate the financial statements of
Sintana and its wholly-owned and partially owned subsidiaries:
Name Registered % of control
Sintana Resources Corp. Ontario, Canada 100%
Mobius Resources Corp. Alberta, Canada 100%
1873520 Ontario Inc. Ontario, Canada 100%
Sintana Energy Finance Inc. Ontario, Canada 100%
Sintana Energy Exploration and Production Inc. Texas, United States 100%
Northbrook Oil and Gas LLC Texas, United States 100%
Patriot Energy Oil and Gas Inc. Panama 100%
Patriot Energy Services LLC Corp. Panama 100%
Patriot Energy (Colombia) Colombia 100%
Giraffe Energy Investments (Pty) Ltd. Namibia 49%
Challenger Energy Group Limited Isle of Man 100%
CEG (A) Limited Isle of Man 100%
BPC (B) Limited Isle of Man 100%
BPC (C) Limited Isle of Man 100%
BPC (D) Limited Isle of Man 100%
CEG (A) Limited Bahamas 100%
BPC Limited Bahamas 100%
Bahamas Offshore Petroleum Limited Bahamas 100%
Island Offshore Petroleum Limited ((1)) Bahamas 100%
Privateer Petroleum Limited Bahamas 100%
Sagrasso Petoleum Limited ((1)) Bahamas 100%
Columbus Oil & Gas Limited ((1)) Bahamas 100%
BPC Uruguay Holdings Limited England and Wales 100%
Columbus Energy Resources Limited England and Wales 100%
CEG Uruguay S.A Uruguay 100%
CEG OFF-3 Uruguay S.A Uruguay 100%
Compañia Petrolifera de Sedano S.L.U. ((1)) Spain 100%
(1) This entity is in the process of being wound up or liquidated as part
of a restructuring exercise to simplify the overall group structure and reduce
costs.
As noted, the Company's primary assets are held through its 49% interest in
all of the issued and outstanding shares of Inter Oil. The Company's 49%
investment in Inter Oil is accounted for as an investment in a joint venture
using the equity method of accounting, as the Company has significant
influence over this investment - accordingly, Inter Oil is not regarded as a
subsidiary and is not included in the above table.
The results of subsidiaries acquired or disposed of during the years presented
are included in the consolidated statements of loss and comprehensive loss
from the effective date of acquisition and up to the effective date of
disposal, as appropriate. All intercompany transactions, balances, income and
expenses are eliminated upon consolidation.
(e) Financial assets and liabilities
IFRS 9 - Financial Instruments ("IFRS 9") includes finalized guidance on the
classification and measurement of financial assets. Under IFRS 9, financial
assets are classified and measured either at amortized cost, fair value
through other comprehensive income ("FVOCI") or fair value through profit or
loss ("FVTPL") based on the business model in which they are held and the
characteristics of their contractual cash flows.
All financial assets not classified at amortized cost or FVOCI are measured at
FVTPL. On initial recognition, the Company can irrevocably designate a
financial asset at FVTPL if doing so eliminates or significantly reduces an
accounting mismatch.
A financial asset is measured at amortized cost if it meets both of the
following conditions and is not designated at FVTPL:
· It is held within a business model which objective is to hold the
financial asset to collect the contractual cash flows associated with the
financial asset instead of selling the financial asset for a profit or loss;
· Its contractual terms give rise to cash flows that are solely
payments of principal and interest.
All financial instruments are initially recognized at fair value on the
consolidated statement of financial position. Subsequent measurement of
financial instruments is based on their classification. Financial assets and
liabilities classified at FVTPL are measured at fair value with changes in
those fair values recognized in the consolidated statement of loss and
comprehensive loss for the period. Financial assets classified at amortized
cost and financial liabilities are measured at amortized cost using the
effective interest method.
Financial assets
Financial assets are classified as either financial assets at FVTPL, amortized
cost, or FVOCI. The Company determines the classification of its financial
assets at initial recognition.
i. Financial assets recorded at FVTPL
Financial assets are classified as FVTPL if they do not meet the criteria of
amortized cost or FVOCI. Gains or losses on these items are recognized in
profit or loss.
ii. Amortized cost
Financial assets classified as amortized cost are non-derivative financial
assets with fixed or determinable payments that are not quoted in an active
market. They are carried at amortized cost less any provision for impairment.
Individually significant receivables are considered for impairment when they
are past due or when other objective evidence is received that a specific
counterparty will default.
The Company's cash and cash equivalents and accounts receivable, excluding HST
and VAT, are classified as financial assets measured at amortized cost.
iii. Financial assets recorded at FVOCI
Financial assets are recorded at FVOCI when the change in fair value is
attributable to changes in the Company's credit risk.
Financial liabilities
Financial liabilities are classified as either financial liabilities at FVTPL
or at amortized cost. The Company determines the classification of its
financial liabilities at initial recognition.
i. Amortized cost
Financial liabilities are measured at amortized cost, include borrowings, are
initially measured at fair value, net of transaction cost. They are
subsequently measured at amortized cost using the effective interest method,
with interest recognized on an effective yield basis.
The effective interest method is a method of calculating the amortized cost of
a financial liability and of allocating interest costs over the relevant
period. The effective interest rate is the rate that exactly discounts
estimated future cash payments through the expected life of the financial
liability or to the next carrying amount or initial recognition.
The Company's accounts payable and accrued liabilities and deferred
compensation do not fall into any of the exemptions and are therefore
classified as measured at amortized cost.
ii. Financial liabilities recorded FVTPL
Financial liabilities are classified as FVTPL if they fall into amortized cost
detailed above.
Transaction costs
Transaction costs associated with financial instruments, carried at FVTPL, are
expensed as incurred, while transaction costs associated with all other
financial instruments are included in the initial carrying amount of the asset
or the liability.
Subsequent measurement
Instruments classified as FVTPL are measured at fair value with unrealized
gains and losses recognized in profit or loss. Instruments classified as
amortized cost are measured at amortized cost using the effective interest
rate method. Instruments classified as FVOCI are measured at fair value with
unrealized gains and losses recognized in other comprehensive loss.
Derecognition
The Company derecognizes financial liabilities only when its obligations under
the financial liabilities are discharged, cancelled, or expired. The
difference between the carrying amount of the financial liability derecognized
and the consideration paid and payable, including any non-cash assets
transferred or liabilities assumed, is recognized in profit or loss.
Expected credit loss impairment model
The Company applies the simplified approach for trade receivables. Using the
simplified approach, the Company records a loss allowance equal to the
expected credit losses ("ECLs") resulting from all possible default events
over the assets' contractual lifetime. The Company has established an
allowance for ECLs that is based on its historical credit loss experience,
adjusted for forward-looking factors specific to the debtors and the economic
environment. This rate is then adjusted based on management judgment to
account for current economic conditions, counterparty's present financial
condition and the term to maturity of the specified receivable balance. Actual
credit loss may significantly differ from this estimate of provision.
Financial assets are written off when the Company has no reasonable
expectations of recovering all or any portion thereof. The Company's expected
credit loss provision was insignificant as at December 31, 2025 and 2024.
Impairment of financial assets
An ECL model applies to financial assets measured at amortized cost. The
Company's financial assets measured at amortized cost and subject to the ECL
model consist primarily of trade receivables. The Company applies the
simplified approach to impairment for trade and other receivables by
recognizing lifetime expected losses on initial recognition through both the
analysis of historical defaults and a reassessment of counterparty credit risk
in revenue contracts on an annual basis.
Financial instruments recorded at fair value
Financial instruments recorded at fair value on the consolidated statements of
financial position are classified using a fair value hierarchy that reflects
the significance of the inputs used in making the measurements. The fair value
hierarchy has the following levels:
Level 1 - valuation based on quoted prices (unadjusted) in active markets for
identical assets or liabilities;
Level 2 - valuation techniques based on inputs other than quoted prices
included in Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 - valuation techniques using inputs for the asset or liability that
are not based on observable market data (unobservable inputs).
As of December 31, 2025 and 2024, none of Sintana's financial instruments are
recorded at fair value in the consolidated statements of financial position.
(f) Impairment of non-financial assets
At the end of each reporting period, Sintana reviews the carrying amounts of
its non-financial assets with finite lives to determine whether there are any
indications that those assets have suffered an impairment loss. Where such an
indication exists, the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss. The recoverable amount is the
higher of an asset's fair value less cost to sell or its value in use, which
is determined using discounted estimated future net cash flows. In addition,
long-lived assets that are not amortized are subject to an annual impairment
assessment.
(g) Cash equivalents
Cash equivalents comprise guaranteed investment certificates with an original
maturity of three months or less, and which are readily convertible into a
known amount of cash. Sintana does not invest in any asset-backed
deposits/investments. Restricted cash is not included within cash and cash
equivalents (refer to note 8 for details of restricted cash).
(h) Provisions
A provision is recognized when Sintana has a present legal or constructive
obligation as a result of a past event, it is probable that an outflow of
economic benefits will be required to settle the obligation and the amount of
the obligation can be reliably estimated. If the effect is material,
provisions are determined by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessments of the time value of
money and, where appropriate, the risks specific to the liability.
Sintana had no material provisions at December 31, 2025 and 2024 other than
the asset retirement obligation and provision.
(i) Asset retirement obligations ("ARO")
A legal or constructive obligation to incur restoration, rehabilitation and
environmental costs may arise when environmental disturbance is caused by the
exploration, development or ongoing production of an oil and gas property
interest. Such costs arising from the decommissioning of plant and other site
preparation work, discounted to their net present value, are provided for and
capitalized to the carrying amount of the asset, as soon as the obligation to
incur such costs arises, whether at the start of each project or on an ongoing
basis during production. Discount rates using a pretax rate that reflects the
time value of money are used to calculate the net present value. These costs
are charged against profit or loss over the economic life of the related
asset, through amortization using either a unit of production or the
straight-line method as appropriate under IFRS. The related liability is
adjusted for each period for the unwinding of the discount rate and for
changes to the current market-based discount rate, amount or timing of the
underlying cash flows needed to settle the obligation.
(j) Exploration and evaluation expenditures
Sintana expenses exploration and evaluation expenditures as incurred for oil
and gas prospects not commercially viable and financially feasible.
Exploration and evaluation expenditures include acquisition costs of oil and
gas prospects, property option payments and evaluation activities.
Once a project has been established as commercially viable and technically
feasible, related development expenditures are capitalized. This includes
costs incurred in preparing the site for production operations. Capitalization
ceases when the oil and natural gas reserves are capable of commercial
production, with the exception of development costs that give rise to a future
benefit.
Exploration and evaluation expenditures are capitalized if Sintana can
demonstrate that these expenditures meet the criteria of an identifiable
intangible asset. To date, no such exploration and evaluation expenditures
have been identified and capitalized.
(k) Share-based payment transactions
The fair value of stock options granted to employees and consultants is
recognized as an expense over the vesting period with a corresponding increase
in equity. An individual is classified as an employee when the individual is
an employee for legal or tax purposes (direct employee) or provides services
similar to those performed by a direct employee, including directors of
Sintana.
The fair value is measured at the grant date and recognized over the period
during which the options vest. The fair value of the options granted is
measured using the Black-Scholes option pricing model, taking into account the
terms and conditions upon which the options were granted. Share-based payments
to non-employees are measured at fair value of services provided, measured on
the service date and recorded over the service period. At the end of each
reporting period, the amount recognized as an expense is adjusted to reflect
the actual number of stock options that are expected to vest.
(l) Restricted share units ("RSUs")
Under the Company's restricted share unit plan, employees and directors are
granted RSUs where each RSU has a value equal to one Sintana common share.
RSUs are measured at fair value on the grant date. The fair value of RSUs is
recognized as a charge to share-based compensation as a general and
administrative expense over the vesting period with a corresponding increase
in equity. RSUs expected to settle in cash are reclassified as a liability and
valued at fair value at period end.
(m) Income taxes
Income tax comprises current and deferred tax. Income tax is recognized in
profit or loss except to the extent that it relates to items recognized
directly in equity or other comprehensive loss, in which case the income tax
is also recognized directly in equity or other comprehensive loss.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted at the end of the reporting period, and any adjustment
to tax payable in respect of previous years. Current tax assets and current
tax liabilities are only offset if a legally enforceable right exists to
offset the amounts and the Company intends to settle on a net basis, or to
realize the asset and settle the liability simultaneously.
Deferred tax is recognized in respect of all qualifying temporary differences
arising between the tax basis of assets and liabilities and their carrying
amounts in the financial statements. Deferred income tax is determined on a
non-discounted basis using tax rates an laws that have been enacted or
substantively enacted at the end of the reporting period and are expected to
apply when the deferred tax asset or liability is settled. Deferred tax assets
are recognized to the extent that it is probable that the assets can be
recovered. Deferred tax assets and liabilities are offset when there is a
legally enforceable right to offset tax assets and liabilities and when the
deferred tax balances relate to the same taxation authority.
Deferred tax assets are recognized to the extent future recovery is probable.
At each reporting period end, deferred tax assets are reduced to the extent
that it is no longer probable that sufficient taxable earnings will be
available to allow all or part of the asset to be recovered.
(n) Loss per share
The Company presents basic and diluted loss per share data for its common
shares, calculated by dividing the loss attributable to common shareholders of
the Company by the weighted average number of common shares outstanding during
the period. Diluted loss per share is determined using the treasury stock
method by adjusting the weighted average number of common shares outstanding
to assume conversion of all dilutive potential common shares.
(o) Interest in joint ventures
A joint venture can take the form of a jointly controlled entity, jointly
controlled operation or jointly controlled assets. A joint venture is a
contractual arrangement whereby the Company and other parties undertake an
economic activity that is subject to joint control (i.e. when the strategic
financial and operating policy decisions relating to the activities of the
joint venture require the unanimous consent of the parties sharing control).
When the Company undertakes its activities under joint venture arrangements,
its share of jointly controlled assets and any liabilities incurred jointly
with other venturers are recognized in the consolidated financial statements
and classified according to their nature. Liabilities and expenses incurred
directly in respect of interest in jointly controlled assets are accounted for
on an accrual basis.
Joint venture arrangements that involve the establishment of a separate entity
in which each venture has an interest are referred to as jointly controlled
entities. The Company reports its interest in jointly controlled entities
using the equity method.
The Company annually assesses whether there is any objective evidence that its
investment in a joint venture is impaired. If impaired, the carrying value of
the Company's share of the underlying assets of associates is written down to
its estimated recoverable amount (being the higher of fair value less costs of
disposal or value in use) and charged to the consolidated statement of
comprehensive loss.
The Company is accounting for its investment in Inter Oil, as a joint venture
(refer to note 9).
(p) Segment reporting
The Company determines and presents operating segments based on information
that is internally provided to the Chief Executive Officer ("CEO") and Chief
Financial Officer ("CFO"), who are the Company's chief operating decision
makers. An operating segment is a component of the Company that engages in
business activities from which it may earn revenues and incur expenses. An
operating segment's operating results, for which discrete financial
information is available, are reviewed regularly by the CEO and CFO to make
decisions about resources to be allocated to the segment and assess its
performance. The Company has one operating segment which is the exploration
and development of oil and gas properties, however for reporting purposes,
segmented information is presented across four geographical segments: Uruguay
(operating), Namibia (operating), Corporate (including Canada, the United
States, the United Kingdom and the Isle of Man) and Non-operating (including
Colombia, Panama, The Bahamas and Spain).
(q) Non-controlling interest
Non-controlling interest represents the minority shareholders' interest in the
Company's less than wholly-owned subsidiary. On initial recognition,
non-controlling interest is measured at its proportionate share of the
acquisition-date fair value of identifiable net assets of the related
subsidiary acquired by the Company. Subsequent to the acquisition date,
adjustments are made to the carrying amount of non-controlling interest for
the minority shareholders' share of changes to the subsidiary's equity.
Changes in the Company's ownership interest that do not result in a loss of
control are accounted for as equity transactions. In such circumstances, the
carrying amounts of the controlling and non-controlling interests shall be
adjusted to reflect the changes in their relative interests in the subsidiary.
Any difference between the amount by which the non-controlling interests are
adjusted and the fair value of the consideration paid or received shall be
recognized directly in equity and attributed to the owners of the parent.
(r) Significant accounting judgments and estimates
The preparation of these consolidated financial statements requires management
to make certain estimates, judgments and assumptions that affect the reported
amounts of assets and liabilities at the date of the consolidated financial
statements and reported amounts of expenses during the reporting period.
Actual outcomes could differ from these estimates. These consolidated
financial statements include estimates that, by their nature, are uncertain.
The impacts of such estimates are pervasive throughout the consolidated
financial statements, and may require accounting adjustments based on future
events. Revisions to accounting estimates are recognized in the period in
which the estimate is revised and future periods if the revision affects both
current and future periods. These estimates are based on historical
experience, current and future economic conditions and other factors,
including expectations of future events that are believed to be reasonable
under the circumstances.
Critical accounting estimates
Significant assumptions made by management about the future could result in
material adjustments to the carrying amounts of assets and liabilities, in the
event that actual results differ from assumptions made, relate to, but are not
limited to, the following:
· The Company uses the asset and liability method in accounting for
deferred income taxes. Under this method, deferred income taxes are recognized
for the estimated future income tax liabilities. In preparing these estimates,
management is required to interpret substantially enacted legislation as well
as economic and business conditions along with management's tax and corporate
plans which may impact taxable income in future periods. Deferred income tax
assets are recognized only to the extent that it is probable that future
taxable income will be available against which the temporary differences can
be utilized.
· Management determines the fair value of warrants and stock
options using the Black-Scholes option pricing model. The estimate of
share-based compensation and warrants require the selection of an appropriate
valuation model and consideration of the inputs necessary for the model
chosen. The Company has made estimates of the volatility of its own shares,
the probable life of options and warrants granted, interest rates, and the
time of exercise of those options and warrants.
· Provision (included in accounts payable and accrued liabilities):
Management estimates the probability each year for the likelihood of the
provision. Changes to the probability can affect the carrying value of the
provision.
·
· The Company has applied judgement in determining whether the
acquisition of Challenger Energy Group Plc constitutes a business combination
under IFRS 3 or an asset acquisition. Although control was obtained in
accordance with IFRS 10, management concluded that the acquired set does not
meet the definition of a business, as substantially all of the fair value of
the gross assets acquired is concentrated in a group of similar identifiable
assets (being the Uruguay exploration licences). Accordingly, the optional
concentration test under IFRS 3 was met, and the transaction has been
accounted for as an asset acquisition, with no goodwill recognized.
· The Company has also applied judgement in assessing indicators of
impairment for exploration and evaluation assets recognized following the
acquisition of Challenger Energy Group Plc, in accordance with IFRS 6.
Exploration and evaluation assets are assessed for impairment when facts and
circumstances suggest that the carrying amount may exceed the recoverable
amount. Such indicators include, but are not limited to, expiry or expected
non-renewal of licence interests, absence of planned or budgeted substantive
exploration expenditure, unsuccessful exploration results, or a decision to
discontinue activities in a specific area. In making this assessment,
management considers the status of ongoing exploration programmes, technical
results, commercial viability, and available funding. Where indicators of
impairment are identified, a formal impairment test is performed, which
requires significant judgement in estimating recoverable amounts.
· ARO has been determined based on the estimated settlement
amounts. Assumptions, based on the current economic environ-ment, have been
made which management believes are a reasonable basis upon which to estimate
the future liability. These estimates take into account any material changes
to the assumptions. Estimates are reviewed quarterly and are based on current
regulatory requirements. Significant changes in estimates of contamination,
restoration standards and techniques will result in changes to liability on a
quarterly basis. Actual rehabilitation costs will ultimately depend on the
settlement amount for actual rehabilitation costs which will reflect the
market condition at the time costs are incurred. The final cost may be higher
or lower than the currently recognized rehabilitation provision.
Critical accounting judgments
· The assessment of the Company's ability to continue as a going
concern and to raise sufficient funds to pay for its ongoing operating
expenses, meet its liabilities for the upcoming year and fund planned
projects, involves significant judgment based on historical experience and
other factors, including expectations of future events that are believed to be
reasonable under the circumstances. Given the judgment involved, actual
results may lead to a materially different outcome.
· Joint venture: Pursuant to the acquisition of 49% of the
outstanding shares of Inter Oil on March 8, 2022, the Company determined that
the acquisition is a form of joint venture and the Company is required to
account for its share in the joint venture company by using the equity method.
(s) Accounting standards effective this year and future applicable accounting
standards
Accounting standards effective this year
The Company adopted no new IFRSs and interpretations during 2025.
Future applicable accounting standards
The following new standards and amendments to standards have been issued as at
December 31, 2025 but are not yet effective. The Company does not plan to
early adopt any of these new or amended standards and interpretations.
Amendments to IFRS 9, Financial Instruments and IFRS 7, Financial Instruments:
Disclosures:
In May 2024, the IASB issued amendments to IFRS 9, Financial Instruments and
IFRS 7, Financial Instruments: Disclosures to clarify the date of recognition
and derecognition of some financial liabilities settled using an electronic
payment system before the settlement date. The amendments also clarify the
classification of certain financial assets and introduce disclosure
requirements for financial instruments with contingent features and equity
instruments classified at fair value through other comprehensive income. The
amendments are effective for annual periods beginning on or after January 1,
2026, and are to be applied retrospectively; restatement of prior periods is
not required. The Company is currently evaluating the potential impact of
these amendments on the Company's consolidated financial statements.
IFRS 18, Presentation and Disclosure in Financial Statements:
IFRS 18, issued in April 2024, replaces IAS 1, Presentation of Financial
Statements and establishes the overall requirements for presentation and
disclosures in the financial statements, including a new defined structure for
the statement of profit or loss and specific disclosure requirements related
to management-defined performance measures. IFRS 18 also enhances guidance on
how to group information within the financial statements. IFRS 18 is effective
for annual periods beginning on or after January 1, 2027, including interim
financial statements, and is to be applied retrospectively. The Company has
not yet determined the impact of this standard on its consolidated financial
statements.
3.1 Acquisition of Challenger Energy Group Plc
On October 9, 2025, the Company announced that it has reached an agreement
with Challenger Energy Group Plc ("Challenger") on the terms of an all-share
acquisition pursuant to which Sintana would acquire all of the issued and to
be issued ordinary share capital of Challenger (the "Challenger Acquisition").
The Challenger Acquisition was implemented by way of a Court-sanctioned scheme
of arrangement under Part IV (Section 152) of the Isle of Man Companies Act
1931 as amended from time to time (the "Scheme"). Under the terms of the
Challenger Acquisition, Challenger shareholders received approximately 0.4705
common shares of Sintana for each Challenger ordinary share held.
On 12 December 2025, the Scheme was sanctioned by the Isle of Man Court and
the Scheme became effective on 16 December 2025. As a result, Sintana
acquired the entire issued and to be issued share capital of the Company, and
Challenger became a wholly-owned subsidiary of Sintana. Admission of the
common shares of Sintana (including those issued as consideration in
accordance with the Scheme) to trading on AIM became effective on 23 December
2025, and Challenger's ordinary shares were cancelled from trading on AIM.
The Challenger Acquisition did not meet the definition of a business
combination under IFRS 3, Business Combination. Accordingly, the Challenger
Acquisition was accounted for as an asset acquisition.
The following table summarizes the fair value of the purchase price and the
allocation to net assets acquired:
Purchase Price Consideration
Consideration shares issued to acquire all the share in Challenger 35,950,774
(126,731,086 Sintana common shares issued)
Costs related to the Challenger Acquisition 3,745,627
39,696,401
Net Assets Acquired (Fair Value)
Statement of financial position
Cash and cash equivalents 4,451,617
Accounts receivable and other assets 1,394,562
Tangible assets 41,417
Intangible assets 39,288,794
Restricted cash 707,602
Accounts payable and other liabilities (3,555,859)
Asset retirement obligation (2,631,732)
Total 39,696,401
Cash inflows
Cash and cash equivalents acquired 4,451,617
Costs related to the Challenger Acquisition (capitalized to intangible costs) (3,745,627)
Net cash inflows 705,990
3.2 Acquisition of Giraffe (2024)
On April 24, 2024, the Company entered into a definitive agreement with Crown
Energy (Pty) Ltd. ("Crown"), a private Namibian company, providing for the
acquisition (the "Giraffe Acquisition") by the Company from Crown of up to 67%
of the issued and outstanding shares of Giraffe. Giraffe holds a 33% limited
carried interest in PEL 79 which governs Namibia offshore blocks 2815 and
2915. The Giraffe acquisition was structured as an initial purchase of 49% of
the issued and outstanding shares of Giraffe from Crown for cash consideration
of $2,000,000, with the Company being granted an option to increase its
ownership up to an aggregate 67% interest in Giraffe over a period of five
years for an additional cash payment at the time of exercise of $1,000,000.
This option remains outstanding and has not as yet been exercised by the
Company. On June 10, 2024, the Company announced that it had completed the
Giraffe Acquisition.
Following completion, and although the Company only owned approximately 49% of
Giraffe and less than half of its voting power, management determined that the
Company controlled Giraffe, on a de facto power basis, because the option to
increase ownership from 49% to 67% is exercisable immediately, without any
significant legal, procedural, or financial barriers, making it a substantive
potential voting right. When combined with Sintana's existing 49% ownership,
the exercisability of the option provides Sintana with the current ability to
direct Giraffe's relevant activities, including the approval of exploration
budgets, capital expenditures, and operational strategies for PEL 79.
Furthermore, it was determined that the requirement for 100% unanimous
approval of fundamental decisions will not preclude Sintana from directing the
relevant activities, even upon exercising the additional 18% option: the
requirement grants Crown a protective right rather than limiting Sintana's
ability to exercise control over the relevant activities of Giraffe.
The Giraffe Acquisition did not meet the definition of a business combination
under IFRS 3, Business Combination. Accordingly, the Giraffe Acquisition was
accounted for as an asset acquisition. The Company recorded a total of
$2,037,903 in exploration and evaluation expenditures to the consolidated
statement of loss and comprehensive loss which is the excess of the
consideration paid over the fair value of the identifiable net assets.
The following table summarizes the fair value of the purchase price and the
allocation to net assets acquired:
Purchase Price Consideration
Cash payment 2,000,000
Costs related to the Giraffe Acquisition 35,614
2,035,614
Net Assets Acquired (Fair Value)
Statement of financial position
Cash and cash equivalents 218
Accounts payable and other liabilities (4,890)
Non-controlling interest on acquisition 2,383
Statement of loss and comprehensive loss
Exploration and evaluation expenditures 2,037,903
Total 2,035,614
As at the Giraffe Acquisition date, unrelated parties owed 51% in the net
liabilities of Giraffe:
Total net liabilities on the date of acquisition (4,672)
% of equity held 51%
Total value of non-controlling interest on acquisition (2,383)
4. Capital risk management
Sintana manages its capital with the following objectives:
· ensure sufficient financial flexibility to achieve its ongoing
business objectives;
· maximize shareholder value.
Sintana monitors its capital structure and makes adjustments, as deemed
necessary, in an effort to meet its commitments and objectives. Sintana can
manage its capital structure by issuing additional shares and debt, purchasing
outstanding shares, reducing participation interests, adjusting capital
spending and operating costs, and / or disposing of assets. The cash forecast
and capital structure are reviewed by management and the Board of Directors on
an ongoing basis. There were no changes to how management manages its capital
during 2025.
Sintana considers its financial capital to be shareholders' equity, which
comprises share capital, warrants, contributed surplus (which includes stock
options and RSUs), non-controlling interest, deficit, and other comprehensive
income which at December 31, 2025 totaled a shareholders' equity of
$54,134,233 (2024 - $20,175,755).
Sintana monitors its sources and uses of capital through its financial and
operational forecasting processes. Sintana reviews its working capital and
forecasts the timing and amounts of its future cash flows based on anticipated
operating and overhead expenditures, and other investing and financing
activities. The forecast is updated periodically based on current and planned
activities related to its oil and natural gas participation interests.
Forecast summaries are provided to the Board of Directors.
Sintana's capital management objectives, policies and processes remained
unchanged during the year ended December 31, 2025 The Company is not subject
to any capital requirements imposed by a lending institution or regulatory
body, other than Policy 2.5 of the TSXV which requires adequate working
capital or financial resources of the greater of (i) CAD$50,000 and (ii) an
amount required in order to maintain operations and cover general and
administrative expenses for a period of 6 months. As of December 31, 2025, the
Company was compliant with Policy 2.5.
5. Financial risk management
Financial risk
Sintana's activities expose it to a variety of financial risks, including
credit risk, liquidity risk and market risk (including interest rates and
foreign exchange risks).
Risk management is carried out by Sintana's management team with guidance from
the Board of Directors.
(i) Credit risk
Credit risk is the risk of loss associated with a counterparty's inability to
fulfill its payment obligations. The Company's credit risk is primarily
attributable to cash and cash equivalents, accounts receivable, excluding HST
and VAT and deferred consideration arising following the acquisition of
Challenger Energy Group Plc. All of the Company's cash and cash equivalents is
held with large, well-known and established financial institutions. As such,
management considers credit risk related to these financial assets to be
minimal.
Accounts receivable primarily consist of indirect tax receivables (HST/VAT)
and other receivables. Deferred consideration balances represent amounts
receivable from Predator Oil & Gas Holdings Plc ("Predator") in connection
with a prior transaction. Under the terms of the agreement, additional
consideration of $500,000 is receivable within 12 months (expected in August
2026), with further amounts of $250,000 receivable on December 31, 2026 and
$250,000 on December 31, 2027. Management has assessed the credit risk
associated with the Predator receivable as low taking into account that an
initial $500,000 cash payment was received from Predator upon completion of
the transaction as well as management's assessment of Predator's financial
capacity to meet its remaining obligations.
The Company's exposure to credit risk is concentrated in respect of the
receivable from Predator, however, this concentration is not considered
significant given the factors noted above. Management believes that the credit
risk concentration with respect to financial instruments included in accounts
receivable is remote since the Company does not have any receivables other
than HST and VAT and the receivable balance from Predator.
(ii) Liquidity risk
Liquidity risk is the risk that the Company will not have sufficient cash
resources to meet its financial obligations as they come due. The Company's
liquidity and operating results may be adversely affected if its access to
capital markets is hindered, whether as a result of a downturn in economic
conditions generally or matters specific to Sintana. The Company generates
cash flow primarily from its financing activities.
Most of the Company's financial liabilities have contractual maturities of
less than 90 days and are subject to normal trade terms. The Company regularly
evaluates its cash position to ensure preservation and security of capital as
well as liquidity. Sintana had a cash and cash equivalents balance of
$10,315,705 (2024 - $12,591,728) and working capital of $5,044,376 at December
31, 2025 (2024 - $11,459,561).
(iii) Market risk
Market risk is the risk of loss that may arise from changes in market factors
such as interest rates and foreign exchange rates.
(a) Interest rate risk
The Company's current policy is to invest excess cash in short-term guaranteed
investment certificates or money market funds of major Canadian chartered
banks. Accordingly, the Company is not subject to material interest rate risk.
(b) Foreign currency risk
The Company is exposed to foreign currency risk through transactions
denominated in currencies other than the functional currency of the relevant
Company's entities. Foreign currency risk arises primarily from the Company's
monetary assets and liabilities denominated in USD, CAD, British pounds
sterling ("GBP"), Euros ("EUR"), Namibian dollars and Uruguayan pesos.
The Company's financial statements are presented in USD, which is the
Company's presentation currency. The functional currency of the Company and
certain subsidiaries is CAD, while other subsidiaries have functional
currencies including USD, CAD, GBP, EUR, Namibian dollars and Uruguayan pesos.
The Company maintains bank accounts in multiple jurisdictions including the
Isle of Man, the United Kingdom, Canada, the United States, Namibia, Uruguay,
Colombia and The Bahamas. The Company does not currently use derivative
financial instruments to hedge its exposure to foreign currency fluctuations.
The following table presents the USD equivalent balances of monetary items
denominated in currencies other than the relevant functional currency:
December 31, 2025 2024
Financial assets 4,624,819 3,314,285
Financial liabilities (2,592,115) -
Sensitivity analysis
The sensitivity analysis below reflects the impact on the Company's loss and
comprehensive loss of reasonably possible changes in foreign exchange rates on
monetary assets and liabilities denominated in currencies other than the
functional currency of the relevant Company entities. The results of the
analysis are presented in the Company's presentation currency, USD. Exposures
to USD may arise within subsidiaries whose functional currency is not USD.
Profit or loss sensitivity
10% increase 10% decrease
Year ended 31 December 2025 $ 000's $ 000's
US dollars 388,045 (388,045)
British Pounds Sterling (185,937) 185,937
Columbian pesos 595 (595)
Uruguay pesos 567 (567)
Total 203,270 (203,270)
Year ended 31 December 2024
US dollars 330,660 (330,660)
Columbian pesos 768 (768)
Total 331,428 (331,428)
The sensitivity analysis reflects the impact of reasonably possible changes in
foreign exchange rates on monetary assets and liabilities denominated in
currencies other than the functional currency of the relevant Company
entities. As the Company does not have financial instruments whose foreign
exchange movements are recognized directly in equity, there is no impact on
equity from the sensitivities presented above.
6. Fair value measurements of financial instruments
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. The fair value hierarchy establishes three levels to
classify the inputs to valuation techniques used to measure fair value. Level
1 inputs are quoted prices (unadjusted) in active markets for identical assets
or liabilities. Level 2 inputs are quoted prices in markets that are not
active, quoted prices for similar assets or liabilities in active markets,
inputs other than quoted prices that are observable for the asset or
liability, or inputs that are derived principally from or corroborated by
observable market data or other means. Level 3 inputs are unobservable
(supported by little or no market activity). The fair value hierarchy gives
the highest priority to Level 1 inputs and the lowest priority to Level 3
inputs. The Company does not have financial instruments that require to be
measured at fair value on a recurring basis.
The Company has not offset financial assets with financial liabilities.
The carrying value of the Company's cash and cash equivalents, accounts
receivable excluding HST and VAT, accounts payable and accrued liabilities and
deferred compensation is close to fair value due to their short-term maturity.
7. Accounts receivable and other assets
As at As at
December 31, December 31,
2025 2024
Current trade and other receivables
Accounts receivable ((1)) 392,047 68,756
Prepaids and other advances 255,456 184,083
Deposit - Corcel ((2)) 500,000 -
Deferred consideration ((3)) 500,000 -
Total 1,647,503 252,839
Non-current trade and other receivables
Deferred consideration ((3)) 431,155 -
Total 431,155 -
(1) Accounts receivable balances are predominantly comprised of HST and
VAT amounts recoverable from the subsidiaries' respective tax jurisdictions.
(2) The deposit to Corcel represents a $500,000 deposit paid during the
year in respect of the KON-16 transaction. See note 24 for further details.
(3) Deferred consideration represents amounts due to Challenger Energy
Limited following the disposal of its Trinidad operations, which completed in
August 2025. The deferred consideration due from that transaction comprises
$500,000 payable in cash on August 30, 2026, $250,000 payable on December 31,
2026, and a further $250,000 payable on December 31, 2027. The deferred
consideration amounts due in December 2026 and 2027 have been discounted and
classified as non-current deferred consideration amounting to $431,155.
8. Restricted cash
As at As at
December 31, December 31,
2025 2024
Credit card security 7,656 -
Licence related restricted bank deposits Licence ((1)) 700,000 -
707,656 -
(1) Licence related restricted bank deposits are cash amounts held in
separately identified Company bank accounts pledged in support of fulfilment
of work programme commitments on specific licences, and to which access is
restricted until those work program commitments are met. As at December 31,
2025 this consisted of $700,000 (2024 - nil) relating to the Company's Uruguay
licences.
9. Investment in joint venture
Balance, December 31, 2023 9,777,673
Additional funding in joint venture 116,945
Sintana's 49% share of Inter Oil's net loss for the year ended December 31, (84,165)
2024
Foreign exchange adjustments (740,435)
Balance, December 31, 2024 9,070,018
Additional funding in joint venture 219,589
Sintana's 49% share of Inter Oil's net loss for the year ended December 31, (31,360)
2025
Foreign exchange adjustments 434,411
Balance, December 31, 2025 9,692,658
On March 8, 2022, the Company completed the acquisition of 49% of the
outstanding shares of Inter Oil. Inter Oil is a private Namibian company which
indirectly holds a strategic portfolio of onshore and offshore PELs in Namibia
including (i) a 15% (Sintana: 7.35%) limited carried interest in PEL 87; (ii)
a 10% (Sintana: 4.9%) limited carried interest in each of PELs 82 and 83; and
(iii) a 10% (Sintana: 4.9%) limited carried interest in PEL 90. Inter Oil also
holds a 30% (Sintana: 14.7%) interest in a subsidiary which, in turn, holds a
90% interest in onshore PEL 103.
The consideration for the acquisition consisted of a cash payment of
$4,000,000 and the issuance of an aggregate of 34,933,333 common shares of the
Company (issued and valued at CAD$8,034,667).
The following is the net loss of Inter Oil and the proportionate share of net
loss for the Company's ownership interest for the twelve months ended December
31, 2025.
2025 2024
Net loss (64,000) (173,806)
Proportionate share of net loss (31,360) (84,165)
10. Intangible assets
Cost
At January 1, 2025 -
Acquisition of Challenger Energy Group Plc (note 3.1) 39,288,794
Foreign exchange adjustments -
Balance, December 31, 2025 39,288,794
Net book value
At, December 31, 2025 39,288,794
At, December 31, 2024 -
11. Tangible assets
Cost
At January 1, 2025 -
Acquisition of Challenger Energy Group Plc (note 3.1) 41,417
Foreign exchange adjustments (43)
Balance, December 31, 2025 41,374
Net book value
At, December 31, 2025 41,374
At, December 31, 2024 -
12. Accounts payable and accrued liabilities
Accounts payable and accrued liabilities of the Company are principally
comprised of amounts outstanding relating to general operating and
administrative activities and a dormant arbitration of disputed joint venture
cash calls:
As at As at
December 31, December 31,
2025 2024
Accounts payable 2,986,637 38,835
Accrued liabilities 1,272,875 118,214
4,259,512 157,049
The following is an aged analysis of accounts payable and accrued liabilities:
As at As at
December 31, December 31,
2025 2024
Less than 1 month 3,531,061 128,719
1 to 3 months 240,920 10,232
Greater than 3 months 487,531 18,098
4,259,512 157,049
Accounts payable and accrued liabilities include amounts totaling
approximately $1,266,735 (2024 - $157,049) that are considered to be of a
routine working capital nature and are expected to be settled in the ordinary
course of business. The remainder of trade and other payables (including
accruals) comprises amounts due in respect of the acquisition of Challenger,
which completed in December 2025, amounting to $2,524,840 (2024 - nil). In
addition, the total trade and other payables balance includes an accrual of
$467,937 for a potential insurance exposure, arising from the final cost of
the Perseverance-1 well in The Bahamas (dating back to 2021) exceeding the
original estimate. However, this matter remains unresolved with the insurers
as of the date of this report. During the year ended December 31, 2025, the
Company recorded a gain on accounts payable of nil (2024 - $45,856) in the
consolidated statements of loss and comprehensive loss related to the decrease
in the probability of the provision being paid.
13. Asset retirement obligation
As at December 31, 2025, the Company had estimated the net present value of
its total ARO to be $2,703,739 (2024 - $71,308). The settlement period is
estimated to occur within the next twelve months. The ARO Is made up of the
following amounts:
1) CAD$102,312 was acquired upon completion of the Mobius Business Combination
in August 2015 and relates to a well in the Duvernay formation in Alberta. The
settlement period is expected to occur in the next 12 months.
2) As part of the Challenger Acquisition in December 2025, a decommissioning
provision as well as various site restoration obligations for certain
facilities became incorporated into the Company's financial statements. All of
these are obligations of a Spanish subsidiary company, dating back
approximately 10 years. The decommissioning provision is undiscounted and
uninflated, as the field is no longer in operation. The Spanish subsidiary is
currently in the process of being liquidated, and management expects that the
decommissioning provision relating to the Spanish company will be released
upon completion of this process, with no cash impact to the Company.
Both provisions were estimated by suitably qualified independent experts with
the appropriate technical expertise to assess decommissioning costs in the
relevant jurisdictions, taking into account applicable local regulatory
requirements.
Balance, December 31, 2023 77,138
Foreign exchange adjustments (5,830)
Balance, December 31, 2024 71,308
Acquisition of Challenger Energy Group Plc (note 3.1) 2,631,732
Foreign exchange adjustments 699
Balance, December 31, 2025 2,703,739
14. Share capital
a) Authorized share capital:
At December 31, 2025, and 2024, the authorized share capital consisted of an
unlimited number of common shares. The common shares do not have a par value.
All issued common shares are fully paid.
b) Common shares issued:
The change in issued share capital for the years presented was as follows:
Number of Amount
common shares $ 000's
Balance, December 31, 2023 282,360,668 93,603,754
Warrants exercised (note 15) 87,176,546 19,333,984
Restricted share units vested and converted to common shares ((1)) 3,900,000 332,518
Exercise of options (note 16(v)) 1,146,907 207,037
Balance, December 31, 2024 374,584,121 113,477,293
Restricted share units vested and converted to common shares ((1)) 2,400,000 2,290,796
Exercise of options (note 16(v)) 4,128,090 811,895
Acquisition of Challenger Energy Group Plc 126,731,086 35,950,774
Share settled compensation 2,512,943 837,827
Balance, December 31, 2025 510,356,240 153,368,585
(1) During the year ended December 31, 2025, 2,400,000 RSUs vested (2024 -
3,900,000) and were converted to common shares with a value of $2,290,796
(2024 - $332,518).
15. Warrants
The following table reflects the continuity of warrants for the years
presented:
Weighted
average
exercise
Number of price
warrants per share
Balance, December 31, 2023 88,957,833 CAD$0.25
Warrants exercised (87,176,546) CAD$0.25
Warrants expired (1,781,287) CAD$0.25
Balance, December 31, 2024 and 2025 - -
During the year ended December 31, 2024, 87,176,546 warrants were exercised
for cash proceeds of $15,879,240 and the related grant date fair value of the
warrants of $3,454,744 was reclassified from warrants to share capital.
There were no warrants outstanding as at December 31, 2024 and December 31,
2025.
16. Stock options
The following table reflects the continuity of stock options for the years
presented:
Weighted
Number of average
stock options exercise price
outstanding $ 000's
Balance, December 31, 2023 23,625,000 CAD$0.17
Granted ((i)(ii)) 5,550,000 CAD$1.19
Exercised ((v)) (1,146,907) CAD$0.13
Balance, December 31, 2024 28,028,093 CAD$0.37
Granted ((iii)) 100,000 CAD$0.73
Exercised ((v)) (4,128,090) CAD$0.14
Cancelled (900,000) CAD$0.16
Balance, December 31, 2025 23,100,003 CAD$0.42
(i) On May 1, 2024, the Company granted a total of 1,650,000 stock
options to certain directors and officers of the Company. The options have an
exercise price of CAD$1.08 and expire on May 1, 2034. Vesting of the stock
options is as follows: one-third on day of grant, one-third after one year and
one-third after two years. The fair value of each option was estimated on the
date of grant using the Black-Scholes option pricing model with the following
assumptions: expected dividend yield of 0%; expected volatility of 131%;
risk-free interest rate of 3.76%; and an expected average life of 10 years.
The options were valued at CAD$1,726,714.
(ii) On December 13, 2024, the Company granted a total of 3,900,000 stock
options to certain directors and officers of the Company. The options have an
exercise price of CAD$1.23 and expire on December 13, 2034. Vesting of the
stock options is as follows: one-third on day of grant, one-third after one
year and one-third after two years. The fair value of each option was
estimated on the date of grant using the Black-Scholes option pricing model
with the following assumptions: expected dividend yield of 0%; expected
volatility of 131%; risk-free interest rate of 3.17%; and an expected average
life of 10 years. The options were valued at CAD$4,641,853.
(iii) On June 27, 2025, the Company granted a total of 100,000 stock options
to an officer of the Company. The options have an exercise price of CAD$0.73
and expire on June 27, 2035. Vesting of the stock options is as follows:
one-third on day of grant, one-third after one year and one-third after two
years. The fair value of each option was estimated on the date of grant using
the Black-Scholes option pricing model with the following assumptions:
expected dividend yield of 0%; expected volatility of 132%; risk-free interest
rate of 3.31%; and an expected average life of 10 years. The options were
valued at CAD$70,731.
(iv) Share-based compensation includes $2,136,605 (2024 - $2,508,425)
relating to stock options granted in current and previous years in accordance
with their respective vesting terms, during the year ended December 31, 2025.
(v) During the year ended December 31, 2025, 4,128,090 stock options were
exercised for cash proceeds of $403,481 (year ended December 31, 2024 -
1,146,907 stock options were exercised for cash proceeds of $109,621) and the
related grant date fair value of the stock options of $2,290,796 (2024 -
$97,416) was reclassified from contributed surplus to share capital. The
average share price on the exercise of stock options for the year ended
December 31, 2025 was CAD$0.63 (2024 - CAD$1.15).
The following table reflects the actual stock options issued and outstanding
as of December 31, 2025:
Weighted
average Number of
remaining Number of options Number of
Exercise contractual options vested options
Expiry date price life (years) outstanding (exercisable) unvested
December 18, 2025* CAD$0.100 - 400,000 400,000 -
March 24, 2027 CAD$0.165 0.36 6,750,000 6,750,000 -
December 19, 2032 CAD$0.110 1.65 5,450,001 5,450,001 -
December 19, 2033 CAD$0.270 1.67 4,850,002 4,850,002 -
May 1, 2034 CAD$1.080 0.60 1,650,000 1,100,000 550,000
December 13, 2034 CAD$1.230 1.51 3,900,000 2,600,000 1,300,000
June 27, 2035 CAD$0.730 0.04 100,000 33,333 66,667
5.83 23,100,003 21,183,336 1,916,667
* The expiry date of the options was extended as the original
expiry date fell within a close period during which the holders were
restricted from exercising the options.
Subsequent to period end, on January 6, 2026 the Company announced 400,000
stock options were exercised at an exercise price of CAD$0.10 each, on March
27, 2026 the Company announced 800,000 stock options were exercised at an
exercise price of CAD$0.11 each, and on April 24, 2026 the Company announced
that 625,000 stock options were exercised at the following prices: 250,000
options at a price of CAD$0.165 per share, 200,000 options at a price of
CAD$0.11 per share and 175,000 at a price of CAD$0.27 per share.
17. RSUs
The grant date fair value of RSUs equals the fair market value of the
corresponding shares at the grant date. The fair value of these equity-settled
awards is recognized as compensation expense with a corresponding increase in
contributed surplus. The total amount expensed is recognized over the vesting
period, which is the period over which all specified vesting conditions must
be satisfied before RSUs are earned and therefore convertible. RSUs are
converted into common shares when vested.
On May 1, 2024, the Company granted a total of 2,400,000 RSUs to certain
directors and officers of the Company. The RSUs vested on May 1, 2025.
On December 13, 2024, the Company granted a total of 2,600,000 RSUs to certain
directors and officers of the Company. The RSUs vested subsequent to year end
on 7 January 2026.
On June 27, 2025, the Company granted a total of 4,200,000 RSUs to certain
directors and officers of the Company. The RSUs will vest on June 27, 2026.
During the year ended December 31, 2025, 2,400,000 RSUs (2024 - 3,900,000)
vested and were converted to common shares with a value of $2,290,796 (2024 -
$332,518).
The compensation portion of RSUs granted in the current and prior years and
vested during the year ended December 31, 2025, amounted to $3,838,338 (2024 -
$1,497,878).
As of December 31, 2025, there were 6,800,000 RSUs outstanding (2024 -
5,000,000 RSUs).
The weighted average fair value of RSUs granted during the year ended December
31, 2025 was CAD$0.71 per unit (year ended December 31, 2024 - CAD$1.15 per
unit).
On January 6, 2026 an aggregate of 2,600,000 common shares were Issued upon
the conversion of RSUs and an aggregate total of 7,250,000 RSU's were granted
to several directors and service providers of the Company.
18. Net loss per share
The calculation of basic and diluted loss per share for the year ended
December 31, 2025 was based on the loss attributable to common shareholders of
$10,223,896 (2024 - loss of $7,666,402) and the weighted average number of
common shares outstanding of 381,503,896 (2024 - 360,996,016). Diluted loss
per share did not include the effect of options, warrants and RSUs for the
year ended December 31, 2025 and 2024 as they were anti-dilutive.
19. Exploration and evaluation expenditures
The following table provides a breakdown of the Company's exploration
evaluation expenditures in each of the last two years:
Year Ended Year Ended
December 31, December 31,
2025 2024
Exploration Expenditures $ $
Namibia
Consulting fees 16,154 16,432
Acquisition of 49% in Giraffe - 2,037,903
16,154 2,054,335
Magdalena Basin, Colombia
Administrative and general 29,097 26,693
Professional fees 30,772 7,736
59,869 34,429
Angola
Consulting fees 30,456 -
30,456 -
Duvernay formation, Alberta
Other - 2,324
- 2,324
106,479 2,091,088
Notes:
In recent periods, the Company has principally acquired relatively small
ownership interests in oil and gas assets, in many cases benefiting from carry
arrangements which result in limited direct exploration and evaluation
expenditure. As most of these interests are held through associated entities
and accounted for under the equity method, any additional contributions to the
underlying joint ventures are capitalized at the associate level, thereby
limiting exploration and evaluation related costs recognized directly by the
Company.
The key exception to this has been the Giraffe investment in PEL 79, where the
Company holds an option to acquire up to a 67% interest, resulting in a level
of quasi-control and therefore full consolidation. This led to a higher level
of exploration and evaluation expenditure being recognized in the year ended
December 31, 2024 with the acquisition cost being recognized as exploration
expenditures (refer to note 3.2).
Following completion of the Challenger acquisition in December 2025, the Group
now holds a 100% interest in the OFF-3 licence and a 40% carried interest in
the OFF-1 licence. As a result, exploration and evaluation activity is
expected to increase going forward, particularly in relation to the OFF-3
asset.
20. General and administrative expenses
Year Ended December 31,
2025 2024
Salaries and benefits (note 22) 2,657,133 2,109,280
Professional fees (note 22) 726,289 467,846
Share-based payments (notes 16,17 and 22) 5,978,695 4,040,963
Investor relations 460,203 396,424
Travel expenses 172,879 217,350
Administrative and general 174,979 93,080
Reporting issuer costs 87,957 36,633
10,258,135 7,361,576
21. Income taxes
The reconciliation of the combined Canadian federal and provincial statutory
income tax rate of 26.5% (2024 - 26.5%) to the effective tax rates is as
follows:
Year Ended December 31, 2025 2024
Net loss before income taxes (10,165,008) (7,473,238)
Expected income tax recovery (2,693,727) (1,980,407)
Effect on income taxes of:
Share-based compensation and other non-deductible items 1,599,574 1,720,693
Difference in tax rates 111,795 25,685
Change in tax benefits not recognized 1,041,246 427,193
Income tax 58,888 193,164
The Company's income tax is allocated as follows:
Current income tax expense 65,257 201,764
Deferred income tax (recovery) expense (6,369) (8,600)
58,888 193,164
Deferred tax
The following table summarizes the components of deferred income tax:
2025 2024
Year Ended December 31,
Deferred tax assets
Capital losses carried forward 32,693 42,081
Deferred tax liabilities
Joint venture (364,289) (353,840)
Long-term loan (32,528) (42,065)
Net deferred tax liability (364,124) (353,824)
Deferred tax assets and liabilities have been offset where they relate to
income taxes levied by the same taxation authority and the Company has the
legal right and intent to offset.
Movement in net deferred tax liabilities:
2025 2024
Balance at the beginning of the year (353,824) (391,632)
Recognized in profit/loss 6,369 8,600
Foreign exchange adjustments (16,669) 29,208
Balance at the end of the year (364,124) (353,824)
Unrecognized deferred tax assets
Deferred taxes are provided as a result of temporary differences that arise
due to the differences between the income tax values and the carrying amount
of assets and liabilities. Deferred tax assets have not been recognized in
respect of the following deductible temporary differences:
2025 2024
Property, plant and equipment 118,318 113,476
Asset retirement obligation 74,694 71,311
Share issuance costs 349,855 675,629
Reserves - 996,835
Operating tax losses - Canada 16,043,856 13,941,688
Operating tax losses - USA 13,481,302 9,621,716
Operating tax losses - Colombia 201,286 140,142
Operating tax losses - Namibia 241,900 85,146
Operating tax losses - Uruguay 476,855 -
Operating tax losses - UK 642,097 -
Capital losses carried forward 92,037,658 87,871,014
Resource pools - Mineral properties 13,431,063 12,923,580
The Canadian and U.S. operating tax losses carry forwards expire as noted in
the table below. In addition, $6.9M of these losses are subject to further
restrictions. The remaining deductible temporary differences may be carried
forward indefinitely. Deferred tax assets have not been recognized in respect
of these items because it is not probable that future taxable profit will be
available against which the group can utilize the benefits therefrom.
The Company's operating tax losses expire as follows:
Canada USA
2030 111,883 -
2031 2,102,764 -
2032 2,413,576 -
2033 505,294 93,107
2034 422,578 1,147,982
2035 2,829,150 1,223,442
2036 665,947 -
2037 64,825 827,559
2038 1,126,482 209,189
2039 231,848 164,155
2040 212,453 123,641
2041 195,423 144,409
2042 1,191,348 -
2043 1,156,951 -
2044 1,372,331 -
2045 1,441,001 -
Indefinitely - 9,547,818
16,043,854 13,481,302
22. Director and Key Management Compensation, Share Based Payments and Related
party transactions and balances
(a) Director and Key Management Compensation
During the year ended December 31, 2025, total cash salaries and benefits paid
amounted to $2,657,133 (2024 - $2,109,280). Of this total, $2,493,942 related
to salaries and benefits paid to directors and key management personnel (2024
- 1,974,616), inclusive of directors' fees and other benefits. The total of
$2,493,942 include $737,215 of termination payments; excluding termination
payments, the total of cash salaries and benefits paid amounted to $1,919,918.
The termination payments arose following completion of the Challenger
transaction where certain amounts were paid pursuant to contractual
obligations to Mr. Keith Spickelmier in respect of the loss of his Executive
Chairman position ($206,761), to Mr, Douglas Manner following the termination
of his role as President ($235,454) and to Mr. David Cherry following the
termination of his role as Chief Operating Officer ($295,000).
Balances for deferred compensation due to directors and key management
personnel of $604,939 are included in deferred compensation as at December 31,
2025 (2024 - $954,939).
(b) Share based payments
During the year ended December 31, 2025, the Company made a number of share
based payments, including to directors and key management personnel of the
Company, in the form of either options or RSUs, as detailed in notes 16 and 17
(and which notes explains the method of valuing these instruments and how
these costs are then amortized over their respective vesting periods).
Accordingly, the total charges to share based payments in the financial
statements for the year ending December 31, 2025 was $5,776,021 (2024 -
$3,830,720). This is recorded under general and administrative costs.
(c) Related party transactions and balances
Related parties include the Board of Directors, officers, close family members
and enterprises that are controlled by these individuals as well as certain
persons performing similar functions.
The below noted transactions during the year ended December 31, 2025 occurred
in the normal course of business and are measured initially at fair value and
approved by the Board of Directors in strict adherence to conflict of interest
laws and regulations:
· the Company paid professional fees and disbursements totaling
$147,845 (year ended December 31, 2024 - $64,375) to Marrelli Support Services
Inc., and certain of its affiliates, together known as the "Marrelli Group",
for: (i) Mr. Carmelo Marrelli, beneficial owner of the Marrelli Group, to act
as the Chief Financial Officer of the Company (until December 16, 2025 and who
ceased office / employment with the Company effective on completion of the
Challenger acquisition), (ii) regulatory filing services, and (iii) press
release services; and
· In connection with the acquisition of Challenger, Sintana entered
into a loan agreement with Charlestown Energy Partners, LLC ("Charlestown"), a
shareholder of Sintana and a related party, pursuant to which Charlestown has
agreed to provide Sintana with a working capital facility of up to US$4
million (the "Facility") from the closing date of the acquisition. The
Facility may be terminated by Sintana at any time upon providing not less than
20 business days' prior written notice to Charlestown. The amount drawn on the
facility at December 31, 2025 was $nil.
23. Segmented information
The Company operates as a single reporting segment focused on oil and natural
gas exploration and development in Namibia, Uruguay and Angola, with
additional group entities located in Canada, the United Kingdom, the United
States, Colombia, The Bahamas, Spain and Panama. The Company's principal place
of business is London, United Kingdom, with administrative offices in
Castletown, Isle of Man, and Toronto, Canada.
For reporting purposes, segmented information is presented across four
geographical segments: Namibia (operating), Uruguay (operating), Corporate
(including Canada, the United States, the United Kingdom and the Isle of Man)
and Non-operating (including Colombia, Panama, The Bahamas and Spain).
December 31, 2025 Corporate Namibia Uruguay Non-operating Total
Cash and cash equivalents 10,270,550 1,690 10,115 33,350 10,315,705
Accounts receivable and other assets 2,036,495 13,531 5,155 23,477 2,078,658
Restricted cash 707,656 - - - 707,656
Tangible assets - - - 41,374 41,374
Intangible assets - - 39,288,794 - 39,288,794
Investment in joint venture 9,692,658 - - - 9,692,658
Total assets 22,707,359 15,221 39,304,064 98,201 62,124,845
Accounts payable and accrued liabilities 3,749,549 12,834 - 497,129 4,259,512
Current income tax payable 58,298 - - - 58,298
Deferred compensation 604,939 - - - 604,939
Asset retirement obligation 74,694 - - 2,629,045 2,703,739
Deferred income tax liability 364,124 - - - 364,124
Total liabilities 4,851,604 12,834 - 3,126,174 7,990,612
Corporate Namibia Uruguay Non-operating Total
December 31, 2025
Exploration and evaluation expenditures 46,610 - - 59,869 106,479
General and administrative 10,198,436 57,410 2,124 165 10,258,135
Foreign exchange loss (gain) 103,800 - (386) 1,285 104,699
Gain on accounts payable - - - - -
Interest income (335,665) - - - (335,665)
Joint venture loss 31,360 - - - 31,360
Income tax expense 65,257 - - - 65,257
Deferred income tax recovery (6,369) - - - (6,369)
Net loss 10,103,429 57,410 1,738 61,319 10,223,896
December 31, 2024 Corporate Namibia Non-operating Total
Cash and cash equivalents 12,552,449 31,598 7,681 12,591,728
Accounts receivable and other assets 243,409 9,430 - 252,839
Investment in joint venture 9,070,018 - - 9,070,018
Total assets 21,865,876 41,028 7,681 21,914,585
Accounts payable and accrued liabilities 140,695 13,004 3,350 157,049
Current income tax payable 201,710 - - 201,710
Deferred compensation 954,939 - - 954,939
Asset retirement obligation 71,308 - - 71,308
Deferred income tax liability 353,824 - - 353,824
Total liabilities 1,722,476 13,004 3,350 1,738,830
Corporate Namibia Non-operating Total
Year Ended December 31, 2024
Exploration and evaluation expenditures 2,324 2,054,335 34,429 2,091,088
General and administrative 7,303,326 58,250 - 7,361,576
Foreign exchange loss (gain) (1,444,557) 49,720 (1,865) (1,396,702)
Gain on accounts payable (45,856) - - (45,856)
Interest income (621,033) - - (621,033)
Joint venture loss 84,165 - - 84,165
Income tax expense 201,764 - - 201,764
Deferred income tax recovery (8,600) - - (8,600)
Net loss 5,471,533 2,162,305 32,564 7,666,402
24. Proposed transactions
On May 14, 2025, the Company announced the formation of a strategic
partnership with Corcel, plc ("Corcel"), a UK-listed entity focused on oil and
gas opportunities in Angola. This included Sintana and Corcel entering into a
head of terms providing for the Company to acquire an indirect 5% net interest
in KON-16 located in the onshore Kwanza Basin in Angola. The acquisition terms
provide that Sintana will also receive a future 2.5% Net Profits Interest
("NPI") on Corcel's interest in KON-16 of up to $50,000,000, after which the
NPI reduces to 1.5%. The consideration for the transaction is a total of
US$2.5MM payable by way of an initial $500,000 deposit and a balance of
payment at completion. A definitive agreement in relation to this acquisition
is expected to be entered into by the end of April 2026, and completion of the
transaction will follow pending satisfaction of conditions precedent,
including regulatory approval, with completion expected in Q4 2026.
25. Subsequent events
On January 6, 2026, the Company announced that 400,000 stock options had been
exercised at an exercise price of CAD$0.10. These options had an original
expiry date of December 18, 2025; however, the expiry date was extended as
it fell within a blackout period during which the holders were restricted
from exercising their options.
On January 6, 2026, the Company also announced the issuance of an aggregate of
2,600,000 common shares upon the conversion of RSUs. The new common shares
were admitted to trading on January 7, 2026. On the same date the Company also
approved the grant of a total of 7,250,000 RSUs to several directors and
service providers of the Company.
On January 21, 2026, the Company announced that it had entered into a Letter
of Intent ("LOI") securing a period of exclusivity in relation to a potential
investment that would provide an indirect interest in Petroleum Exploration
Licence 37 ("PEL 37") in the Walvis Basin, offshore Namibia. The exclusivity
period runs initially through to April 30, 2026, during which period the
Company is undertaking technical, commercial and legal due diligence and
seeking to negotiate potential transaction terms. To secure the exclusivity,
the Company agreed to pay a $1 million deposit, one-third of which is
non-refundable should the Company elect not to proceed. As at the date of
these accounts, the Company continues to undertake due diligence as to the
technical and commercial merits of this opportunity, and in parallel is
seeking to negotiate suitable transaction terms - the exclusivity period is
expected to be extended.
On February 4, 2026, the Company announced that its subsidiaries, Patriot
Energy Oil and Gas Inc. and Patriot Energy Sucursal Colombia, had reached an
agreement with ExxonMobil Exploration Colombia Limited and its Colombian
affiliate to resolve the previously announced arbitration relating to the
VMM-37 block in Colombia's Middle Magdalena Valley Basin. Under the agreement,
the parties will dismiss the arbitration, and Patriot has agreed to
conditionally assign its interests in VMM-37 to ExxonMobil. In consideration,
ExxonMobil will make cash payments totaling US$9 million, comprising $3
million payable within 60 days of execution and a further $6 million payable
upon governmental approval of the assignment and satisfaction of certain
contractual conditions. Subsequently, the arbitration has been dismissed as
agreed, and the Company has received the first payment of $3 million. The
parties are working collaboratively in relation to securing the requisite
governmental approvals, and presently expect payment of the second instalment
prior to year end 2026.
On March 27, 2025, the Company announced that 800,000 stock options had been
exercised at an exercise price of CAD$0.10.
On April 24, 2025, the Company announced that 625,000 stock options had been
exercised. The options were exercisable at the following prices: 250,000
options at a price of CAD$0.165 per share, 200,000 options at a price of
CAD$0.11 per share and 175,000 at a price of CAD$0.27 per share.
Management Discussion & Analysis
Introduction
The following Management's Discussion and Analysis ("MD&A") of the
financial condition and results of operations of Sintana Energy Inc. (the
"Company") and its subsidiary companies (collectively with the Company,
"Sintana") constitutes management's review of the factors that affected the
Company's financial and operating performance for the year ended December 31,
2025. This MD&A was prepared to comply with the requirements of Form
51-102F1 - Management's Discussion & Analysis; National Instrument 51-102
- Continuous Disclosure Obligations and National Instrument 51-101 Standards
of Disclosure for Oil and Gas Activities.
This MD&A should be read in conjunction with the audited annual
consolidated financial statements of the Company for the years ended December
31, 2025 and 2024, together with the notes thereto. Results are reported in
United States dollars, unless otherwise noted. The Company's consolidated
financial statements and the financial information contained in this MD&A
are prepared in accordance with IFRS(®) Accounting Standards as issued by the
International Accounting Standards Board ("IASB") and interpretations of the
IFRS Interpretations Committee.
For purposes of preparing this MD&A, management, in conjunction with the
Board of Directors (the "Board"), considered the materiality of information.
Information is considered material if: (i) such information results in, or
would reasonably be expected to result in, a significant change in the market
price or value of the Company's common shares; (ii) there is a substantial
likelihood that a reasonable investor would consider it important in making an
investment decision; and / or (iii) it would significantly alter the total
mix of information available to investors. Management, in conjunction with the
Board, evaluated materiality with reference to all relevant circumstances,
including potential market sensitivity.
This MD&A contains forward-looking information that is subject to risk
factors including those set out below under the heading "Risk Factors" and in
the Company's continuous disclosure filings from time to time. All amounts are
reported in US dollars, unless otherwise noted. Certain information and
discussion included in this MD&A constitutes forward-looking information.
Readers are encouraged to refer to the cautionary notes contained in the
section Forward-Looking Statements at the end of the MD&A.
Date
The date of this MD&A is 29 April 2026. Information presented herein is as
at that date, unless otherwise indicated.
Technical Information
Douglas Manner, non-executive director of the Company and chair of the
Company's technical committee has reviewed and verified the technical content
of the information contained in this MD&A.
Company Information
The Company was registered under the laws of the Province of Alberta under the
Business Corporations Act Alberta (the "ABCA") on 28 September 2010 with
registration number 2015615707. The Company is a body corporate continued
under the ABCA and accordingly the liability of its shareholders is limited to
the amount paid up or to be paid on their shares. The Company's principal
activity is that of a holding company. It is the ultimate parent company of a
group of companies comprising the Company and various subsidiary undertakings
that holds interests in a portfolio of oil and gas assets including in
Namibia, Uruguay and Angola.
The registered office of the Company is 3300, 421 7th Avenue S. W., Calgary,
Alberta T2P 4K9. The corporate headquarters and principal place of business of
the Company is 88 Kingsway, London, WC2B 6AA, United Kingdom. The telephone
number of the Company is +44(0)7 747 845 987.
The Company's accounting reference date is 31 December.
Approval
This MD&A has been approved by the Board of the Company.
Additional Information
Information about the Company and its operations can be obtained from the
offices of the Company, on the Company's website (www.sintanaenergy.com), on
the System for Electronic Documents Analysis and Retrieval ("SEDAR+") and is
available for review under the Company's profile on the SEDAR+ website
(www.sedarplus.ca) or via the Regulatory News Service of the London Stock
Exchange, and is available for review under the Company's profile
(www.lse.co.uk).
Overall Performance
A. Brief Description of Sintana's Business
The Company is the Canadian parent company of a group of companies focused on
the acquisition, exploration, potential development, and ultimately the
monetization of a diversified portfolio of interests in high-impact assets
with significant hydrocarbon resource potential in emerging "frontier"
geographies.
The portfolio currently comprises of:
· indirect interests in four large, highly prospective petroleum
exploration licences ("PELs") in the Orange Basin, offshore Namibia, including
an indirect carried interest in PEL 83, home of the Mopane discoveries that
were made in 2023 and 2024, as well as indirect interests in PELs 79, 87 and
90;
· an indirect interest in one PEL offshore Namibia in the Walvis
Basin (PEL 82), and one PEL onshore Namibia in the Waterberg Basin (PEL 103),
as well as a potential indirect interest in an additional PEL offshore Namibia
in the Walvis Basin (PEL 37) (subject to completion of a transaction to
acquire that interest, pursuant to a Letter of Intent which was entered into
by the Company on 19 January 2026);
· direct interests in two offshore blocks in Uruguay, being AREA
OFF-1 in the Punta del Este Basin and AREA OFF-3 in the Pelotas Basin (these
interests having become part of the Company's portfolio on completion of the
acquisition of Challenger Energy Group Plc in December 2025);
· an indirect interest in the KON-16 licence in the onshore Kwanza
Basin in Angola (subject to completion of the transaction to acquire that
interest, expected in H2 2026); and
· legacy assets onshore in the Middle Magdalena Basin, Colombia (in
the process of being monetized), and offshore The Bahamas.
The Company's common shares are traded on the TSX Venture Exchange ("TSX-V")
in Canada under the symbol "SEI", on the London Stock Exchange's AIM Market
("AIM") in the United Kingdom under the symbol "SEI", and on the OTCQX in the
United States under the symbol "SEUSF".
B. Trends and Economic Conditions
The Company is focused on the acquisition, exploration, development,
production and / or sales of hydrocarbons resources, in a number of locations.
Relevant trends and economic conditions are summarized as follows:
(i) Namibia
Namibia is emerging as one of the most promising frontiers for oil
exploration, with offshore basins, particularly the Orange Basin, attracting
significant international interest following recent discoveries. The sector is
expected to play a transformative role in Namibia's economy, supporting
industrialization, energy security, and broad-based economic transformation.
Exploration began in the 1970s with the offshore Kudu gas field discovery by a
subsidiary of Chevron. Despite its significance, the field was never developed
due to commercial and market constraints, and for decades thereafter, Namibia
saw only sporadic exploration activity and a string of dry wells, leaving
major international oil companies largely uninterested. Geological
similarities between Namibia's Orange Basin and the deepwater Cretaceous
basins of Brazil eventually rekindled interest, though Namibia's opportunities
are not pre-salt.
Major offshore oil finds in 2022 by Shell (Graff) and TotalEnergies (Venus)
resulted in a change in industry sentiment towards Namibia, and positioned the
country as a high-profile "hot spot" exploration destination. Exploration
activity intensified in 2024 and 2025, with Galp Energia making the Mopane-1X
and Mopane-2X discoveries, TotalEnergies extending Venus with Mangetti-1X, and
Shell confirming Enigma-1X. Several appraisal wells further validated the
resources, though some results, including TotalEnergies' Tamboti-1X and
Chevron's Kapana-1X, were non-commercial. Rhino Resources achieved successes
with Sagittarius-1X and Capricornus-1X, while onshore exploration resumed with
Recon Africa spudding the Kavango West 1X prospect. By 2025, the cumulative
exploration effort included over ten discoveries and more than a dozen
appraisal wells, transforming Namibia's deepwater Orange Basin into one of the
continent's most actively explored regions.
Although Namibia currently has no commercial oil production, the discoveries
at Venus and Mopane, along with the prospective Kudu gas field, position the
country to become a significant oil and gas producer in Sub-Saharan Africa.
According to TotalEnergies, which is the operator of Venus, first oil is
anticipated before 2030, and final investment decisions for major developments
TotalEnergies is associated with (being both Venus and Mopane) are expected in
the period 2026 to 2028. With a favourable fiscal and regulatory framework,
high-quality reservoirs, and sustained interest from international operators,
Namibia is poised to become one of the continent's most important emerging oil
and gas hubs.
(ii) Uruguay
Although Uruguay has never been an oil and gas producer, industry focus turned
to it after the large discoveries off Namibia in 2022, since both regions were
adjacent during the Early Cretaceous Period and thus are considered
"conjugates" with shared geological correlations.
Currently, all offshore areas in Uruguay are offered for exploration by ANCAP,
the State-owned oil and gas company which also acts as regulator. All
available offshore areas in Uruguay are currently under licence, several
farm-outs have either been conducted or are in the works, and the industry is
optimistic about finding commercially recoverable reserves in the near future.
New 3D seismic acquisition is currently underway and the drilling of at least
one exploratory well, by APA Corporation (formerly, Apache), is expected in
late 2026 / 2027.
(iii) Angola
Angola has a proven petroleum system with bitumen and viscous crude oil from
seeps having been used as fuel in Angola for several centuries. Hydrocarbon
exploration began in 1910 over an area covering the Lower Congo and Kwanza
basins. After commercial discoveries in both basins, initial production
commenced onshore in 1956 before extending into the shallow water in the
1970's. The civil war from 1975 to 2002 disrupted further exploration but in
the 1990's the deepwater was opened up and this has driven the latest phase of
development and production in Angola, with several licensing rounds of varied
success and a few ad-hoc awards. Drilling activity has largely focused on the
deepwater and ultra-deepwater over the last 10 years, but recently Angola's
onshore oil and gas sector has gained renewed attention as the Government of
Angola seeks to diversify exploration and production beyond its mature
offshore fields. In particular, the Kwanza Basin, which stretches along the
central-western coast of Angola, holds significant hydrocarbon potential, and
is historically under-explored compared to Angola's prolific offshore
deepwater blocks. The basin is now a focal point of efforts to revitalize the
country's upstream sector, with recent licensing rounds and regulatory reforms
opening the door for both international oil companies and local players to
participate in onshore exploration and production.
(iv) General
All of the locations in which the Company holds assets are considered
"frontier" for oil and gas activity. Financial and commodities markets in
general, and the global market for oil and has in particular has been
volatile, and is expected to remain volatile for the foreseeable future,
reflecting ongoing concerns regarding the impact of wars in the Middle East
and Ukraine in particular, and geo‑political developments in the Americas,
the Middle East and Africa in general. Energy companies worldwide, including
Sintana, can be materially and adversely affected by these trends. See also
the section of this document entitled "Risk Factors".
C. 2025 Portfolio Highlights & Major Developments
(i) Assets & Operations
On May 14, 2025, the Company announced the formation of a strategic
partnership with Corcel, plc ("Corcel"), a UK-listed entity focused on oil and
gas opportunities in Angola. Specifically, the Company and Corcel entered into
a head of terms providing for the Company to acquire an indirect 5% net
interest in KON-16 located in the onshore Kwanza Basin in Angola. The
acquisition terms provide that the Company will also receive a future 2.5% Net
Profits Interest ("NPI") on Corcel's interest in KON-16 of up to $50,000,000,
after which the NPI reduces to 1.5%. The consideration for the transaction is
a total of $2.5MM payable by way of an initial $500,000 deposit and a balance
of payment at completion. Formal documentation for the acquisition is expected
to be signed during Q2 2026 and completion thereafter will be pending
satisfaction of various conditions, including in particular regulatory
approval - expected to occur in H2 2026. See also "Proposed Transactions",
below.
On October 9, 2025, the Company announced that it has reached an agreement
with Challenger Energy Group Plc ("Challenger") for an all-share acquisition
pursuant to which the Company would acquire all of the issued and to be issued
ordinary share capital of Challenger by way of a scheme of arrangement (the
"Scheme"). Challenger holds interests in two highly prospective offshore
exploration licences in Uruguay, as well as legacy assets in The Bahamas.
Under the terms of the Scheme, Challenger shareholders received approximately
0.4705 common shares of the Company for each Challenger ordinary share held.
On 12 December 2025, the Scheme was sanctioned by the Isle of Man Court and
the Scheme became effective on 16 December 2025. As a result, the Company
acquired the entire issued and to be issued share capital of Challenger, and
Challenger became a wholly owned subsidiary of the Company. The Company issued
126,731,086 common shares to Challenger shareholders, equating to
approximately 25% of the enlarged share capital of the Company at the time of
the transaction.
In parallel with the Scheme, the Company applied for admission to trading on
the AIM Market of the London Stock Exchange. Admission of the common shares of
the Company (including those issued as consideration for the Challenger
acquisition) to trading on AIM became effective on 23 December 2025, and at
the same time the Challenger's ordinary shares were cancelled from trading on
AIM.
On December 9, 2025 it was announced that TotalEnergies and Galp Energia had
entered into an agreement pursuant to which TotalEnergies will assume
operatorship of PEL 83 in addition to receiving a 40% participating interest
in PEL 83 from Galp Energia, the current operator who currently own 80%. The
agreement also included a commitment to launch an exploration and appraisal
campaign on PEL 83 that will include at least three wells over the next two
years, to continue de-risking the block and support definition of an initial
development hub. The first potential well is expected to be spud in H2 2026.
The agreement with TotalEnergies is subject to regulatory approval, which
process is currently underway and is expected to be completed in H2 2026.
Subsequent to period end:
· in February 2026, as part of its 2025 annual results
presentation, TotalEnergies indicated in relation to PEL 83 that (i) the
Mopane project FID target was 2028, with first oil target in 2032; (ii) a
development concept based around FPSO and 20,000 boepd production was
contemplated; and (iii) considerable upside exploration potential of up to a
further 1.5 bn barrels had been identified both within an expansion of the
Mopane project and in the broader PEL 83 block;
· on 3 March 2026, the planned 3D seismic acquisition campaign on
AREA OFF-1, offshore Uruguay, commenced. The survey is being carried out by
the contractor Viridien, using the BGP Prospector vessel, and will cover a
total of approximately 4,300 km(2). Acquisition fieldwork will take place over
two seasons: February-April 2026 and November 2026-April 2027, with most
acquisition relevant to the key prospects on AREA OFF-1 expected to be
completed in the first season. Fast-track results from seismic acquired in the
first season are expected in Q4 2026, with full PSDM results from the first
season expected in Q2 2027; and
· on 23 March 2026, Galp Energia released its Integrated Management
Report 2025, in which it detailed a significant upgrade to 3C contingent
resources at the Mopane discovery on PEL 83, offshore Namibia. The previously
reported 3C contingent resource of 875 mmboe (gross) has been upgraded to 1.38
bn boe (gross), the increase reflective of the success of the exploration
drilling campaign at Mopane. This upgrade represents a 57% increase to the
Mopane resource base.
(ii) Corporate
Consequent on the completion of the Challenger acquisition, a number of
changes to the Board and management of the Company took effect as of 16
December 2025, as follows:
· Mr. Keith D. Spickelmier ceased in his role as Executive Chairman
of the Company, and assumed the role of non-executive Chairman;
· Mr. Douglas G. Manner ceased in his role as President of the
Company, and assumed the role of non-Executive Director;
· Each of Mr. David L. Cherry (Chief Operating Officer), Mr.
Carmelo Marrelli (Chief Financial Officer), Mr. Bruno C. Maruzzo (Director)
and Mr. Dean Gendron (Director) ceased their roles with the Company;
· Mr. Eytan Uliel, formerly chief executive officer of Challenger,
assumed the role of President and Executive Director of the Company;
· Mr. Iain McKendrick, formerly the non-executive Chairman of
Challenger, assumed the role of non-executive Director and senior independent
director of the Company; and
· Mr. Jonathan Gilmore, formerly Finance Director of Challenger,
assumed the role of Chief Financial Officer and co-company secretary of the
Company.
Mr. Robert Bose continues to serve as Chief Executive Officer and Executive
Director of the Company, Mr. Knowledge Katti continues in his role as
non-executive Director of the Company, and Mr. Sean Austin continues in his
role as Financial Controller, Treasurer and co-company secretary of the
Company.
(iii) Finance
As at December 31, 2025, the Company had total assets of $62.1 million (2024:
$21.9 million), including cash of $10.3 million (2024: $12.6 million). The
significant increase compared to the prior year is primarily attributable to
the Challenger acquisition, through which the Company acquired total assets of
$45.8 million, including cash of $4.5 million, and assumed liabilities of $6.2
million, resulting in identifiable net assets of $39.7 million.
The increase in liabilities primarily reflects amounts acquired as part of the
acquisition of Challenger, including $3.6 million of accounts payable and
accrued liabilities and a $2.6 million asset retirement obligation relating to
a legacy Spanish subsidiary, which is currently undergoing a liquidation
process.
During the year ended December 31, 2025, the Company reported a net loss of
$10.2 million (2024: $7.7 million). The increase in net loss was primarily
driven by higher general and administrative expenses, including a $1.9 million
increase in non-cash share-based compensation, a $0.5 million increase in
salaries and benefits, a $0.3 million increase in professional fees and
investor relations costs. In addition, interest income decreased by $0.3
million due to lower average cash balances as cash resources were utilized
during the year.
During the year ended December 31, 2025, the Company issued the following
stock options and restricted share units:
· On June 27, 2025, the Company granted a total of 100,000 stock
options to Mr. Carmello Morelli, at that time an officer of the Company.
· On June 27, 2025, the Company granted a total of 4,200,000 RSUs
to certain directors and officers of the Company. The RSUs will vest on June
27, 2026.
· On November 30, 2025, 900,000 options with an exercise price of
$0.16 were cancelled.
· During the year ended December 31, 2025:
· 4,128,090 stock options were exercised for aggregate cash
proceeds of $811,895, and
· 2,400,000 RSUs vested and were converted to common shares with a
value of $2,290,796.
· Subsequent to period end:
· on January 6, 2026, the Company announced that 400,000 stock
options had been exercised for cash proceeds of $29,062,
· on January 6, 2026, the Company announced the issuance of an
aggregate of 2,600,000 common shares upon the conversion of RSUs. The common
shares were admitted to trading on January 7, 2026,
· on March 27, 2026, The Company announced the exercise of an
aggregate of 800,000 stock options for cash proceeds of $64,105, and
· on April 24, 2026, the Company announced the exercise of an
aggregate of 625,000 stock options for cash proceeds of CAD$110,500.
Subsequent to year end, on 4 February 2026, the Company advised it had reached
agreement to resolve arbitration with ExxonMobil in relation to the VMM-37
block in Colombia, whereby the parties had agreed to dismiss the arbitration;
the Company had agreed to conditionally assign all its interests in VMM-37 to
ExxonMobil; and ExxonMobil had agreed to make a total of $9 million in cash
payments to the Company: an initial payment of $3 million within 60 days, and
a second $6 million payment conditioned on approval of the assignment by the
appropriate Colombian governmental agencies. Subsequently, the arbitration has
been dismissed as agreed, and the Company has received the first payment of
$3 million from ExxonMobil. The parties are working collaboratively in
relation to securing the requisite governmental approvals, and presently
expect payment of the second instalment prior to year end 2026.
Selected Annual Information
The following is selected financial data derived from the audited annual
consolidated financial statements of the Company at December 31, 2025 and
December 31, 2024 for the years then ended:
Year Ended Year Ended
December 31, December 31,
2025 2024
$ $
Total revenues nil nil
Total loss (10,223,896) (7,666,402)
Net loss per share - basic
Net loss per share - diluted (0.03) (0.02)
Assets / Liabilities As at As at
December 31, December 31,
2025 2024
$ $
Current assets 12,670,864 12,844,567
Non-current assets 49,453,981 9,070,018
Total assets 62,124,845 21,914,585
Current liabilities 7,626,488 1,385,006
Non-current liabilities 364,124 353,824
Total liabilities 7,990,612 1,738,830
Distribution or cash dividends nil nil
· The net loss for the year ended December 31, 2025, consisted
primarily of (i) exploration and evaluation expenditures of $106,479; (ii)
general and administrative expenses of $10,258,135; (iii) joint venture loss
of $31,360; and (iv) income tax expense of $58,888. These fees were offset by
(i) foreign exchange loss of $104,699; (ii) other income of $nil; and (iii)
interest income of $335,665.
· The net loss for the year ended December 31, 2024, consisted
primarily of (i) exploration and evaluation expenditures of $2,091,088; (ii)
general and administrative expenses of $7,361,576; (iii) foreign exchange loss
of $1,396,702; (iv) joint venture loss of $84,165; and (v) income tax expense
of $193,164. These fees were offset by interest income of $621,033.
· The Company's ability to fund its operations is dependent on
securing financing by issuing equity and / or debt instruments, selling
assets, proceeds from sales of produced hydrocarbons, and / or royalty income.
The value of any prospective hydrocarbons is dependent upon the existence of
economically recoverable reserves, the ability to obtain the necessary
financing to complete exploration, development and production activities, and
the future profitable production or proceeds from the disposition of
successful hydrocarbons projects. See "Trends" and "Risk Factors".
Discussion of Operations
1. Namibia
PEL 83 - Orange Basin, offshore Namibia (4.9% indirect interest)
The Company holds an indirect carried interest in PEL 83 (Blocks 2813A/2814B)
which is located in the northern Orange sub-basin approximately 150 km off the
south-west coast of Namibia. The Barremian Aptian source rock (Kudu shale) is
mature and believed to be within the oil mature window across PEL 83.
In November of 2023, Galp Energia spudded the Mopane-1X exploration well
targeting two AVO anomalies (AVO-1 and AVO-2) and in January 2024 announced
discoveries in both AVO anomalies of significant columns of light oil in
reservoirs of high-quality sands. Given these results Galp Energia proceeded
with drilling of a second well, Mopane-2X, and in March 2024 reported several
discoveries at the Mopane-2X location, with each of the AVO-1 appraisal
target, AVO-3 exploration target and a deeper target fully cored and logged.
Notably, the AVO-1 appraisal target at the Mopane-2X location found the same
pressure regime as in the Mopane-1X discovery well located approximately eight
kilometers to the east, thus confirming its lateral extension.
In April 2024, Galp Energia successfully completed drill stem testing
operations at the Mopane-1X well and reported that the reservoirs' log
measures contain good porosities, high pressures and high permeabilities in
large hydrocarbon columns. Fluid samples presented very low oil viscosity and
contained minimum CO(2) and no H(2)S concentrations.
Late in 2024, the Mopane-1A well, an AVO-1 appraisal well, was drilled, cored
and logged, with the well encountering light oil and gas-condensate. This was
followed by the Mopane-2A well, which successfully appraised and extended the
AVO-3 reservoir and the AVO-4 discovery, a column of light oil in a deeper
reservoir. Galp Energia subsequently completed drilling the Mopane-3X
exploration well to the south-east and announced light oil discoveries in two
stacked prospects, AVO-10 and AVO-13, plus a deeper target.
Galp Energia has indicated potential resources of approximately 10 billion
barrels and has provided an initial 3C contingent resource estimate of around
875 million barrels (gross). Initial well flow rates (infrastructure
constrained) were reported at approximately 14,000 barrels of oil per day.
On 9 December 2025, TotalEnergies announced that it has entered into an
agreement with Galp Energia to acquire a 40% operated interest in PEL083.
Under the terms of the agreement, TotalEnergies will become operator of PEL083
and will carry 50% of Galp Energia's costs for exploration, appraisal and
initial development. Completion of the transaction is subject to customary
approvals from Namibian authorities and joint venture partners, with closing
expected in 2026.
Subsequent to period end:
· in February 2026, as part of its 2025 annual results
presentation, TotalEnergies indicated in relation to PEL 83 that (i) the
Mopane project FID target was 2028, with first oil target in 2032; (ii) a
development concept based around FPSO and 20,000 boepd production was
contemplated; and (iii) considerable upside exploration potential of up to a
further 1.5 bn barrels had been identified both within an expansion of the
Mopane project and in the broader PEL 83 block, and
· on 23 March 2026, Galp Energia released its Integrated Management
Report 2025, in which it detailed a significant upgrade to 3C contingent
resources at the Mopane discovery on PEL 83, offshore Namibia. The previously
reported 3C contingent resource of approximately 875 mmboe (gross) has been
upgraded to approximately 1.38 bn boe (gross), the increase reflective of the
success of the exploration drilling campaign at Mopane. This upgrade
represents a 57% increase to the Mopane resource base.
PEL 79 - Orange Basin, offshore Namibia (16.17% indirect interest)
The Company holds an indirect and carried interest in PEL 79 (Blocks
2815/2915) which is located in the northern Orange sub-basin off the
south-west coast of Namibia.
Adjacent to the west is PPL 3, home to the Kudu Gas Field, discovered by the
drilling of the Kudu-1 well in 1974 and delineated by seven subsequent wells.
During 2023, BW Energy acquired 4,600 km(2) of 3D seismic across all of PPL003
aimed at further developing the oil prospectivity on the block. BW Energy is
currently drilling the Kharas exploration/appraisal well on PPL 3, with
expected completion in early Q1 2026.
The Barremian Aptian source rock (Kudu shale) is mature and believed to be
within the oil mature window across PEL079. The initial interpretation of the
block led to the identification of three potential targets. Additionally, as
the block is adjacent to the Kudu Field there is also potential for the
extension of the Kudu trend in this block. The 2815/15-1 well, drilled by a
subsidiary of Chevron in 1996 had gas shows. It also validated the succession
of shale intercalated with thin fluvial deltaic sandstones.
The Company's interest in PEL 79 was secured in June 2024 as a result of the
Giraffe acquisition. NAMCOR is the operator of the block and holds a 67%
interest. As part of the Giraffe acquisition, Sintana retains an option to
increase its ownership to up to 67% of Giraffe at any time over the five years
following completion of the Giraffe acquisition, with the cost of exercise of
that option being US$1 million.
PEL 87 - Orange Basin, offshore Namibia (7.35% indirect interest)
The Company holds an indirect and carried interest in PEL 87 (Block 2713)
offshore Namibia, and to the northwest of the Kudu Gas Field.
Seismic data covers more than 1,400 km(2) of 3D and regional grid of 2D
seismic ties to other blocks and key wells. The Moosehead-1 well, drilled by
HRT in 2013, encountered a thick Barremian carbonates source rock section and
thick shale seal section, but lacked maturity and porosity at well location.
PEL087 contains the Saturn turbidite complex that spans more than 2,400 km(2)
and has significant oil potential. The Aptian/Albian age fan rests directly on
top of source rocks and contains several sands within the 280m gross section.
In March 2023, Woodside entered into an option agreement to acquire a 56%
participating interest in PEL087, in consideration for which it agreed to fund
the full costs of a 3D seismic acquisition campaign. A 6,593 km(2) 3D seismic
acquisition programme over and around PEL087 was completed in May 2023 at a
cost of US$40 million, the costs of which were fully born by Woodside. In
March 2025 Woodside decided not to exercise its option, and as a result
Pancontinental, the operator of the block, is currently engaged in a process
to secure an alternate partner for PEL087 with equivalent carry rights for the
Company.
Subsequent to period end, on 18 March 2026, Pancontinental Energy Limited
("Pancontinental"), the joint venture partner and operator of PEL 87, advised
that it had received notification from the Namibian Ministry of Industry,
Mines and Energy (MIME) that the Minister has granted approval to
Pancontinental's application to extend the current First Renewal Exploration
Period of PEL 87 by 12 months, to January 22 2027. The extension has been
granted with the following work commitments to be carried out on PEL 87 during
the extension period: (i) undertaking of an Environmental Impact Assessment
("EIA"), (ii) reprocessing of 3D seismic data and seismic interpretation, and
(iii) drilling of an exploration well. Currently the EIA is well progressed,
having commenced in 2025, with the seismic reprocessing work program focusing
on a subset of PEL 87 3D. The main purpose of the seismic work will improve
seismic signal quality in specific areas.
PEL 90 - Orange Basin, offshore Namibia (4.9% indirect interest)
The Company holds an indirect interest in PEL 90 (Block 2813B) offshore
southern Namibia, in the northern Orange Basin, in water depths between 2,300m
and 3,300m.
In October 2022, Chevron acquired an 80% operated working interest in PEL 90
in exchange for a full-carry on initial exploration activities including a
6,600 km(2) 3D seismic programme and an initial exploration well.
In January 2024, Chevron drilled the Kapana-1X exploration on PEL 90. The well
did not encounter commercial hydrocarbons, but operations did return valuable
information on important aspects of the basin and increased confidence in
future operations on PEL 90. The Company was fully carried in all costs
associated with that well. In December 2024 Qatar Energy entered into PEL 90
through the acquisition of a 27.5% participating interest.
Chevron has filed environmental applications which would enable the drilling
of up to five exploration wells and five appraisal wells. Additionally,
Chevron has announced its intension to proceed with planning and drilling
operations associated with the Nabba-1X well expected to be drilled in Q4
2026. The Company's indirect interest is not carried for any additional
exploration activity that may occur on PEL 90, but retains carry through any
appraisal operations. Initial estimates are that the Company's share of the
cost of any future exploration well on PEL 90 would be in the range of $6 to
$7 million.
It is worth noting that in early 2022, TotalEnergies announced a light oil
discovery at Venus-1, with the well encountering 84 metres of net oil pay in
good quality Lower Cretaceous reservoir. The Venus appraisal programme was
followed by the drilling of the Mangetti-1X well in early 2024 which is
located less than 30 km from the southern boundary of PEL 90.
PEL 82 - Walvis Basin, offshore Namibia (4.9% indirect interest)
The Company holds an indirect and carried interest in PEL082 (Blocks
2112B/2212A) offshore Namibia in the Walvis Basin. Two historic wells have
been drilled on the block - the Wingat-1 well drilled by a subsidiary of HRT
in 2013, which recovered oil, and the Murombe-1 well, drilled by HRT in 2013,
which intersected a mature oil-prone source in the Aptian sequence.
In April 2024, Chevron acquired an 80% operated working interest in PEL 82. A
3,440 km(2) 3D seismic survey in PEL 82 has resulted in the delineation of a
number of significant prospects consisting of Lower Cretaceous submarine fans
that are stratigraphically trapped.
Chevron is currently evaluating the prospect inventory and is considering an
exploration drilling program potentially in 2027. The Company's indirect
interest is fully carried for the cost of this program.
PEL 37 - Walvis Basin, offshore Namibia (potential indirect interest)
Subsequent to period end, on January 21, 2026, the Company announced that it
had entered into a Letter of Intent ("LOI") securing a period of exclusivity
in relation to a potential investment that would provide an indirect interest
in PEL 37 in the Walvis Basin, offshore Namibia. PEL 37 is immediately
adjacent to and north of PEL 82. The exclusivity period runs initially through
to April 30, 2026, during which the Company has been undertaking technical,
commercial and legal due diligence and negotiating potential transaction
terms. To secure the exclusivity, the Company agreed to pay a $1 million
deposit, one-third of which is non-refundable should the Company elect not to
proceed. As at the date of this MD&A, the Company continues to undertake
due diligence as to the technical and commercial merits of this opportunity,
and in parallel is seeking to negotiate suitable transaction terms - the
exclusivity period is expected to be extended.
PEL 103 - Waterberg Basin, onshore Namibia (13.23% indirect interest)
The Company holds an indirect interest in PEL 103 (Block 1918B) which is
located onshore in the North-East of Namibia, in the Waterberg Basin. Thick
Permian Karoo Supergroup sediments are present in the Waterberg Basin, which
provide a favourable setting for hydrocarbon exploration. Waterberg Basin
geology is characterized by coal and shales, with 19 million tons of coal
reserves indicated within the vicinity of PEL 103. Permian source rocks are
expected as well as several reservoir intervals from Permian to Triassic. A
small portion of the Basin has been drilled to date and more untested
sub-basins are likely to exist.
The Waterberg Basin is adjacent to the Kavango Basin, where Recon Africa holds
acreage. Recon Africa's first Stratigraphic Test well on its acreage resulted
in a discovery, confirming an active petroleum system with porous and
permeable sediments containing marine hydrocarbons. PEL 103 is located ~55 km
to the south-west of Recon Africa's acreage, and based on the results of Recon
Africa's well it is believed that the Permian sediments on PEL 103 could hold
similar hydrocarbons.
As reported in December 2025, Recon Africa's Kavango West 1X well in Namibia
encountered approximately 400 metres of hydrocarbon-bearing Otavi carbonate
section, including 64 metres of confirmed net pay, with production testing
scheduled for Q1 2026.
2. Uruguay
AREA OFF-1 (40% working interest)
AREA OFF-1 is a large block covering approximately 14,557 km(2) located
approximately 100 to 150 km offshore Uruguay in relatively shallow water depth
(50 to 1,000 metres). Challenger (a subsidiary of the Company following the
Challenger acquisition) was the first company to bid in the new Uruguay Open
Round in May 2020, and in June 2020 was awarded AREA OFF-1, with the initial
four-year exploration period commencing on 25 August 2022.
In late 2022, in view of growing industry interest in Uruguay's offshore,
Challenger made a decision to accelerate and expand the work required to be
completed on AREA OFF-1 during the first four-year exploration period. In
doing so, three material prospects with significant resource potential were
identified and delineated.
In March 2024, Challenger entered into a farmout agreement with a subsidiary
of Chevron for the AREA OFF-1 block. That transaction completed on 29 October
2024. Under the terms of the farmout agreement, in addition to payment of
US$12.5 million in cash, Chevron assumed a 60% operated interest in the block,
in exchange for a full carry on a 3D seismic acquisition (up to a total gross
programme value of $37.5 million) and a partial carry on any subsequent
exploration well (up to a total gross well cost of $100 million).
On 8 December 2025, the Uruguayan Ministry of Environment issued the necessary
environmental permits for seismic acquisition in Uruguayan territorial waters.
Subsequent to period end on 3 March 2026, the planned 3D seismic acquisition
campaign on AREA OFF-1, offshore Uruguay, commenced. The survey is being
carried out by the contractor Viridien, using the BGP Prospector vessel, and
will cover a total of approximately 4,300 km(2). Acquisition fieldwork will
take place over two seasons: February-April 2026 and November 2026-April 2027,
with most acquisition relevant to the key prospects on AREA OFF-1 expected to
be completed in the first season. Fast-track results from seismic acquired in
the first season are expected in Q4 2026, with full PSDM results from the
first season expected in Q2 2027.
AREA OFF-3 (100% working interest)
AREA OFF-3 is a large block covering an area of 13,252 km(2) located
approximately 75 km to 150 km offshore Uruguay in relatively shallow water
depths (25 to 1,000 metres). The Company holds a 100% working interest in and
is the operator of the block, which was awarded in March 2024, and with the
initial four-year exploration period commencing on 7 June 2024.
The licence for AREA OFF-3 provides for a modest work commitment in the
initial four-year exploration period, and no drilling obligation. Similar to
AREA OFF-1, the Company's plan during the initial four-year exploration period
has been to accelerate and expand the technical work programme, and thus far
reprocessing, interpretation and mapping 1,250 km(2) of 3D seismic data has
been completed, supplemented by a number of ancillary technical workstreams
(and substantially discharging all minimum work obligations in the initial
four-year exploration period). The technical work completed to-date has
identified and delineated two primary prospects with material resource
potential.
In July 2025, Sintana initiated a farmout process for the AREA OFF-3 block,
with multiple parties undertaking technical and commercial due diligence on
the asset. As at the date of this MD&A, the farm-out process is ongoing.
3. Angola
KON-16 - Kwanza Basin, Angola (5% potential indirect interest)
The Company entered into heads of terms with Corcel on 13 May 2025 to acquire
an indirect 5% participation interest in the KON-16 licence, which is located
in the central coast of Angola, in the Kwanza Basin. A definitive agreement in
relation to this acquisition is expected to be entered into by the end of
April 2026, and completion of the transaction will follow pending satisfaction
of conditions precedent, including regulatory approval, with completion
expected in Q4 2026. See further "Proposed Transactions", below.
Subsequent to period end, on 26 February 2026 Corcel announced that
acquisition of 326-line km of high resolution 2D seismic data acquired over
the KON-16 block had been completed, with initial internal review of the raw
field data showing excellent data quality, and providing clear imaging of key
pre-salt. Seismic processing will follow with results expected throughout the
course of 2026 to support prospect maturation and drilling preparation.
4. Legacy Assets
Colombia
The VMM-37 block (175 km (2)) is in the Middle Magdalena Basin, which is the
oldest producing basin in Colombia. In November 2012, the Company had entered
into a farmout agreement an affiliate of Exxon Mobil Corporation that provided
initially for a conveyance to Exxon of a 70% operated working interest in the
unconventional horizons associated with VMM-37 in exchange for, among other
things, an upfront cash payment and a commitment to fund 100% of certain
exploration and appraisal activities including the drilling of exploration
wells. The Company retained a 100% participation interest in the conventional
resources overlying the top of the unconventional interval.
On 18 April 2023, the Company announced that Exxon had provided notice that it
had determined to withdraw from VMM‑37 as of 31 May 2023. An arbitration
claim in respect of this matter was subsequently filed by the Company in July
2023.
Subsequent to period end, on 4 February 2026, the Company advised it had
reached agreement to resolve the arbitration against ExxonMobil in relation to
the VMM-37 block in Colombia, whereby the parties had agreed to dismiss the
arbitration; the Company had agreed to conditionally assign all its interests
in VMM-37 to ExxonMobil, and ExxonMobil had agreed to make a total $9 million
cash payment to the Company: an initial payment of $3 million within 60 days,
and a second $6 million conditioned on approval of the assignment by the
appropriate Colombian governmental agencies. Subsequently, the arbitration has
been dismissed as agreed, and the Company has received the first payment of
$3 million from ExxonMobil. The parties are working collaboratively in
relation to securing the requisite governmental approvals, and presently
expect payment of the second instalment prior to year end 2026. Assuming the
settlement is completed and full payment is received as agreed, the Company
will have no further operations or assets in Colombia and no future plans in
this regard at the present time.
The Bahamas
A subsidiary company of Challenger entered into Licence Agreements with The
Government of the Commonwealth of the Bahamas on 26 April 2007, for each of
the Bain, Cooper, Donaldson and Aneas licence areas, offshore The Bahamas.
Extensive technical work was undertaken on the licence areas between 2008 and
2020 (including 3D seismic acquisition in 2012) and in late 2020 The
Perseverance-1 well was drilled in the licence areas. In March 2021,
consistent with the terms of the licences, application was made to the
Government of The Bahamas to renew the licences for a third exploration
period. However, the Government of The Bahamas has not yet responded to this
application and, given the length of time that has passed since the
application was made, the Company is presently exploring alternative means of
monetizing the value of its historic investment in The Bahamas, including
considering legal remedies available against the Government of The Bahamas. As
such, the licence interests are considered to be legacy assets and Sintana has
no active operations in The Bahamas.
Summary of Select Quarterly Information
The following table provides a summary of the Company's financial statements,
for each of the eight most recently completed quarters:
Profit or (Loss)
Basic and
Diluted Income
Total (Loss) Per Total
Revenues Total Share((9)) Assets
Quarter Ending ($) ($) ($) ($)
2025-December 31 Nil (3,207,265)((1)) (0.01) 62,124,845
2025-September 30 Nil (2,561,374)((2)) (0.01) 20,488,044
2025-June 30 Nil (2,161,878)((3)) (0.01) 21,430,996
2025-March 31 Nil (2,293,278)((4)) (0.01) 21,074,912
2024-December 31 Nil (2,213,993)((5)) (0.01) 21,914,585
2024-September 30 Nil (1,375,213)((6)) (0.00) 24,575,680
2024-June 30 Nil (3,798,618)((7)) (0.01) 24,535,794
2024-March 31 Nil (278,578)((8)) (0.00) 27,964,701
Notes:
(1) Net loss of $3,207,265 consisted primarily of: exploration and
evaluation expenditures of $65,011, general and administrative expenses of
$3,147,068 and income tax expense of $58,888, which were offset by a joint
venture gain of $4,864, foreign exchange gain of $2,581 and interest income of
$56,257.
(2) Net loss of $2,561,374 consisted primarily of: exploration and
evaluation expenditures of $27,371, general and administrative expenses of
$2,753,975 and joint venture loss of $19,637 which was offset by a foreign
exchange gain of $152,742 and interest income of $86,865.
(3) Net loss of $2,161,878 consisted primarily of: exploration and
evaluation expenditures of $5,098, general and administrative expenses of
$2,088,447, joint venture loss of $8,865 and foreign exchange loss of $149,547
which was offset by interest income of $90,079.
(4) Net loss of $2,293,378 consisted primarily of: exploration and
evaluation expenditures of $9,000, general and administrative expenses of
$2,268,646 joint venture loss of $7,723 and foreign exchange loss of $110,475
which was offset by interest income of $102,465.
(5) Net loss of $2,213,993 consisted primarily of: exploration and
evaluation expenditures of $21,797, general and administrative expenses of
$3,190,370, joint venture loss of $54,041 and income tax expense of $193,165,
which was offset by Interest Income of $140,939 and foreign exchange gain of
$1,104,762.
(6) Net loss of $1,375,213 consisted primarily of: exploration and
evaluation expenditures of $8,200, general and administrative expenses of
$1,251,197, foreign exchange loss of $280,968, joint venture loss of $21,330,
which was offset by Interest Income of $174,800 and gain on accounts payable
of $11,682.
(7) Net loss of $3,768,618 consisted primarily of: exploration and
evaluation expenditures of $2,051,817 general and administrative expenses of
$2,229,389, joint venture loss of $23,736, which was offset by interest income
of $247,878, gain on accounts payable of $17,329 and foreign exchange gain of
$241,116.
(8) Net loss of $278,578 consisted primarily of: exploration and
evaluation expenditures of $9,274, general and administrative expenses of
$690,621, which was offset by joint venture gain of $14,943, foreign exchange
gain of $331,792, interest income of $57,415 and gain on accounts payable of
$17,166.
(9) Per share amounts are rounded to the nearest cent, therefore
aggregating quarterly amounts may not reconcile to year-to-date per share
amounts.
Variances in the Company's quarterly net income or loss are largely
attributable to variances in the magnitude and timing of the Company's
exploration and evaluation expenditures and recoveries, transactions costs,
share-based payments, professional fees and other general and administration
costs, foreign exchange gain / loss, gain or loss on asset sales, interest and
other income and loss on debt extinguishment.
Results of Operations
Three months ended December 31, 2025 compared with three months ended December
31, 2024
Sintana's net loss totalled $3,207,265 for the three months ended December 31,
2025, with basic and diluted loss per share of $0.01. This compares with a net
loss of $2,213,993 for the three months ended December 31, 2024, with basic
and diluted loss per share of $0.01. The increase of $993,272 in net loss was
principally due to:
· Exploration and evaluation expenditures increased to $65,011 for
the three months ended December 31, 2025 compared to $21,797 for the
comparative period.
· General and administrative expenses decreased by $43,303. General
and administrative expenses totalled $3,147,068 for the three months ended
December 31, 2025 (three months ended December 31, 2024 - $3,190,370) and
consisted of share-based compensation of $1,447,566 (three months ended
December 31, 2024 - $2,079,894) salaries and benefits of $1,786,068 (three
months ended December 31, 2024 - $667,325), professional fees of $194,176
(three months ended December 31, 2024 - $180,721), administrative and general
expenses of $44,227 (three months ended December 31, 2024 - $46,548), investor
relations of $109,110 (three months ended December 31, 2024 - $139,482),
travel expenses of $42,591 (three months ended December 31, 2024 - $74,344)
and reporting issuer costs of $21,469 (three months ended December 31, 2024 -
$2,306). In addition to these costs a further credit was recorded under
business acquisition costs of $498,140 (three months ended December 31, 2024 -
credit of $250) which occurred due to a reversal of costs incurred in the
previous period which were subsequently capitalized on the last quarter of
each respective year.
The Company incurred a decrease in share-based compensation of $632,328 for
the three months ended December 31, 2025, compared to the three months ended
December 31, 2024. The decrease was the result of a reduction in vesting over
time of options and RSUs.
The Company incurred an increase in salaries and benefits of $1,118,743 for
the three months ended December 31, 2025, compared to the three months ended
December 31, 2024. This was the result of an increase in salaries effective as
of January 1, 2025 and performance bonuses and termination benefits paid
during the current period.
The Company incurred an increase in professional fees of $13,455 for the three
months ended December 31, 2025, compared to the three months ended December
31, 2024. The Increase can be attributed to higher legal, audit and accounting
fees during the three months ended December 31, 2025 compared to the three
months ended December 31, 2024.
The Company incurred a decrease in investor relations expense of $30,372 for
the three months ended December 31, 2025, compared to the three months ended
December 31, 2024. The decrease can be attributed to a moderate reduction in
investor communication and outreach efforts.
The Company incurred a foreign exchange gain of $2,581 for the three months
ended December 31, 2025 compared to a gain of $1,104,762 in the period ended
December 31, 2024, which was primarily attributable to US dollar and Canadian
dollar exchange rate fluctuations.
The Company recorded a joint venture gain of $4,864 for the three months ended
December 31, 2025 compared to a loss of $54,041 for the three months ended
December 31, 2024. This is due to the Company's share of the Inter Oil
loss/income.
The Company recorded an income tax expense of 58,888 for the three months
ended December 31, 2025 compared to an income tax expense of $193,164 for the
three months ended December 31, 2024, which was primarily due to the
recognition of the current income tax payable and deferred income tax
liability during the current and prior period.
Year ended December 31, 2025 compared with year ended December 31, 2024
Sintana's net loss totalled $10,223,896 for the year ended December 31, 2025,
with basic and diluted loss per share of (0.03). This compares with a net loss
of $7,666,402 for the year ended December 31, 2024, with basic and diluted
loss per share of (0.02). The increase of $2,557,494 in net loss was
principally due to:
· Exploration and evaluation expenditures decreased to $106,479 for
the year ended December 31, 2025 compared to $2,091,088 for the comparative
period.
· General and administrative expenses increased by $2,896,559.
General and administrative expenses totalled $10,258,135 for the year ended
December 31, 2025 (year ended December 31, 2024 - $7,361,576) and consisted of
share-based compensation of $5,978,695 (year ended December 31, 2024 -
$4,040,963) salaries and benefits of $2,657,133 (year ended December 31, 2024
- $2,109,280), professional fees of $726,289 (year ended December 31, 2024 -
$467,846), administrative and general expenses of $174,979 (year ended
December 31, 2024 - $93,080), investor relations of $460,203 (year ended
December 31, 2024 - $396,424), travel expenses of $172,879 (year ended
December 31, 2024 - $217,350) and reporting issuer costs of $87,957 (year
ended December 31, 2024 - $36,633).
The Company incurred an increase in share-based compensation of $1,937,732 for
the year ended December 31, 2025, compared to the year ended December 31,
2024. The increase was the result of the vesting over time of options and
RSUs.
The Company incurred an increase in salaries and benefits of $547,853 for the
year ended December 31, 2025, compared to the year ended December 31, 2024
which was linked to severance payments made to certain Directors associated
with the acquisition of Challenger.
The Company incurred an Increase in professional fees of $258,443 for the year
ended December 31, 2025, compared to the year ended December 31, 2024. The
Increase can be attributed to increased legal, audit and accounting fees
during the year ended December 31, 2025 compared to the year ended December
31, 2024.
The Company incurred an increase in investor relations expense of $63,779 for
the year ended December 31, 2025, compared to the year ended December 31,
2024. The increase can be attributed to a significant increase in the investor
communication and outreach efforts.
The Company incurred a foreign exchange loss of $104,699 for the year ended
December 31, 2025 compared to a gain of $1,396,702 in the period ended
December 31, 2024, which was primarily attributable to US dollar and Canadian
dollar exchange rate fluctuations.
The Company recorded a joint venture loss of $31,360 for the year ended
December 31, 2025 compared to a loss of $84,165 for the year ended December
31, 2024. This is due to the Company's share of the Inter Oil loss.
The Company recorded an income tax expense of $58,888 for the year ended
December 31, 2025 compared to an income tax expense of $193,164 for the year
ended December 31, 2024, which was primarily due to the recognition of the
current income tax payable and deferred income tax liability during the
current and prior period.
Acquisition of Challenger Energy Group PLC
As noted, during 2025, the Company completed a transaction to acquire all of
the issued and to be issued ordinary share capital of Challenger. The
completion of the transaction was effective 16 December 2025, and resulted in
the issuance of 126,731,086 new common shares of the Company to former
Challenger shareholders, with a value of the date of issuance of $35,950,774.
The acquisition of Challenger did not meet the definition of a business
combination under IFRS 3, Business Combination. Accordingly, the acquisition
was accounted for as an asset acquisition, with a number of consequent effects
on the operations, financial condition, financial performance and cash flows
of the Company, as described further below.
The following table summarizes the fair value of the purchase price of
Challenger and the allocation to net assets acquired:
Purchase Price Consideration
Common shares issued to acquire all the share in Challenger (126,731,086 35,950,774
Sintana common shares issued)
Costs related to the acquisition of Challenger 3,745,627
39,696,401
Net Assets Acquired (Fair Value)
Statement of financial position
Cash and cash equivalents 4,451,617
Accounts receivable and other assets 1,394,562
Tangible assets 41,417
Intangible assets 39,288,794
Restricted cash 707,602
Accounts payable and other liabilities (3,555,859)
Asset retirement obligation (2,631,732)
Total 39,696,401
Cash inflows
Cash and cash equivalents acquired 4,451,617
Costs related to the acquisition of Challenger (capitalized to intangible (3,745,627)
costs)
Net cash inflows 705,990
Liquidity
The Company derives no income from operations. Accordingly, the activities of
the Company have been financed by cash raised through private placements of
securities, convertible debentures, exercise of stock options and warrants,
interest income and sales of non-core assets. As the Company does not expect
to generate positive cash flows from operations in the near future, it will
continue to rely primarily on additional financings to raise additional
capital, in due course and if needed. The Company has no debt.
At the date of this MD&A, the Company estimates that it has or will have
cash resources (including cash balances and cash expected to be received in
due course during the next 12 months pursuant to firm contractual obligations)
adequate to carry on business activities for the next 12 months, based on the
Company's current property interests and currently committed expenditures
during such period. Following such 12-month period, unless the Company
commences producing hydrocarbons in sufficient quantities to meet the
Company's ongoing need for additional working capital, the Company might need
to secure additional financing.
The most significant variables for cash movements are expected to be:
(i) the size, timing and results of the Company's requirements to fund
participation in drilling and exploration activities on various portfolio
assets where those obligations are not the subject of carries,
(ii) the Company's overhead and G&A cost, which is approximately US$4
million per annum, and
(iii) the Company's ability to continue to access additional capital to fund
its ongoing activities in Namibia, Uruguay and Angola.
Although the Company has been successful in raising funds to date, there is no
assurance that future equity capital and / or debt capital will be available
to the Company in the amounts or at the times required or on terms that are
acceptable to the Company, if at all. See "Risk Factors" below.
Capital Resources
The Company monitors its capital structure and makes adjustments, as deemed
necessary, in an effort to meet its commitments and objectives. The Company
can manage its capital structure by issuing additional shares and debt,
purchasing outstanding shares, reducing participation interests, adjusting
capital spending and operating costs, and / or disposing of assets. The cash
forecasts and capital structure are reviewed by management and the Board on an
ongoing basis. There were no changes to how management manages its capital
during 2025.
The Company considers its financial capital to be shareholders' equity, which
comprises share capital, warrants, contributed surplus (which includes stock
options and RSUs) and deficit, which at December 31, 2025 totalled to a
shareholders' equity of $54,134,233 (December 31, 2024 - $20,175,755).
The Company is not subject to any capital requirements imposed by a lending
institution or regulatory body, other than Policy 2.5 of the TSX-V which
requires adequate working capital or financial resources of the greater of (i)
$50,000 and (ii) an amount required in order to maintain operations and cover
general and administrative expenses for a period of 6 months. As of December
31, 2025, the Company was compliant with Policy 2.5.
In connection with the acquisition of Challenger, the Company entered into a
loan agreement with Charlestown Energy Partners, LLC ("Charlestown"), a
shareholder of the Company and a related party, pursuant to which Charlestown
has agreed to provide the Company with a working capital facility of up to
US$4 million (the "Facility") from the closing date of the acquisition. The
Facility may be terminated by the Company at any time upon providing not less
than 20 business days' prior written notice to Charlestown. As at the date of
this MD&A, the Company has not drawn down on the Facility.
Details of the Company's common shares, options and RSUs is set out under
"Disclosure of Share Capital", below.
Off-Balance Sheet Arrangements
As of the date of this MD&A, the Company does not have any off-balance
sheet arrangements that have or are reasonably likely to have a current or
future effect on its results of operations or financial condition, including,
and without limitation, such consolidations as liquidity, capital expenditure
and capital resources that would be considered material to investors.
Directors and Key Management Compensation, Share Based Payments, and
Transactions Between Related Parties
Cash remuneration of directors and key management personnel of the Company
during the period and as compared to the prior period were as follows:
Year ended 31 December 2025 Year ended 31 December 2024
Base Salary/ Base Salary/
Directors' Performance Directors' Performance
Salaries and Benefits((1)) fees bonus Total fees bonus Total
Keith Spickelmier - Director /
Executive Chairman 121,250 100,000 221,250 100,000 40,000 140,000
Robert Bose - Director /
Chief Executive Officer 300,000 300,000 600,000 237,500 700,000 937,500
Douglas Manner - Director / President 105,500 50,000 155,500 100,000 20,000 120,000
Sean Austin - Vice President, Controller,
Secretary & Treasurer 175,000 125,000 300,000 146,250 300,000 446,250
Knowledge Katti - Director 139,280 50,000 189,280 26,764 107,000 133,764
David Cherry - Chief Operating Officer((2)) 110,000 30,000 140,000 100,000 20,000 120,000
Bruno Maruzzo - Director((2)) 31,658 20,000 51,658 28,551 10,000 38,551
Dean Gendron - Director((2)) 31,658 20,000 51,658 28,551 10,000 38,551
Eytan Uliel - Director / President((3)) 37,149 - 37,149 - - -
Iain McKendrick - Director((3)) 3,432 - 3,432 - - -
Jonathan Gilmore - Chief Financial Officer((3)) 6,800 - 6,800 - - -
Total 1,061,727 695,000 1,756,727 767,616 1,207,000 1,974,616
Notes:
(1) Salaries and benefits include director fees. Balances for deferred
compensation due to directors and key management personnel of $604,939 are
included in deferred compensation as at December 31, 2025 (December 31, 2024 -
$993,939).
(2) To 16 December 2025, ceased office / employment with the Company
effective on completion of the Challenger acquisition
(3) From 16 December 2025, commenced office / employment with the Company
effective on completion of the Challenger acquisition
In addition to the above, following completion of the Challenger transaction,
certain cash payments were made pursuant to contractual obligations to Mr.
Keith Spickelmier in respect of the loss of his Executive Chairman position
($206,761), to Mr Douglas Manner following termination of his position as
President ($235,454) and to Mr. David Cherry following the termination of his
role as President and Chief Operating Officer ($295,000).
During the period, directors and key management personnel of the Company were
also awarded options and/or RSUs as part of their overall compensation
arrangements. The number of options and RSUs awarded were as follows:
Year Ended Year Ended
December 31, 2025 December 31, 2024
Share-based awards (Stock options and RSUs) Options RSUs Options RSUs
Keith Spickelmier - Director / Executive Chairman - 600,000 - 1,400,000
Robert Bose - Director / Chief Executive Officer - 600,000 1,900,000 -
Douglas Manner - Director / President - 600,000 - 1,200,000
Sean Austin - Vice President, Controller, Secretary & Treasurer - 600,000 1,600,000 -
Knowledge Katti, Director - 600,000 1,300,000 -
David Cherry - Chief Operating Officer((1)) - 600,000 - 1,200,000
Bruno Maruzzo - Director((1)) - 300,000 - 600,000
Dean Gendron - Director((1)) - 300,000 - 600,000
Carmelo Marrelli - Chief Financial Officer((1)) 100,000 - 300,000 -
Eytan Uliel - Director / President((2)) - - - -
Iain McKendrick - Director((2)) - - - -
Jonathan Gilmore - Chief Financial Officer((2)) - - - -
Total 100,000 4,200,000 5,100,000 5,000,000
Notes:
(1) To 16 December 2025, ceased office / employment with the Company
effective on completion of the Challenger acquisition
(2) From 16 December 2025, commenced office / employment with the Company
effective on completion of the Challenger acquisition
The following table sets out the interests of the Directors and key management
personnel and their families (including any interest known to that Director or
key management person which could with reasonable diligence be ascertained by
him) in the issued share capital of the Company as at the date of this
MD&A:
Number Percentage of
of Common Common
Directors Shares Shares((3))
Keith Spickelmier 6,552,500 1.27
Robert Bose 26,001,263((1)) 5.05
Eytan Uliel 9,665,896 1.88
Iain McKendrick 1,029,561 0.20
Douglas Manner 5,595,558 1.01
Knowledge Katti 22,490,001((2)) 4.37
Senior Managers
Sean Austin 6,925,000 1.35
Jonathan Gilmore 91,646 0.02
Notes:
(1) Mr. Bose holds the legal and beneficial title in 2,213,503 Common
Shares. Mr. Bose is also regarded as the beneficial owner of 23,787,760 Common
Shares held by Charlestown Energy Partners LLC given his association with that
entity.
(2) Mr. Katti holds the legal and beneficial title in 650,000 Common
Shares. Mr. Katti is also the beneficial owner of 21,840,001 Common Shares
held by Grisham Assets Corp.
(3) Calculated based on an aggregate of 514,781,240 common shares of the
Company issued and outstanding on 29 April 2029.
The following table sets out details of the share options to acquire common
shares held by each of the Directors and senior management personnel as at the
date of this MD&A:
Shares Exercise
under Price Expiry
Director Option (CAD) Date
Keith Spickelmier 1,000,000 0.165 24.03.2027
800,000 0.110 16.12.2032
650,000 0.270 19.12.2033
Robert Bose 1,000,000 0.165 24.12.2027
800,000 0.110 16.12.2032
650,000 0.270 19.12.2033
600,000 1.080 01.05.2034
1,300,000 1.230 13.12.2034
Eytan Uliel - - -
Iain McKendrick - - -
Douglas Manner 1,000,000 0.165 24.03.2027
800,000 0.110 16.12.2032
650,000 0.270 19.12.2033
Knowledge Katti 500,000 0.165 24.03.2027
400,000 0.110 16.12.2032
650,000 0.270 19.12.2033
300,000 1.080 01.05.2034
1,000,000 1.230 13.12.2034
Sean Austin 1,000,000 0.165 24.03.2027
650,000 0.270 19.12.2033
600,000 1.080 01.05.2034
1,000,000 1.230 13.12.2034
Jonathan Gilmore - - -
Total 15,350,000
The following table sets out details of the RSUs held by each of the Directors
and senior management personnel as at the date of this MD&A:
Director Number of RSU's Exercise Price Expiry Date
Keith D. Spickelmier 600,000 Nil 27-Jun-26
1,000,000 Nil 7-Jan-27
Robert Bose 600,000 Nil 27-Jun-26
1,500,000 Nil 7-Jan-27
Douglas G. Manner 600,000 Nil 27-Jun-26
1,000,000 Nil 7-Jan-27
Knowledge R. Katti 600,000 Nil 27-Jun-26
1,000,000 Nil 7-Jan-27
Eytan Uliel - - -
Iain McKendrick - - -
Senior Manager
Sean Austin 600,000 Nil 27-Jun-26
1,250,000 Nil 7-Jan-27
Jonathan Gilmore - - -
Total 8,750,000
During the year ended December 31, 2025, the Company entered into the
following transactions with related parties:
· the Company paid professional fees and disbursements totaling
$147,845 (year ended December 31, 2024 - $64,375) to Marrelli Support Services
Inc., and certain of its affiliates, together known as the "Marrelli Group",
for: (i) Mr. Carmelo Marrelli, beneficial owner of the Marrelli Group, to act
as the former Chief Financial Officer of the Company (until 16 December 2025
and who ceased office / employment with the Company effective on completion of
the Challenger acquisition), (ii) regulatory filing services, and (iii) press
release services; and
· In connection with the acquisition of Challenger, the Company
entered into a loan agreement with Charlestown Energy Partners, LLC
("Charlestown"), a shareholder of the Company and a related party, pursuant to
which Charlestown has agreed to provide the Company with a working capital
facility of up to US$4 million (the "Facility") from the closing date of the
acquisition. The Facility may be terminated by the Company at any time upon
providing not less than 20 business days' prior written notice to Charlestown.
As at the date of this MD&A, the Company has not drawn down on the
Facility.
Proposed Transactions
Sintana is currently progressing a number of proposed transactions which may
have future accounting implications.
In respect of the KON-16 investment in Angola, the structure involves the
acquisition of a minority equity interest in a special purpose vehicle holding
the underlying licence interest. Based on the currently proposed terms, it is
not expected that this investment will result in significant influence, and
therefore it is unlikely to be accounted for using the equity method; instead,
it is expected to be treated as a financial asset, although this will be
confirmed upon completion and finalization of governance rights.
In relation to the potential investment in PEL 37 in Namibia, the proposed
acquisition of an approximate 30% indirect participating interest may give
rise to significant influence, and therefore the investment would likely be
accounted for as an associate using the equity method. However, the final
accounting treatment will depend on the detailed terms of the agreements,
including governance, control and participation rights, and will be assessed
upon completion.
Critical Accounting Estimates
The Company's critical accounting estimates are those estimates that have a
significant impact on the portrayal of its financial position and operations
and that require management to make judgments, assumptions and estimates in
the application of IFRS. Judgments, assumptions and estimates are based on
historical experience and other factors that management believes to be
reasonable under current conditions. As events occur and additional
information is obtained, these judgments, assumptions and estimates may be
subject to change. The Company' material accounting policies can be found in
Note 3 of the Company's Financial Statements.
Changes in Accounting Policies including Initial Adoption
Functional and presentation currency:
Following the acquisition of Challenger and its subsidiaries and the Company's
subsequent admission to AIM in the United Kingdom, Sintana Energy Inc. has
elected to change the presentation currency of its consolidated financial
statements from Canadian Dollars ("CAD") to United States Dollars ("USD"),
including comparative information for the year ended December 31, 2024.
The change in presentation currency was made as the expanded Company is
primarily invested in offshore assets along the Atlantic Margin, where the
majority of expected input costs are denominated in USD, and any future
revenues or proceeds from asset sales, farm-downs or production are likely to
be realized in USD. In addition, given the Company's listing on the TSXV,
OTCQX and AIM, USD was considered to be a more appropriate presentation
currency for the enlarged and diverse shareholder base.
Transactions in foreign currencies are translated into each subsidiary's
functional currency at exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are
translated into the functional currency at the period‑end exchange rate.
Non-monetary items measured at historical cost are translated at the exchange
rate at the date of the transaction, and non-monetary items measured at fair
value are translated at the exchange rate at the date the fair value was
determined. Foreign exchange differences arising on translation are recognized
in the consolidated statement of loss and comprehensive loss, except for
differences arising on the translation of foreign operations, which are
recognized in other comprehensive income.
Accounting standards effective this year:
The Company adopted no new IFRSs and interpretations during 2025.
Future applicable accounting standards:
The following new standards and amendments to standards have been issued as at
December 31, 2025 but are not yet effective. The Company does not plan to
early adopt any of these new or amended standards and interpretations.
Amendments to IFRS 9, Financial Instruments and IFRS 7, Financial Instruments:
Disclosures:
In May 2024, the IASB issued amendments to IFRS 9, Financial Instruments and
IFRS 7, Financial Instruments: Disclosures to clarify the date of recognition
and derecognition of some financial liabilities settled using an electronic
payment system before the settlement date. The amendments also clarify the
classification of certain financial assets and introduce disclosure
requirements for financial instruments with contingent features and equity
instruments classified at fair value through other comprehensive income. The
amendments are effective for annual periods beginning on or after January 1,
2026, and are to be applied retrospectively; restatement of prior periods is
not required. The Company is currently evaluating the potential impact of
these amendments on the Company's consolidated financial statements.
IFRS 18, Presentation and Disclosure in Financial Statements:
IFRS 18, issued in April 2024, replaces IAS 1, Presentation of Financial
Statements and establishes the overall requirements for presentation and
disclosures in the financial statements, including a new defined structure for
the statement of profit or loss and specific disclosure requirements related
to management-defined performance measures. IFRS 18 also enhances guidance on
how to group information within the financial statements. IFRS 18 is effective
for annual periods beginning on or after January 1, 2027, including interim
financial statements, and is to be applied retrospectively. The Company has
not yet determined the impact of this standard on its consolidated financial
statements.
Financial Instruments and Other Instruments
The Company currently holds only simple financial instruments, including cash
and cash equivalents, other receivables (including deferred consideration),
and trade and other payables. These financial assets and liabilities are
measured at amortized cost in accordance with IFRS.
Other MD&A Requirements
A. Additional Disclosures for Venture Issues without Significant Revenue
Exploration Assets and Expenditures
In recent periods, the Company has principally acquired relatively small
ownership interests in oil and gas assets, in many cases benefiting from carry
arrangements which result in limited direct exploration and evaluation
expenditure. As most of these interests are held through associated entities
and accounted for under the equity method, any additional contributions to the
underlying joint ventures are capitalized at the associate level, thereby
limiting exploration and evaluation related costs recognized directly by the
Company.
The key exception to this has been the Giraffe investment in PEL 79, where the
Company holds an option to acquire up to a 67% interest, resulting in a level
of quasi-control and therefore full consolidation. This led to a higher level
of exploration and evaluation expenditure being recognized in FY24.
Following completion of the Challenger acquisition in December 2025, Sintana
now holds a 100% interest in the OFF-3 licence and a 40% carried interest in
the OFF-1 licence. As a result, exploration and evaluation activity is
expected to increase going forward, particularly in relation to the OFF-3
asset.
The following table provides a breakdown of the Company's exploration assets
and expenditures in each of the last two years:
Year Ended Year Ended
December 31, December 31,
2025 2024
Exploration Expenditures $ $
Namibia
Consulting fees 16,154 16,432
Acquisition of 49% in Giraffe - 2,037,903
16,154 2,054,335
Middle Magdalena Basin, Colombia
Administrative and general 29,097 26,693
Professional fees 30,772 7,736
59,869 34,429
Angola
Consulting fees 30,456 -
30,456 -
Duvernay formation, Alberta
Other - 2,324
- 2,324
106,479 2,091,088
General and Administrative Expenses
The following table provides a breakdown of material components of the
Company's general and administration expenses:
Year Ended Year Ended
December 31, December 31,
2025 2024
General and administrative $ $
Share-based compensation 5,978,695 4,040,963
Salaries and benefits 2,657,133 2,109,280
Professional fees 726,289 467,846
Investor relations 460,203 396,424
Travel expenses 172,879 217,350
Administrative and general 174,979 93,080
Reporting issuer costs 87,957 36,633
Total 10,258,135 7,361,576
The Company has no expensed research and development costs and no intangible
assets arising from development.
B. Disclosure of Internal Controls
Management has established processes to provide it with sufficient knowledge
to support representations that it has exercised reasonable diligence to
ensure that (i) the consolidated financial statements do not contain any
untrue statement of material fact or omit to state a material fact required to
be stated or that is necessary to make a statement not misleading in light of
the circumstances under which it is made, as of the date of and for the
periods presented by the consolidated financial statements, and (ii) the
consolidated financial statements fairly present in all material respects the
financial condition, results of operations and cash flow of the Company, as of
the date of and for the periods presented.
In contrast to the certificate required for non-venture issuers under National
Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim
Filings ("NI 52-109"), the Venture Issuer Basic Certificate does not include
representations relating to the establishment and maintenance of disclosure
controls and procedures ("DC&P") and internal control over financial
reporting ("ICFR"), as defined in NI 52-109. In particular, the certifying
officers filing such certificate are not making any representations relating
to the establishment and maintenance of:
(i) controls and other procedures designed to provide reasonable assurance
that information required to be disclosed by the issuer in its annual filings,
interim filings or other reports filed or submitted under securities
legislation is recorded, processed, summarized and reported within the time
periods specified in securities legislation; and
(ii) a process to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of consolidated financial
statements for external purposes in accordance with the issuer's GAAP (IFRS).
The Company's certifying officers are responsible for ensuring that processes
are in place to provide them with sufficient knowledge to support the
representations they are making in the certificate. Investors should be aware
that inherent limitations on the ability of certifying officers of a venture
issuer to design and implement on a cost-effective basis DC&P and ICFR as
defined in NI 52-109 may result in additional risks to the quality,
reliability, transparency and timeliness of interim and annual filings and
other reports provided under securities legislation.
C. Disclosure of Outstanding Share Data
As at the date of this MD&A, the Company has 514,781,240 common shares
outstanding.
As at the date of this MD&A, the Company has the following securities
outstanding that are convertible into, or exercisable or exchangeable for,
voting securities:
Options:
Weighted
average Number of
remaining Number of options Number of
Exercise contractual options vested options
Expiry date price (CAD) life (years) outstanding (exercisable) unvested
March 24, 2027 $0.165 0.28 6,750,000 6,750,000 -
December 19, 2032 $0.110 1.41 4,650,001 4,650,001 -
December 19, 2033 $0.270 1.69 4,850,002 4,850,002 -
May 1, 2034 $1.080 0.60 1,650,000 1,100,000 550,000
December 13, 2034 $1.230 1.54 3,900,000 2,600,000 1,300,000
June 27, 2035 $0.730 0.04 100,000 33,333 66,667
5.56 21,900,003 19,983,336 1,916,667
* The expiry date of the options was extended as the original
expiry date fell within a close period during which the holders were
restricted from exercising the options.
RSUs:
Weighted
average
remaining Number of Number of Number of
contractual RSU's RSU's RSU's
Expiry date life (years) outstanding vested unvested
June 27, 2026 0.06 4,200,000 - 4,200,000
December 19, 2032 0.44 7,250,000 - 7,250,000
0.50 11,450,000 - 11,450,000
Risk Factors
Sintana's business is subject to a number of risks and uncertainties,
including (but not limited to) the risk factors described below. The risk
factors described below do not purport to be an exhaustive list and do not
necessarily comprise all of the risks to which the Company is exposed. In
particular, the Company's performance is likely to be affected by changes in
market and/or economic conditions and in legal, accounting, regulatory and tax
requirements. The risk factors described below are not intended to be
presented in any assumed order of priority. Additional risks and uncertainties
not presently known to the Board, or which the Board currently deem
immaterial, may also have an adverse effect upon the Company. If any of the
following risks were to materialise, the Company's business, financial
condition, results, prospects and/or future operations may be materially
adversely affected.
RISKS RELATING TO THE COMPANY
Additional requirements for capital
The Company has sufficient financial resources to meet its obligations arising
within the period of the working capital statement contained in this document.
However, the nature of its business is capital intensive and the Company's
assets are not yet revenue generating. In the longer term, its projects may be
subject to delays or cost overruns or increased scope and assets may move into
the development stage. Any of these risks may create circumstances where the
Company requires additional financing from credit or equity markets in the
longer term.
The Company may require additional funds to fund exploration and development
commitments, undertake capital expenditures or to undertake acquisitions and
may attempt to raise additional funds through equity or debt financing or from
other sources. Any equity financing may be dilutive to holders of common
shares and any debt financing beyond the existing facilities, if available,
may require restrictions to be placed on the Company's future financing and
operating activities.
Despite the Company having sufficient resources to meet its obligations within
the period of the working capital statement in this document, the Company's
activities are not expected to generate positive cash flow from operating
activities in the foreseeable future, and accordingly, to the extent that the
Company has negative cash flow in any future period following the period of
the working capital statement, the Company may be required to use its current
cash on hand or raise additional capital which may be restrictive or dilutive
to existing shareholders in order to fund such negative cash flow from
operating activities, if any.
No assurances can be given that the Company will be able to raise the
additional financing or may be unable to obtain additional financing on
acceptable terms or at all. The Company's access to debt, equity and other
financing as a source of funding for operations will also be subject to many
factors, including the cash needs of the Company and the then prevailing
conditions in the financial markets, including in the corporate bond, term
loan and equity markets, the financial condition or operating performance of
the Company or investor sentiment (whether towards the Company in particular
or towards the market sector in which the Company operates) are unfavourable.
The Company's inability to raise additional funding may hinder its ability to
grow in the future or to maintain its existing levels of operation. Even if
its financial resources are sufficient to fund its operations in the near
term, there is no guarantee that the Company will be able to achieve its
business objectives and strategy. The failure to raise capital could result in
the delay or indefinite postponement of current business objectives or
strategy or a loss of property interest.
Chevron is currently considering future activities in relation to PEL090,
which could commence in 2026, and has filed environmental applications which
would enable the drilling of up to five exploration wells and five appraisal
wells. The Company would not be carried in any additional activity that may
occur on PEL090 and the Company may not have sufficient financial resources to
meet its obligations.
In addition, from time to time, the Company may enter into transactions to
acquire assets or the shares of other companies. These transactions may be
financed wholly or partially with debt, which may temporarily increase the
Company's debt levels above industry standards. Any debt financing secured in
the future could involve restrictive covenants relating to capital raising
activities and other financial and operational matters, which may make it more
difficult for the Company's to obtain additional capital and to pursue
business opportunities, including potential acquisitions.
The benefits from the acquisition of Challenger will depend on the Company's
ability to successfully integrate Sintana and Challenger
The Company may encounter integration challenges following the Challenger
acquisition, including challenges which are not currently foreseeable.
The integration process may take longer than expected, or difficulties
relating to the integration, of which the Directors are not yet aware,
including unforeseen operating difficulties, may arise and pose management,
administrative and financial challenges. In addition, unanticipated costs may
be incurred in respect of the integration of Sintana and Challenger. This
could adversely affect the delivery of the anticipated benefits from the
Challenger acquisition or the operational and financial performance of the
Company's combined assets, and the Company may not be successful in addressing
risks or problems encountered in connection with the integration and failure
to do so may adversely affect its business or financial condition.
The Directors believe that the combination of the businesses Sintana and
Challenger has the potential to generate efficiencies through operating,
financing and other cost savings. However, there is a risk that such
efficiency benefits will fail to materialize. For example, such efficiency
benefits may be materially lower than anticipated or it may take longer than
expected to realize such efficiency benefits, each of which would have a
significant impact on the profitability of the Company in the future.
Some of the principal integration challenges may include retaining key
personnel, properly planning and executing the transition of the acquired
businesses, operating assets, harmonizing organizational structures (including
the appropriate resourcing of that organization) and harmonizing processes,
controls and systems of Sintana and Challenger. The process of integration
could potentially lead to interruption of the operations of either business
which could adversely impact Sintana's business, financial condition, results
of operations and future prospects.
Risks associated with operated interests, no history of production and
dependence on strategic partners
Most of the Company's properties are in early-stage exploration and have no
history of hydrocarbon production or revenue generation. There is no certainty
that commercial quantities of hydrocarbons will be discovered or that
exploration and development programmes will yield positive results. Even if
discoveries occur, there is no assurance that production will be economically
viable, which depends on factors such as commodity prices, access to capital,
regulatory approvals, infrastructure availability and the characteristics of
any deposits.
The Company is not the operator of most assets and therefore has limited
control over day-to-day operations, relying on third-party operators for
execution. Performance by operators and licence partners may be affected by
their financial capacity, technical expertise, and prioritization of projects,
which could lead to delays, increased costs or loss of licence interests.
Where the Company acts as operator, it must fund and execute work commitments
within specified timeframes, and there is no guarantee it will have the
necessary resources.
The Company also depends on strategic partners for funding and technical
support. These partners may have competing priorities and may not allocate
sufficient resources to advance the Company's projects. Any withdrawal or lack
of engagement by partners could materially impact the Company's ability to
progress operations, achieve commercial production or realize value from its
investments.
In respect of the PELs where the Company holds a minority indirect interest,
its ability to influence decisions is limited under the terms of the Joint
Operating Agreements (JOAs). Typically, key decisions typically require a
majority vote, and in most cases, the operator or majority interest holders
can carry decisions without the Company's support. Veto rights are generally
restricted to fundamental matters requiring unanimous approval. This means the
Company may not be able to block or direct operational decisions.
The Company holds an indirect interest in Assets in Namibia through a 49%
interest in two joint ventures, Inter Oil and Giraffe, but the Company does
not control either company. Under the relevant shareholder agreements, the
Company is entitled to appoint only one out of three directors to the board of
Inter Oil and one out of two directors to the board of Giraffe (increasing to
two out of three if an option is exercised). As a result, the Company will
always be outvoted on board decisions unless it exercises its option to
increase its shareholding in Giraffe. Further, the Company's ability to
receive confidential information from either company is also limited, as the
JOAs prohibit or otherwise limit the sharing of information to parties which
beyond the joint venture partners associated with any specific license.
Capital expenditure estimates may not be accurate
Estimated capital expenditure requirements are estimates based on anticipated
costs and are made on certain assumptions. Should the Company's capital
expenditure requirements turn out to be higher than currently anticipated the
Company or its partners may need to seek additional funds which it may not be
able to secure on reasonable commercial terms to satisfy the increased capital
expenditure requirements. If this happens, the Company's business, cash flow,
financial condition and operations may be materially adversely affected.
Failure to meet commitments
The Company will be subject to contractual work commitments, from time to
time, which will include minimum work programmes to be fulfilled within
certain time restraints. Specifically, these commitments may include seismic
surveys to be performed and other data acquisition and analysis, and/or
requirements to drill wells. Failure to comply with such obligations, whether
inadvertent or otherwise, may lead to fines, penalties, restrictions and
withdrawal of licences with consequent material adverse effects. So far as the
Directors are aware, all work obligations in respect of the Company's assets
have been complied with to date.
Risks associated with acquisitions and dispositions
The Company may pursue strategic acquisitions that would provide additional
licence interests which could be complementary to its portfolio, in both
existing and new jurisdictions. Future acquisitions may expose the Company to
potential risks, including risks associated with: (a) the integration of new
operations, services and personnel; (b) unforeseen or hidden liabilities; (c)
the diversion of resources from the Company's existing business and
technology; (d) potential inability to generate sufficient revenue to offset
new costs; and/or (e) the expenses of acquisitions. In addition, any proposed
acquisitions may be subject to regulatory approval. There can be no assurance
that such assets will be available at an acceptable price, or at all. Such
failure to complete or acquire additional licence interests which are
complementary to its current portfolio, could have a material adverse effect
on its business, operating results and financial condition.
Even in the event of successful acquisitions of interests in new assets or
licence interests, there is no assurance that any subsequent work carried out
under any of these licences will be successful or that it will be effective in
increasing the value of any of these assets. No assurance can be given that
the Company will be able to carry out the work required under each of the
licences it has an interest in to effectively realize increased value. In
addition, even if the Company completes a licence acquisition, general
economic and market conditions or other factors outside the Company's control
could make its strategies difficult or impossible to implement. Any failure to
implement its programme on a licence successfully and/or failure of the
programme to deliver the anticipated benefits could have a material adverse
effect on the Company's results of operations and financial condition. In
addition, any delays in or withdrawal of licences, or failure to secure
requisite licence extensions in respect of any of the Company's operations may
have a material adverse impact on the Company's business, operating results
and financial condition.
Further, the Company may seek to execute dispositions of licence interests,
including through farm-out agreements, particularly where significant
additional capital is required to progress development. There can be no
assurance that the Company will be able to successfully execute such
dispositions on acceptable terms or within required timeframes. Failure to
complete dispositions where additional capital is required could impair the
overall financial health and performance of the Company and limit its ability
to generate returns to shareholders.
Future litigation
From time to time, the Company may be subject, directly or indirectly, to
litigation arising out of its proposed operations, including litigation by
activist Company's designed to delay, halt or frustrate oil and gas operations
in the various jurisdictions in which it has assets. Outcomes achieved and /
or damages claimed under such litigation may be material or may be
indeterminate, and may materially impact the Company's business, results of
operations or financial condition. While the Company assesses the merits of
each lawsuit and defends itself accordingly, it may be required to incur
significant expenses or devote significant resources to defending itself
against such litigation. In addition, the adverse publicity surrounding such
claims may have a material adverse effect on the Company's business.
The Company may from time to time be involved in or considering potential
litigation against certain parties. Any such proceedings could be complex,
lengthy and costly, and there can be no assurance as to the outcome. To
mitigate financial exposure, the Company may seek litigation funding
arrangements and insurance coverage to support these actions. However, there
is no guarantee that such funding or insurance will be available on acceptable
terms or at all. Failure to secure adequate funding or insurance could
increase the financial burden on the Company and adversely affect its ability
to pursue or defend claims effectively.
Climate change abatement legislation, changes to carbon pricing systems or
activist activity against fossil fuel extraction may have a material adverse
effect on the Company's industry
Continued political and societal attention to issues concerning climate
change, including the role of human activity in it and potential mitigation
through regulation could have a material impact on the Company's business.
International agreements, national and regional legislation, and regulatory
measures to limit greenhouse emissions are currently in various stages of
discussion or implementation.
Like other oil and gas companies, given that the Company's operations involve,
and the Company's products are associated with, emissions of greenhouse gases,
these and other greenhouse gas emissions related laws, policies and
regulations may result in substantial capital, compliance, operating and
maintenance costs. The level of expenditure required to comply with these laws
and regulations is difficult to accurately predict and will vary depending on,
among other things, the laws enacted by particular countries. As such, climate
change legislation and regulatory initiatives restricting emissions of
greenhouse gases may materially adversely affect the Company's operations and
increase the Company's cost structure.
Such legislation or regulatory initiatives could also have a material adverse
effect by diminishing the demand for oil and gas, increasing the Company's
cost structure or causing disruption to the Company's operations by
regulators. Global efforts to respond to the challenges of climate change may
have an impact on the value of the price of oil and gas moving forward, as
countries increasingly shift toward alternative energy sources, which may in
turn impact the viability of the Company's producing, development and
exploration projects.
In addition, the Company may be subject to activism from Company's campaigning
against fossil fuel extraction, including legal actions designed to delay,
block or frustrate the Company's activities, which could affect the Company's
assets, ability to conduct business, reputation, dissuade investors from
investing in the Company's business, persuade shareholders to sell their
holdings, dissuade contractors from working with the Company, disrupt the
Company's campaigns or programmes, induce the Company's employees and/or
directors to cease working or acting for the Company or otherwise negatively
impact the Company's business.
Local environmental organizations in Uruguay have publicly opposed seismic
prospecting along Uruguay's coast. Several injunction requests have been filed
in Uruguay in connection with this matter, which have thus far been denied by
the Uruguayan courts, but which have been appealed, with those appeals
pending. The outcome of those appeals, if adverse, may delay or restrict
planned operations in Uruguay. The Company continues to monitor the situation
closely, however, there can be no assurance that these or other legal or
regulatory challenges will not arise or that they will be resolved in a manner
favourable to the Company.
Risks relating to taxation
The fiscal regimes of emerging oil and gas producing countries such as Namibia
and Uruguay are relatively untested and subject to change. Any change in the
Company's tax status or in applicable tax legislation in any country where the
Company has operations or corporate entities could affect the Company's
ability to provide returns to shareholders. Statements in this document in
relation to tax and concerning the taxation of investors in common shares are
based on current tax law and practice, which is subject to change. The
taxation of an investment in the Company depends on the specific circumstances
of the relevant investor.
The nature and amount of tax which members of the Company expect to pay and
the reliefs expected to be available to any member of the Company are each
dependent upon a number of assumptions, any one of which may change and which
would, if so changed, affect the nature and amount of tax payable and reliefs
available. In particular, the nature and amount of tax payable is dependent on
the availability of relief under tax treaties in and between a number of
jurisdictions and is subject to changes to the tax laws or practice in any of
the jurisdictions affecting the Company. Any limitation in the availability of
relief under these treaties, any change in the terms of any such treaty or any
changes in tax law, interpretation or practice could increase the amount of
tax payable by the Company.
Due to the Company being a Canadian-based entity which will operate and hold
assets in the various non-Canadian jurisdictions, any changes in the
non-Canadian jurisdictions' national tax law or tax rulings unfavourable to
the Company structure related to non-Namibian, Uruguayan, Angolan, Isle of
Man, Colombian or Bahamian parent companies could have a material impact on
the Company's effective tax rate, cash flows and results of operations.
Potential Conflicts of Interest
Some of the individuals who serve as directors and/or officers of the Company
are also directors, officers and/or promoters of other public and private
companies or have significant shareholdings in other public and private
companies. As of the date hereof, and to the knowledge of the Directors and
senior managers of the Company, there are no existing conflicts of interest
between the Company and any of the individuals who are directors or officers
of the Company other than as disclosed elsewhere in this document. Situations
may arise where the Directors of the Company may be in competition with the
Company. Any conflicts will be subject to and governed by the laws applicable
to Directors' conflicts of interest. In the event that such a conflict of
interest arises at a meeting of the Directors, a director who has such a
conflict will abstain from voting for or against the approval of such
participation or such terms. In accordance with applicable laws, the Directors
are required to act honestly, in good faith and in the best interests of the
Company.
Dependence on key executives and personnel
The future performance of the Company will, to a significant extent, be
dependent on its ability to retain the services and personal connections or
contacts of key executives and to attract, recruit, motivate and retain other
suitably skilled, qualified and industry experienced personnel to form a high
caliber management team. Such key executives are expected to play an important
role in the development and growth of the Company, in particular, by
maintaining good business relationships with regulatory and governmental
departments and essential partners, contractors and suppliers.
There can be no assurance that the Company will retain the services of any key
executives, advisers or personnel who have entered into service agreements or
letters of appointment with the Company. The loss of the services of any of
the key executives, advisers or personnel may have a material adverse effect
on the business, operations, relationships and/or prospects of the Company.
However, the Board believes that the spread of skills and experience across
the Directors is such that the loss of any one Director is unlikely to have a
material adverse effect on the Company. The Company has not purchased
"key-man" insurance.
There is a risk that the Company will struggle to recruit the key personnel
required to run an exploration and production company. Shortages of labour, or
of skilled workers, may cause delays or other stoppages during exploration and
appraisal activities. Many of the Company's competitors are larger, have
greater financial and technical resources, as well as staff and facilities,
and have been operating in a market-based competitive economic environment for
much longer than the Company.
Retention of key business relationships
The Company relies significantly on strategic relationships with other
entities, on good relationships with regulatory and governmental departments
and on third parties to provide essential contracting services. There can be
no assurance that its existing relationships will continue to be maintained or
that new ones will be successfully formed, and the Company could be adversely
affected by changes to such relationships or difficulties in forming new ones.
Any circumstance which causes the early termination or non-renewal of one or
more of these key business alliances or contracts could adversely impact the
Company, its business, operating results and prospects.
Issues resulting from limited due diligence on acquisitions
The Company may, from time to time, acquire directly or indirectly oil and gas
assets. The Company intends to perform a review in respect of any potential
assets prior to such acquisitions. Although it is intended that any such
review would be consistent with industry practice, such reviews are inherently
incomplete. Even an in-depth review of assets and records may not necessarily
reveal existing or potential problems, nor will it permit a buyer to become
sufficiently familiar with the assets to assess fully their deficiencies and
capabilities.
Future acquisitions may cause the Company to expend costs on, inter alia,
conducting due diligence into potential investment opportunities in further
businesses, assets or prospects/projects that may not be successfully
completed or result in any acquisition being made, which could have a material
adverse effect on its business, operating results and financial condition.
There is no guarantee that an unforeseen defect in title, changes in law or
change in the interpretation of law or political events will not arise to
defeat or impair the claim of the Company to any properties which it currently
owns or may acquire which could result in a material adverse effect on the
Company, including a reduction in any revenues generated.
Exposure to local currency
The Company operates internationally and is exposed to foreign exchange risk
arising from various currency transactions, primarily with respect to the
Namibian Dollar, Uruguayan Peso, Angolan Kwanza, Colombian Peso, Bahamian
Dollar, Euro, Canadian Dollar and US Dollar. Although, the Company endeavours
to reduce its exposure to foreign currencies by minimizing the amount of funds
held overseas, holding cash balances in the currency of intended expenditure
and recognizing the profits and losses resulting from currency fluctuations as
and when they arise, there remains a risk that adverse currency movements may
have a negative impact on the financial position and performance of the
Company.
Currency exchange rates risk
The Company's functional currency is US Dollars and, although most of its
major contracts are denominated in US Dollars, a portion of its general and
administrative expenses are in Canadian Dollars, GBP and other currencies.
Hence, the Company is exposed to fluctuations in exchange rates, in
particular, between the US Dollar, Canadian Dollars and GBP. Such exposure may
affect the Company's results. The Company will consider, on a case-by-case
basis, implementing policies to limit its currency exposure, if appropriate,
and may examine currency hedging instruments when they prove to be available
and cost effective.
The Company's share price is quoted on the TSX-V in Canadian Dollars, on the
OTCQX in US Dollars, and on AIM in GBP. As a consequence, shareholders may
experience fluctuations in the market price of the common shares as a result
of, inter alia, movements in the foreign exchange rate between Canadian
Dollars, GBP and US Dollars.
Insurance coverage and uninsured risks
The Company insures its operations in accordance with industry practice and
plans to insure the risks it considers appropriate for the Company's needs and
circumstances. However, the Company may elect not to have insurance for
certain risks, due to the high premium costs associated with insuring those
risks or for various other reasons, including an assessment in some cases that
the risks are remote.
No assurance can be given that the Company will be able to obtain insurance
coverage at reasonable rates (or at all), or that any coverage it or the
relevant operator obtains, if applicable, and any proceeds of insurance, will
be adequate and available to cover any claims arising. The Company may become
subject to liability for pollution, blow-outs or other hazards against which
it has not insured or cannot insure, including those in respect of past
activities for which it was not responsible. Any indemnities the Company may
receive from such parties may be difficult to enforce if such sub-contractors,
operators or joint venture partners lack adequate resources.
In the event that insurance coverage is not available or the Company's
insurance is insufficient to fully cover any losses, claims and/ or
liabilities incurred, or indemnities are difficult to enforce or the Company
elects not to have insurance for certain risks and claims and/or liabilities
are incurred, the Company's business and operations, financial results or
financial position may be disrupted and adversely affected.
The payment by the Company's insurers of any insurance claims may result in
increases in the premiums payable by the Company for its insurance cover and
adversely affect the Company's financial performance. In the future, some or
all of the Company's insurance coverage may become unavailable or
prohibitively expensive.
Global economic conditions may adversely affect the Company
The Company may make acquisitions of companies and businesses that are
susceptible to economic recessions or downturns. During periods of adverse
economic conditions, the markets in which the Company operates may decline,
thereby potentially decreasing revenues and causing financial losses,
difficulties in obtaining access to, and fulfilling commitments in respect of,
financing, and increased funding costs. In addition, during periods of adverse
economic conditions, the Company may have difficulty accessing financial
markets, which could make it more difficult or impossible for the Company to
obtain funding for additional acquisitions and negatively affect the Company's
operating results. Accordingly, adverse economic conditions could adversely
impact the business, development, financial condition, results of operations
and prospects of the Company. Furthermore, there can be no assurances that
financial conditions in the global financial markets will not worsen or
adversely affect the Company's then prevailing financial position and
performance or, indeed, those of its investments.
Force majeure
The Company's operations may be adversely affected by risks outside the
control of the Company including labour unrest, civil disorder, war,
subversive activities or sabotage, fires, floods, explosions or other
catastrophes, epidemics or quarantine restrictions, which may have a material
adverse effect on the Company's future financial condition and results.
Cyber risks
The Company is at risk of financial loss, reputational damage and general
disruption from a failure of its information technology systems or an attack
for the purposes of espionage, extortion, terrorism or to cause embarrassment.
Any failure of, or attack against, the Company's information technology
systems may be difficult to prevent or detect, and the Company's internal
policies to mitigate these risks may be inadequate or ineffective. The Company
may not be able to recover any losses that may arise from a failure or attack.
RISKS RELATING TO THE OIL AND GAS MARKETS
Oil and gas prices
The marketability and price of oil and natural gas that may directly or
indirectly be acquired, discovered or developed by the Company will be
affected by numerous factors beyond the control of the Company, but which
include: global and regional supply and demand, expectations regarding future
supply and demand, for oil and gas; global and regional economic conditions;
political, economic and military developments (including current ongoing
conflicts in Ukraine and the Middle East) in oil and gas producing regions;
prices and availability of alternative sources of energy; geopolitical
uncertainty; speculative activities and trends in the financial community;
lower hydrocarbon prices or reduced demand for oil and gas or power could
reduce the economic viability of the Company's strategy and ultimately its
business, result in a reduction in revenues or net income, adversely affect
the Company's ability to maintain working capital requirements, impair its
ability to make planned expenditures and could materially adversely affect its
prospects, financial condition and results of operations.
The Directors believe that the strengthening of the oil price and the
increasing importance of energy security considerations for both sellers and
the capital markets are highly advantageous for the Company in the longer
term. However, in the short term, oil price volatility and geopolitical
uncertainty may create a challenging M&A and fundraising environment.
Current resource data are only estimates and are inherently uncertain
The resource data that is provided from time to time by the Company involves
subjective judgements and determinations and are based on available
geological, technical, contractual and economic information. The estimation of
underground accumulations of oil and gas is a subjective process aimed at
understanding the statistical probabilities of recovery. These are not exact
determinations. Estimates of the quantity of economically recoverable oil and
gas reserves, rates of production, net present value of future cash flows and
the timing of development expenditures depend upon several variables and
assumptions, including the following: (i) interpretation of geological and
geophysical data; (ii) effects of regulations adopted by governmental
agencies; (iii) future percentages of international sales; (iv) future oil and
gas prices; (v) capital expenditure; and (vi) future operating costs, tax on
the extraction of commercial hydrocarbons, development costs and workover and
remedial costs. The assumptions upon which the estimates of the Company's
hydrocarbon resources have been based may change over time or prove to be
incorrect. The Company may be unable to recover and produce the estimated
levels or quality of hydrocarbons set out in this document and if this proves
to be the case, the Company's business, reputation, prospects, financial
condition and results of operations could be materially adversely affected.
As all resource estimates are subjective, each of the following items may
differ materially from those assumed in estimating resources: (i) the
quantities and qualities of oil and gas that are ultimately recovered; (ii)
the production and operating costs and capital expenditure incurred; (iii) the
amount and timing of additional exploration and future development
expenditures; and (iv) future oil and gas prices.
Many of the factors, assumptions and variables used in estimating resources
are beyond the Company's control and may prove to be incorrect over time.
Evaluations of resources necessarily involve multiple uncertainties. The
accuracy of any resource evaluation depends on the quality of available
information and petroleum engineering and geological interpretation.
Exploration drilling, interpretation and testing and production after the date
of the estimates may require substantial upward or downward revisions to the
Company's resource data. A decline in the market price for oil and gas could
render reserves uneconomic to recover and may ultimately result in a
reclassification of reserves as resources. Moreover, different reservoir
engineers may make different estimates of reserves and cash flows based on the
same available data. Actual production, revenues and expenditures with respect
to reserves and resources will vary from estimates, and the variances may be
material. The estimation of reserves and resources may also change because of
acquisitions and disposals, new discoveries and extensions of existing fields
as well as the application of improved recovery techniques.
The estimates may prove to be incorrect and potential investors should not
place reliance on the forward-looking statements contained in this document
concerning the resources. If the assumptions upon which the estimates of the
resources have been based prove to be incorrect, the Company (or the operator
of an asset in which the Company has an interest) may be unable to recover and
produce the estimated levels or quality of hydrocarbons set out in this
document and the Company's business, prospects, financial condition or results
of operations could be materially and adversely affected.
Oil and gas exploration is speculative, capital intensive and can result in a
complete loss of capital
There can be no guarantee that any hydrocarbons discovered will be developed
into profitable production or that hydrocarbons will be discovered in
commercial quantities. The business of exploration and development of
hydrocarbon deposits is speculative and involves a high degree of risk, which
even a combination of careful evaluation, experience and knowledge may not
eliminate. Hydrocarbon deposits assessed by the Company may not ultimately
contain economically recoverable volumes of resources and even if they do,
delays in the construction and commissioning of production projects or other
technical difficulties may result in any projected target dates for production
being delayed or further capital expenditure being required.
The risks associated with oil and gas exploration include, but are not limited
to, encountering unusual or unexpected geological formations or pressures;
seismic shifts; unexpected reservoir behaviour; unexpected or different fluids
or fluid properties; premature decline of reservoirs; uncontrollable flow of
oil, gas or well fluids; inaccurate subsurface seismic drilling; equipment
failures; extended interruptions due to (amongst other things) adverse weather
conditions; environmental hazards; industrial accidents; lack of availability
of exploration and production equipment; explosions; pollution; oil or gas
escapes; industrial action; and shortages of manpower. Encountering any of
these can greatly reduce the profitability of operations. Extreme weather,
adverse geological conditions and other field operating conditions may delay
seismic, drilling or appraisal and development activities and can also
increase costs. Oil and gas exploration and appraisal projects often involve
unprofitable activities, resulting either from dry wells or from wells that
may be put into production but do not generate sufficient revenues to return a
profit after development, operating and other costs. Completion of a well does
not guarantee a profit on the investment or recovery of the costs associated
with that well. Any of the above factors could result in a total loss of
investment in certain projects, which could have a material adverse effect on
the Company's business, reputation, prospects, financial condition and results
of operations.
The Company believes it has undertaken the necessary due diligence to
understand the technical risks associated with all oil and gas volumes but
recognizes that such results from drilling activities may vary from the
expected performance and / or timetable of commercialization.
Companies operating within the oil and gas industry are subject to stringent
regulations including those relating to the environment, health and safety
The Company's operations are subject to environmental, health and safety
regulations in the jurisdictions in which they operate. Whilst both the
Company and the underlying operators of the assets in which the Company holds
interests believe that each carries out its activities and operations in
material compliance with these environmental, safety and health and sanitary
regulations, there can be no guarantee that their contractors or staff will
individually comply with the policies and practices in place.
The discharge of oil, gas or other pollutants into the air, soil or water may
give rise to liabilities to local, provincial and federal governments and
third parties and may require the Company to incur significant penalties
and/or costs to remedy such discharge.
The operations of the Company require it (or its joint venture partners) to
obtain licences for operating, permits, and in some cases, renewals of
existing licences and permits from various authorities, depending upon the
nature of property operations and development. The Company believes that it
and/or its joint venture partners currently hold or have applied for all
necessary licences and permits to carry on the activities as currently being
conducted on its property interests under applicable laws and regulations, and
also believes that it and its joint venture partners are complying in all
material respects with the terms of such licences and permits. However, the
ability of the Company and/or its joint venture partners to obtain, sustain or
renew any such licences and permits on acceptable terms is subject to changes
in regulations and policies and to the discretion of the applicable
authorities or other governmental agencies in foreign jurisdictions.
While the Company has conducted due diligence on the assets, no assurance can
be given that changes in environmental laws or their application to the
Company's operations will not result in further remediation costs, a
curtailment of production or a material increase in the costs of production,
development or exploration activities or otherwise adversely affect its
business, prospects, financial condition and results of operations.
Obtaining exploration, development or production licences and permits may also
become more difficult or be the subject of delay by reason of governmental,
regional or local environmental consultation, approvals or other
considerations or requirements.
In addition, due to concern over the risk of climate change, a number of
countries have adopted, or are considering the adoption of, new regulatory
requirements to reduce greenhouse gas emissions, such as carbon taxes,
increased efficiency standards or the adoption of cap-and-trade regimes. If
such requirements were adopted in the jurisdictions where the Company operates
in, these requirements could make the Company's products more expensive as
well as shift hydrocarbon demand toward relatively lower-carbon sources such
as renewable energy.
Oil and gas exploration and production may cause damage to persons, property
and the environment
Exploration for oil and gas carries inherent risks. The Company's exploration,
development and production activities present several risks such as those of
explosions in wells and pipelines and escape of hazardous materials and
contamination; major process safety incidents; failure to comply with approved
policies; effects of natural disasters and pandemics; social unrest; civil war
and terrorism; exposure to general operational hazards; personal health and
safety; and crime. The occurrence of any of these events or other accidents
could result in personal injuries, loss of life, severe environmental damage
entailing containment, clean-up and repair expenses, equipment damage and
civil or, in certain limited instances, criminal proceedings against the
Company, any of which could result in material legal sanctions and financial
liabilities, as well as significant reputational damage, and may have a
material adverse effect on the Company's business, prospects, financial
condition and results of operations. Although precautions to minimize risk are
taken, even a combination of careful evaluation, experience and knowledge may
not eliminate all of the hazards and risks. In addition, not all of these
risks are insurable.
Delays in production, marketing and transportation
Various production, marketing and transportation conditions, if assets have
been explored and developed, may cause delays in crude oil production and
adversely affect the Company's business. For example, infrequent cargo
liftings may, once the Company's assets start producing hydrocarbons, affect
the Company's working capital position and it is not usually possible to
increase production rates. There will also be particular challenges due to the
difficulties of maintaining infrastructure offshore and such difficulties will
be exacerbated where the infrastructure is mature and therefore increasing
operational downtime may be or become an issue, which could have a detrimental
effect on the revenues received by the Company's business.
The marketability and price of oil condensate and natural gas that may
directly or indirectly be acquired or discovered by the Company will be
affected by numerous factors beyond the control of the Company. The Company is
also subject to market fluctuations in the prices of oil and natural gas,
deliverability uncertainties related to the proximity of reserves to adequate
pipeline and processing facilities, and extensive government regulations
relating to price, taxes, royalties, licences, land tenure, allowable
production, the export of oil and natural gas, and many other aspects of the
oil and natural gas business. Any or all of these factors may result in an
adverse impact on the financial returns anticipated by the Company.
As the Company is not the operator in respect of most of the assets in which
it has an interest, the Company will generally have limited control over the
day-to-day management or operations of such interests and will therefore be
dependent upon the third-party operators. A third-party operator's management
of an asset may result in failure to meet the expected and required
timetables.
Interruptions in availability of exploration or supply infrastructure
The Company may suffer, indirectly, from delays or interruptions due to lack
of availability of drilling rigs or construction of infrastructure, including
pipelines, storage tanks and other facilities, which may adversely impact the
operations and could lead to fines, penalties and criminal sanctions against
the Company and/or its officers or its current or future licences or interests
being terminated. Delays in obtaining licences, permissions and approvals
required by the Company or its partners in the pursuance of its business
objectives could likewise have a material adverse impact on the Company's
business and the results of its operations.
Risk of loss of oil and gas rights
The Company's activities are dependent upon the maintenance of appropriate
leases, licences, concessions, permits and regulatory consents which may be
withdrawn or made subject to qualifications. Although the Company believes
that the authorizations in relation to all of the Company's interests will not
be withdrawn and will be maintained (as the case may be), there can be no
guarantee that such authorizations will not, in the future, be withdrawn, fail
to be renewed or granted. There can be no assurance as to the terms of such
future grants or renewals.
Natural disasters
Any interest held by the Company is subject to the impacts of any natural
disaster such as earthquakes, epidemics, fires and floods etc. Extreme weather
events are globally becoming more frequent, posing a physical risk to
activities in each operational location. Geographically while the Company's
assets in Namibia, Uruguay and the Bahamas are offshore, they may be
vulnerable to extreme weather including hurricanes, tropical storms and
floods. Such events, including the long-term risk of rising sea-levels, may
damage Company property, disrupt operational and transportation activities,
and pose increased health and safety risks to third-party contractors all of
which will have a negative impact on the operations, financial position,
performance and prospects for the Company.
Environmental factors
The Company's operations are, and will be, subject to environmental
regulation. Environmental regulations are likely to evolve in a manner that
will require stricter standards and enforcement measures being implemented,
increases in fines and penalties for non-compliance, more stringent
environmental assessments of proposed projects and a heightened degree of
responsibility for companies and their directors and employees. Compliance
with environmental regulations could increase the Company's costs. Should the
Company's operations not be able to comply with this mandate, financial
penalties may be levied. Environmental legislation can provide for
restrictions and prohibitions on spills, releases of emissions of various
substances produced in association with oil, condensate and natural gas
operations. In addition, certain types of operations may require the
submission and approval of environmental impact assessments. The Company's
operations will be subject to such environmental policies and legislation.
Environmental legislation and policy is periodically amended. Such amendments
may result in stricter standards of enforcement and in more stringent fines
and penalties for non-compliance. Environmental assessments of existing and
proposed projects may carry a heightened degree of responsibility for
companies and their directors, officers and employees. The costs of compliance
associated with changes in environmental regulations could require significant
expenditure, and breaches of such regulations may result in the imposition of
material fines and penalties. In an extreme case, such regulations may result
in temporary or permanent suspension of exploration, development and/or
production operations. There can be no assurance that these environmental
costs or effects will not have a material adverse effect on the Company's
future financial condition or results of operations.
Competition
The crude oil and natural gas industry is competitive in all of its phases.
The Company indirectly faces strong competition from other companies in
connection with the acquisition of properties producing, or capable of
producing, crude oil and/or natural gas. Many of these companies have greater
financial resources, operational experience and technical capabilities than
the Company. As a result of this competition, The Company may be unable to
maintain or acquire attractive properties on terms it considers acceptable or
at all. Consequently, the revenues, operations and financial condition of the
Company could be materially adversely affected.
RISKS RELATING TO COUNTRIES WHERE THE COMPANY OPERATES
Local risk factors
The Company's operations are conducted in the Jurisdictions and, as such, the
Company's operations, financial condition and operating results are exposed to
various levels of political, economic and other risks and uncertainties over
which it has no control. These risks and uncertainties vary and can include,
but are not limited to: currency exchange rates; high rates of inflation;
terrorism; war; labour unrest; border disputes between countries;
renegotiation or nullification of existing concessions, licences, permits and
contracts; bribery and corruption; changes in taxation policies; restrictions
on foreign exchange; changing political conditions; currency controls and
governmental regulations that favour or require the awarding of contracts to
local contractors or require foreign contractors to employ citizens of, or
purchase supplies from, a particular jurisdiction. Future political actions
cannot be predicted and may adversely affect the Company.
Changes, if any, in petroleum or investment policies or shifts in political
attitude in the jurisdictions in which the assets the Company holds interests
in, and border disputes affecting the Company's rights to explore and develop
for oil and gas, may adversely affect the Company's business, results of
operations and financial condition. Future operations may be affected in
varying degrees by government regulations with respect to, but not limited to,
restrictions on production, price controls, export controls, currency
remittance, income taxes, foreign investment, maintenance of claims,
environmental legislation, land use, land claims of local people and water
use. The possibility that future governments may adopt substantially different
policies, which may extend to the expropriation of assets, cannot be ruled
out.
Failure to comply strictly with applicable laws or regulations relating to the
petroleum regime, including licences to blocks and petroleum agreements
governing exploration activity on the blocks, could result in loss, reduction
or expropriation of entitlements. The occurrence of these various factors and
uncertainties cannot be accurately predicted and could have an adverse effect
on the Company's consolidated business, results of operations and financial
condition.
Operating in emerging countries with developing Oil and Gas regimes
The Company currently holds material oil and gas interests in Namibia, Uruguay
and Angola, alongside having other assets in other developing countries, and
may carry on business in other emerging territories in the future. Social,
political and economic conditions in these countries are in varying stages of
development and can be volatile. Volatility may be caused, without limitation,
by the following:
· significant governmental influence over many aspects of local
economies;
· unexpected or radical changes in legislation, regulatory
requirements, labour conditions or other government policies, and changes in
interpretations or enforcement of existing laws or regulations;
· governmental regulations that favour or require the awarding of
contracts to local contractors or require foreign contractors to employ
citizens of, or purchase supplies from, a particular jurisdiction or otherwise
benefit residents of that country or region;
· changes in tax laws and conflicting national or local
interpretations of tax laws;
· political, social and economic instability, terrorism, war and
civil disturbances;
· damage to equipment or violence directed at employees, including
kidnapping;
· lack of law enforcement;
· imposition of trade barriers;
· wage and price controls;
· foreign currency fluctuations and devaluation;
· restrictions on currency conversion and repatriation;
· renegotiation, nullification, or unilateral termination of
concessions, licences, permits and agreements by government-owned entities;
· seizure, expropriation or nationalization of assets or
industries;
· difficulty in collecting international accounts receivables;
· changing political conditions;
· solicitation by government officials for improper payments or
other forms of corruption;
· regional economic downturns;
· inflation and adverse economic conditions stemming from
governmental attempts to reduce inflation, such as the imposition of higher
interest rates;
· the burden of complying with multiple and potentially conflicting
laws; and
· other forms of governmental regulation and economic conditions
that are beyond the Company's control.
Risks related to international interests
The Company holds interests in licenses in a number of countries with emerging
oil and gas regimes. Such interests are subject to risks associated with
operations in foreign countries, including political and economic
uncertainties such as civil and local unrest, war, terrorist actions, criminal
activity, nationalization, invalidation of governmental orders, failure to
enforce existing laws, labour disputes, corruption, sovereign risk, political
instability, the failure of foreign parties, courts or governments to honour
or enforce contractual relations or uphold property rights, changing
government regulations with respect to natural resources (including royalties,
environmental requirements, labour, taxation, land tenure, foreign
investments, income repatriation and capital recovery), fluctuations in
currency exchange and inflation rates, import and export restrictions,
challenges to title to properties or oil and gas rights, problems or delays
renewing licences and permits, opposition to exploration and development from
local, environmental or other non-governmental organizations, increased
financing costs, instability due to economic under-development, inadequate
infrastructure, and the expropriation of property interests, as well as by
laws and policies affecting foreign trade, investment and taxation. Fiscal
regimes in these jurisdictions are relatively immature and may give rise to
uncertainty and volatility.
As governments continue to struggle with deficits and depressed economies, the
strength of commodity prices has resulted in the natural resource sector being
targeted as a source of revenue. Governments are continually assessing the
terms for companies to exploit resources in their countries, which may result
in amendments to applicable laws and regulations regarding oil and gas
interests from time to time. The Company may be subject to the exclusive
jurisdiction local authorities where licence interests are held in the event
of a dispute arising in connection with its operations and/or interests and it
may not be successful in subjecting foreign persons to the jurisdiction of
courts in Canada, the United Kingdom or elsewhere. In addition, the
enforcement by the Company of its legal rights to exploit their respective
properties or to utilize their permits and licences may not be recognized by
local court systems.
Licence interests associated with properties in developing nations may also
make it more difficult for the Company to obtain required financing for its
projects. Furthermore, it may be difficult for the operators of such property
interests to find or hire qualified people in the oil and gas industry who are
situated locally, or to obtain all of the necessary local services or
expertise while complying with local procurement requirements, or to conduct
operations on its projects at reasonable rates. As a result of the foregoing,
the Company could face risks such as: (i) effective legal redress in the local
courts being more difficult to obtain, whether in respect of a breach of law
or regulation, or in a contract or an ownership dispute; (ii) a higher degree
of discretion on the part of governmental authorities and therefore less
certainty; (iii) the lack of judicial or administrative guidance on
interpreting applicable rules and regulations; (iv) inconsistencies or
conflicts between and within various laws, regulations, decrees, orders and
resolutions; or (v) relative dearth of jurisprudence on post-apartheid
legislation and by the judiciary and courts in such matters. Thus, there can
be no assurance that contracts, joint ventures, licences, licence applications
or other legal arrangements will not be adversely affected by the actions of
applicable government authorities and the effectiveness of and enforcement of
such arrangements in any jurisdiction. Any of the above events could delay or
prevent operators of the Company's licence interests from exploring or
developing their properties even if economic quantities of oil and/or gas are
found and could have a material adverse impact upon the Company's foreign
operations.
Political instability, changes in government, or shifts in regulatory
priorities may result in amendments to hydrocarbon legislation, environmental
regulations, or foreign investment policies. Such changes could increase
compliance costs, restrict operational flexibility, or, in extreme cases,
result in the revocation of licences. Furthermore, there is a risk of
nationalization or expropriation of assets, which could lead to the loss of
value without adequate compensation.
Risks of Foreign Operations
Exploration for and exploitation, production and sale of oil and/or gas in the
Jurisdictions in which the Company operates, are subject to extensive laws and
regulations, including complex tax laws and environmental laws and
regulations. As such, the Company's operations could be significantly affected
by risks over which it has no control. These risks may include risks related
to economic, social or political instability or change, government
intervention relating to the oil and/or gas industry, expropriation, actions
by terrorist or insurgent groups, war, civil unrest, security issues,
hyperinflation, currency non-convertibility or instability and changes of laws
affecting foreign ownership or foreign investors, interpretation or
renegotiation of existing contracts, government participation, taxation
policies, including royalty and tax increases and retroactive tax claims, and
investment restrictions, working conditions, rates of exchange, exchange
control, exploration licencing, petroleum and export licencing and export
duties, government control over domestic oil and/or gas pricing, currency
fluctuations, devaluation or other activities that limit or disrupt markets
and restrict payments or the movement of funds, the possibility of being
subject to exclusive jurisdiction of foreign courts in connection with legal
disputes relating to licences to operate and concession rights and
difficulties in enforcing any rights the Company may have against a
governmental agency because of the doctrine of sovereign immunity and foreign
sovereignty over international operations. Problems may also arise due to the
quality or failure of locally obtained equipment or technical support, which
could result in failure to achieve expected target dates for exploration
operations or result in a requirement for greater expenditures.
Legal systems
The legal systems in jurisdictions in which the Company might operate in the
future may be different to the legal systems in more established economies,
such as the UK, Canada or US, which could result in risks such as: (i)
effective legal redress in the Courts of such jurisdictions being more
difficult to obtain, whether in respect of a breach of law or in an ownership
dispute; (ii) a higher degree of discretion on the part of Governmental
authorities who may be susceptible to corruption; (iii) the lack of judicial
or administrative guidance on interpreting applicable rules and regulations;
(iv) inconsistencies or conflicts between and within various laws,
regulations, decrees, order and resolutions; or (v) relative inexperience of
the judiciary and Courts in such matters.
In certain jurisdictions the commitment of local business people, Government
officials and agencies and the judicial system to abide by legal requirements
and negotiated agreements may be more uncertain, creating particular concerns
with respect to the Company's licences. There can be no assurance that joint
ventures, licences, licence applications or other legal arrangements will not
be adversely affected by the actions of Government authorities or otherwise
and the effectiveness of and enforcement of such arrangements in these
jurisdictions cannot be assured.
Inherent Risks relating to Fraud, Bribery and Corruption in the Jurisdictions
in which the Company operates
Fraud, bribery and corruption are more common in some jurisdictions than in
others. Doing business in international developing markets brings with it
inherent risks associated with enforcement of obligations, fraud, bribery and
corruption. In addition, the oil and/or gas industries have historically been
shown to be vulnerable to corrupt or unethical practices.
The Company uses its best efforts to prevent the occurrence of fraud, bribery
and corruption, but it may not be possible for the Company to detect or
prevent every instance of fraud, bribery and corruption in every jurisdiction
in which its employees, agents, sub-contractors or joint venture partners are
located. The Company may therefore be subject to civil and criminal penalties
and to reputational damage. Participation in corrupt practices, including the
bribery of foreign public officials, by the Company, its subsidiaries or other
predecessors in interest, whether directly or indirectly (through agents or
other representatives or otherwise) may also have serious adverse consequences
on the rights and interests of the Company, including but not limited to title
to government contracts, licences and concessions.
Instances of fraud, bribery and corruption, and violations of laws and
regulations in the jurisdictions in which the Company may operate could have a
material adverse effect on its business, prospects, financial condition or
financial performance. In addition, there is a risk that the Company could be
at a commercial disadvantage and may fail to secure contracts within
jurisdictions that have been allocated a low score on Transparency
International's "Corruption Perceptions Index" to the benefit of other
companies who may not have or comply with anti-corruption safeguards and
practices.
Namibian Equitable Economic Empowerment Legislation
Namibia has introduced draft legislation, the New Equitable Economic
Empowerment Bill ("NEEEB"), based on Namibian Constitutional principles, to
provide for the advancement of Namibians previously disadvantaged by past
discriminatory laws and practices and to provide redress for social, economic
or educational imbalances arising therefrom. Prepared by the Office of the
Prime Minister of Namibia, the NEEEB may form the basis for new legislation in
Namibia to promote, facilitate and strengthen measures to implement the
equitable economic empowerment and ancillary policies of the government. The
framework is built on six pillars, including: Ownership; Management, Control
and Employment Equity; Human Resources and Skills Development;
Entrepreneurship Development and Marketing; Corporate Social Responsibility
and Value Addition; and Technology and Innovation. Each of the pillars
requires compliance, which is measured by designated weighting attached to
each pillar. During the licence periods of the PELs, and of any future
petroleum licences, the NEEEB may be promulgated as an Act of Parliament,
setting out the general empowerment regulatory framework for Namibia. There is
no assurance that the enacted legislation will not have adverse effects on the
Company or on its business interests in Namibia.
Cautionary Note regarding Forward-Looking Information
This MD&A contains certain forward-looking information and forward-looking
statements, as defined in applicable securities laws (collectively referred to
herein as "forward-looking statements"). These statements relate to future
events and / or the Company's future performance. All statements other than
statements of historical fact are forward-looking statements. Often, but not
always, forward-looking statements can be identified by the use of words such
as "plans", "expects", "is expected", "budget", "scheduled", "estimates",
"continues", "forecasts", "projects", "predicts", "intends", "anticipates" or
"believes", or variations of, or the negatives of, such words and phrases, or
statements that certain actions, events or results "may", "could", "would",
"should", "might" or "will" be taken, occur or be achieved. Forward-looking
statements involve known and unknown risks, uncertainties and other factors
that could cause actual results to differ materially from those anticipated in
such forward-looking statements. The forward-looking statements in this
MD&A speak only as of the date of this MD&A or as of the date
specified in such statement. The following table outlines certain significant
forward-looking statements contained in this MD&A and provides the
material assumptions used to develop such forward-looking statements and
material risk factors that could cause actual results to differ materially
from the forward-looking statements - shareholders should also refer to the
section of this document entitled "Risk Factors".
Forward-looking statements Assumptions Risk factors
The Company will be able to remain a going concern and continue its business The Company has anticipated all material costs; the operating and exploration Unforeseen costs to the Company may arise; any particular operating cost
activities activities of the Company for the twelve-months period ending December 31, increase or decrease from the date of estimate, including with respect to loss
2026, and the costs associated therewith, will be consistent with the of or change in joint venture partners or in ability to secure joint venture
Company's current expectations regarding costs and timing partners, as applicable; changes in operating and exploration activities;
changes in economic conditions; timing of expenditures
The Company may need to raise additional capital in order to meet its working Financing will be available for future exploration and development of Changes in debt and equity markets; timing and availability of external
capital needs Sintana's private participation interests; the exploration and operating financing on acceptable terms; increases in costs; changes in operating and
activities of the Company on a going forward basis, and the costs associated exploration activities; interest and exchange rates fluctuations; changes in
therewith, will be consistent with Sintana's current expectations; debt and economic conditions, planned operations and associated costs
equity markets; exchange and interest rates and other applicable economic
conditions will be favourable to Sintana; availability of financing
The potential of Sintana's direct and indirect participation interests to The actual results of exploration and development activities will be Price volatility for hydrocarbons; uncertainties involved in interpreting
contain hydrocarbons reserves that may and can be developed, produced and sold favourable; operating, exploration, development and production costs will not geological and geophysical data and Sintana's expectations regarding the
at rates and costs that result in an adequate financial return on invested exceed expectations; the Company will be able to retain and attract skilled conventional and unconventional plays and uncertainties in confirming valid
capital staff and joint venture partners, as necessary; all requisite regulatory and private participation interests; the possibility that future exploration
governmental approvals for exploration projects and other operations will be results will not be consistent with Sintana's expectations; inadequate
received on a timely basis upon terms acceptable to Sintana; applicable financial returns on invested capital; increases in costs, including as a
political and economic conditions will be favourable; market prices for result of the loss of or change in joint venture partners or inability to
hydrocarbons and applicable interest and exchange rates will be favourable; no secure joint venture partners, as applicable; environmental compliance and
legal disputes exist or arise with respect to the Company's private changes in environmental and other local legislation and regulation; interest
participation interests; Sintana's expectations regarding the potential of its and exchange rates fluctuations; changes in economic and political conditions;
participation interests to contain hydrocarbons reserves the Company's ability to retain and attract skilled staff and obtain all
required permits in a timely manner on acceptable terms
Management's outlook regarding future trends Financing will be available for exploration and operating activities; the Price volatility for hydrocarbons; changes in debt and equity markets;
market prices for hydrocarbons will be favourable; economic and political interest and exchange rates fluctuations; changes in economic and political
conditions will be favourable conditions; availability of financing
Inter Oil, which indirectly holds limited working interests in five PELs in Inter Oil, Giraffe and Challenger will continue to proceed with the projects; Price volatility for hydrocarbons; changes in debt and equity markets;
Namibia and Giraffe, which holds limited interests in one PEL in Namibia, will market prices of hydrocarbons will be favourable; all requisite permits, increases in costs; interest rates and exchange rates fluctuations; changes in
successfully explore and develop the PELs, and Challenger, which holds working equipment, materials, supplies, services, partners, access and personnel will economic, contractual, regulatory and political conditions; availability of
interests in two licences in Uruguay, will successfully explore and develop be obtained in a timely manner upon acceptable terms; proposed exploration and permits, equipment, materials, supplies, services, partners, access, personnel
the licences development activities and the costs associated therewith will occur as and financing; proposed exploration and development activities will not occur
anticipated; actual results of exploration and development are positive; as anticipated; the success of neighbouring properties will not be consistent
financing will be available upon acceptable terms, as applicable; political, with the results of drilling on any of Inter Oil's and/or Giraffe's and/or
contractual, regulatory and economic considerations will remain favourable Challenger's properties; actual results of exploration are inconsistent with
expectations
The arbitration regarding VMM-37 will be dismissed and the Company will All regulatory and third-party approvals will be received for the transfer of Delays or failure to obtain all applicable third party and regulatory
conditionally assign all its interests in VMM-37 to ExxonMobil in VMM-37 and completion of the settlement payments; ExxonMobil will comply with approvals; failure of ExxonMobil to comply with the settlement agreement
consideration of $9 million in cash payments the settlement agreement
Inherent in forward-looking statements are risks, uncertainties and other
factors beyond Sintana's ability to predict or control. Additional risk
factors are described in the "Risk Factors" section below. Readers are
cautioned that the above table does not contain an exhaustive list of any and
all relevant factors and / or assumptions that could affect forward-looking
statements, and that assumptions underlying such statements might prove to be
incorrect. Actual results and developments are likely to materially differ
from those expressed or implied by forward-looking statements contained in
this MD&A.
Forward-looking statements involve known and unknown risks, including
regulatory, contractual and political risks, uncertainties and other factors
that could cause Sintana's actual results, performance and / or achievements
to be materially different from any of its projected results, performance and
/ or achievements expressed or implied by forward-looking statements. All
forward-looking statements herein are qualified by this cautionary statement.
Accordingly, readers should not place undue reliance on forward-looking
statements. The Company undertakes no obligation to update publicly, or
otherwise revise, any forward-looking statements whether as a result of new
information or future events or otherwise, except as may be required by law
and / or regulation. If the Company does update one or more forward-looking
statements, no inference should be drawn that it will make additional updates
with respect to those or other forward-looking statements, unless required by
law.
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. END FR AKKBDNBKDCQN
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