REG - Sintana Energy Inc - Interim Results for the 3 months to 31 March 2026
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RNS Number : 4196E Sintana Energy Inc 15 May 2026
15 May 2026
Sintana Energy, Inc.
("Sintana" or "the Company")
Interim Results for the three months ended 31 March 2026
TORONTO, MAY 15, 2026 - Sintana Energy Inc. (TSX-V: SEI, AIM: SEI, OTCQX:
SEUSF) announces that it has filed its interim financial statements for the
three months ended 31 March 2026 ("Q1 2026") and the accompanying Management's
Discussion and Analysis ("MD&A").
The following should be read in conjunction with the complete unaudited
unreviewed interim financial statements and the accompanying MD&A for the
three months ended 31 March 2026, which are available on the Canadian System
for Electronic Document Analysis and Retrieval ("SEDAR+") at
www.sedarplus.ca and on Sintana's website at https://sintanaenergy.com
(https://sintanaenergy.com)
Q1 2026 Operational and Financial Highlights
· Completion of the all-share acquisition of Challenger Energy
Group Plc and admission to trading on AIM (both effective December 2025),
with integration progressing smoothly during Q1 2026.
· Galp Energia announced a 57% upgrade to 3C contingent resources
at the Mopane discovery (PEL 83, offshore Namibia), from 875 mmboe to 1.38
billion boe (gross); TotalEnergies confirmed an FID target of 2028 and first
oil in 2032.
· Letter of Intent signed securing exclusivity over a potential
indirect interest in PEL 37, Walvis Basin, offshore Namibia; definitive
documentation expected in Q2 2026 and completion in H2 2026.
· 3D seismic acquisition commenced over AREA OFF-1, offshore
Uruguay, with circa 1,600 km² acquired in the first season and fast-track
results expected in Q4 2026.
· Settlement reached with ExxonMobil resolving the VMM-37
arbitration for total cash payments of $9 million ($3 million received, $6
million expected before year-end 2026); net loss reduced to $1.1 million (Q1
2025: $2.3 million); cash of $8.2 million at period end.
· Net loss for Q1 2026 of $1.1 million, a reduction from $2.3
million in the comparative period in 2025, primarily reflecting the receipt of
$2.3 million of net proceeds from the VMM-37 settlement, partially offset by
higher general and administrative expenses.
· As at 31 March 2026, the Company had total assets of $60.5
million (2025: $62.1 million), including cash of $8.2 million (2025: $10.3
million).
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
(mailto: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
(https://www.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.
SINTANA ENERGY INC.
CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2026
(EXPRESSED IN UNITED STATES DOLLARS, UNLESS OTHERWISE STATED)
UNAUDITED
Financial Statements
Condensed Interim Consolidated Statements of Financial Position
(Expressed in United States Dollars, Unless Otherwise Stated)
As at As at
March 31, December 31,
2026 2025
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents 8,179,715 10,315,705
Accounts receivable and other assets (note 3) 1,925,858 1,647,503
Restricted cash (note 4) 707,512 707,656
Total current assets 10,813,085 12,670,864
Non-current assets
Investment in joint venture (note 5) 9,868,519 9,692,658
Tangible assets 44,261 41,374
Intangible assets (note 6) 39,288,794 39,288,794
Accounts receivable and other assets (note 3) 442,024 431,155
Total assets 60,456,683 62,124,845
SHAREHOLDERS' EQUITY AND LIABILITIES
Current liabilities
Accounts payable and accrued liabilities (notes 7 and 14) 2,153,726 4,259,512
Current income tax payable 57,356 58,298
Deferred compensation (note 14) 604,939 604,939
Asset retirement obligation 2,642,973 2,703,739
Total current liabilities 5,458,994 7,626,488
Non-current liabilities
Deferred income tax liability 358,234 364,124
Total liabilities 5,817,228 7,990,612
Shareholders' equity 54,639,455 54,134,233
Total shareholders' equity and liabilities 60,456,683 62,124,845
The accompanying notes are an integral part of these unaudited condensed
interim consolidated financial statements.
Nature of operations and going concern (note 1)
Subsequent events (note 17)
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
(Expressed in United States Dollars, Unless Otherwise Stated) (Unaudited)
Three Months Ended
March 31,
2026 2025*
Operating expenses
Exploration and evaluation expenditures (note 12) 233,273 9,000
Foreign exchange loss (gain) 409,265 110,475
General and administrative (notes 13 and 14) 2,931,888 2,268,646
Net loss before interest income and joint venture loss (3,574,426) (2,388,121)
Interest income 60,938 102,465
Net consideration on assignment of exploration licence interest (note 16) (2,399,388) -
Joint venture (loss) income (note 5) (13,520) (7,723)
Net loss for the period (1,127,620) (2,293,379)
Net loss attributable to:
Common shareholders (1,127,345) (2,283,633)
Non-controlling interest (275) (9,746)
Net loss for the period (1,127,620) (2,293,379)
Other comprehensive loss
Items that will be reclassified subsequently to loss
Exchange difference on translating foreign operations 274,386 53,985
Other comprehensive loss for the period 274,386 53,985
Net comprehensive loss for the period (853,234) (2,239,394)
Net comprehensive loss attributable to:
Common shareholders (852,959) (2,229,648)
Non-controlling interest (275) (9,746)
Net comprehensive loss for the period (853,234) (2,239,394)
Loss per share - basic and diluted (note 11) (0.00) (0.01)
Weighted average number of common shares 513,120,076 375,182,268
outstanding - basic and diluted (note 11)
The accompanying notes are an integral part of these unaudited condensed
consolidated interim financial statements.
* Restated. See note 2b for details.
Condensed Interim Consolidated Statements of Cash Flows
(Expressed in United States Dollars, Unless Otherwise Stated) (Unaudited)
Three Months Ended
March 31,
2026 2025*
Operating activities
Net loss for the period (1,127,620) (2,293,379)
Adjustment for:
Joint venture loss (income) 13,520 7,723
Share-based compensation (notes 10 and 11) 1,265,891 1,579,696
Depreciation 131 -
Foreign exchange 409,265 110,475
Non-cash working capital items:
Accounts receivable and other assets (289,224) (102,375)
Accounts payable and accrued liabilities** (2,105,785) (6,018)
Deferred compensation (note 14) - (350,000)
Net cash used in operating activities (1,833,822) (1,053,878)
Investing activities
Additional funding in joint venture (note 5) (351,082) (30,396)
Tangible asset additions (3,952) -
Net cash used in investing activities (355,034) (30,396)
Financing activities
Options exercised (note 9) 92,565 173,446
Net cash provided by financing activities 92,565 173,446
Net change in cash and cash equivalents (2,096,291) (910,828)
Effects of exchange rate changes on cash and cash equivalents (39,699) (75,961)
Cash and cash equivalents, beginning of period 10,315,705 12,591,728
Cash and cash equivalents, end of period 8,179,715 11,604,939
Cash 8,179,715 10,823,150
Cash equivalents - 781,789
Total cash and cash equivalents 8,179,715 11,604,939
The accompanying notes are an integral part of these unaudited condensed
interim consolidated financial statements.
• Restated. See note 2b for details.
** The significant movement in accounts payable and accrued liabilities
is primarily driven by the settlement of substantial creditor balances
outstanding at December 31, 2025, relating to fees incurred in connection with
the acquisition of Challenger Energy Group Plc during the year.
Condensed Interim Consolidated Statements of Changes in Shareholders' Equity
(Expressed in United States Dollars, Unless Otherwise Stated) (Unaudited)
Number Non- Other
of common Share Contributed controlling comprehensive
shares capital surplus interest Deficit loss Total
Balance, December 31, 2024* 374,584,121 113,477,293 10,628,956 19,170 (100,449,232) (3,500,432) 20,175,755
Options exercised (note 9(ii)) 1,691,424 383,521 (210,075) - - - 173,446
Share-based compensation - stock options (note 9) - - 594,906 - - - 594,906
Share-based compensation - restricted shares (note 10) - - 985,867 - - - 985,867
Net loss and comprehensive loss for the period - - - (9,746) (2,283,633) 53,985 (2,239,394)
Balance, March 31, 2025 376,275,545 113,860,814 11,999,654 9,424 (102,732,865) (3,446,447) 19,690,580
Balance, December 31, 2025 510,356,240 153,368,585 13,810,690 5,252 (110,565,211) (2,485,083) 54,134,233
Restricted shares vested and
converted to common shares (note 10) 2,600,000 2,291,377 (2,291,377) - - - -
Options exercised (note 9(ii)) 1,200,000 211,676 (119,111) - - - 92,565
Share-based compensation - stock options (note 9(i)) - - 199,847 - - - 199,847
Share-based compensation - restricted shares (note 10) - - 1,066,044 - - - 1,066,044
Net loss and comprehensive loss for the period - - - (275) (1,127,345) 274,386 (853,234)
Balance, March 31, 2026 514,156,240 155,871,638 12,666,093 4,977 (111,692,556) (2,210,697) 54,639,455
The accompanying notes are an integral part of these unaudited condensed
interim consolidated financial statements.
* Restated. See note 2b for details.
Notes to Condensed Interim Consolidated Financial Statements Three Months
Ended March 31,
(Expressed in United States Dollars, Unless Otherwise Stated) (Unaudited)
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 OTC-QXmarket
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 December 23, 2025. The primary
Canadian 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 and which
the Company is seeking to monetize and /or exit.
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 Group 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 portfolio of assets are an early stage of exploration and development
and thus do not generate revenues, and therefore as is common with similar
exploration companies, Sintana raises financing for its business activities.
Sintana did not earn any operating income in the current and prior three
months. For the three months ended March 31, 2026, the Company incurred a loss
of $1,127,620 (three months ended March 31, 2025 - $2,293,379) and had an
accumulated deficit of $111,692,556 (2025 - $102,732,865). Sintana had working
capital of $5,354,091 at March 31, 2026 (2025 - $5,044,376).
These unaudited condensed interim 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 certainty of funding
future exploration 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. The Company's ability to continue as a going concern is dependent
upon obtaining additional financing and eventually achieving profitable
production. These unaudited condensed interim 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 during the period, 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 (a legacy asset in which
Company holds a private participation interest). 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 settlement 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
The Company applies IFRS(®) Accounting Standards ("IFRS") as issued by the
International Accounting Standards Board ("IASB"). These unaudited condensed
interim consolidated financial statements have been prepared in accordance
with International Accounting Standard 34, Interim Financial Reporting.
Accordingly, they do not include all of the information required for full
annual financial statements prepared in accordance with IFRS as issued by the
IASB.
(b) Functional and presentational currency
Following the acquisition of Challenger and its subsidiaries and the Company's
subsequent admission to AIM in the United Kingdom, the Company 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 three month period ended March 31, 2025. 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 more diverse shareholder base.
The change in presentation currency was applied retrospectively and had no
impact on the Company's reported net earnings, cash flows, or shareholders'
equity, other than the translation of financial statement amounts into USD.
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
The policies applied in these unaudited condensed interim consolidated
financial statements are based on IFRS(®) issued and outstanding as of 15 May
2026, being the date the Board of Directors approved these unaudited condensed
interim consolidated financial statements. The same accounting policies,
methods of computation, significant judgements, and key accounting estimates
are followed in these unaudited condensed interim consolidated financial
statements as compared with the most recent annual audited consolidated
financial statements as at and for the year ended December 31, 2025, except as
noted below. Any subsequent changes to IFRS that are given effect in the
Company's annual audited consolidated financial statements for the year ending
December 31, 2026 could result in restatement of these unaudited condensed
interim consolidated financial statements.
Future applicable accounting standards
In April 2024, the IASB issued IFRS 18 - Presentation and Disclosure in
Financial Statements which sets out the overall requirements for presentation
and disclosures in the consolidated financial statements. The new standard
replaces IAS 1 and although much of the substance of IAS 1 will carry over
into the new standard, the new standard will require presentation of
separate categories of income and expense for operating, investing, and
financing activities with prescribed subtotals for each new category. The new
standard will also require disclosure and explanation of 'management-defined
performance measures' in a separate note within the consolidated financial
statements.
The new standard is effective for annual reporting periods beginning on or
after January 1, 2027, including interim consolidated financial statements,
and requires retrospective application. The company is currently assessing the
impact of the new standard.
3. Accounts receivable and other assets
As at As at
March 31, December 31,
2026 2025
Current trade and other receivables
Accounts receivable 68,432 392,047
Prepaids and other advances 357,426 255,456
Deposit - Corcel 500,000 500,000
Deposit - PEL 37 (1) 500,000 -
Deferred consideration (2) 500,000 500,000
Total 1,925,858 1,647,503
Non-current trade and other receivables
Deferred consideration (2) 442,024 431,155
Total 442,024 431,155
(1) On January 21, 2026, the Company announced it had entered into a
Letter of Intent securing exclusivity through April 30, 2026, in relation to a
potential investment providing an indirect interest in PEL 37 offshore
Namibia, adjacent to and north of PEL 82. During the exclusivity period, the
Company has been conducting technical, commercial and legal due diligence and
negotiating transaction terms. To secure exclusivity, the Company agreed to
pay a $1 million deposit, of which $500,000 has been paid to date, with
one-third being non-refundable if the Company elects not to proceed. As of the
date of this report, due diligence and negotiations are at an advanced stage,
with definitive agreements expected in Q2 2026 and completion anticipated in
the second half of 2026, subject to customary conditions precedent.
(2) 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 $442,024.
4. Restricted cash
As at As at
March 31, December 31,
2026 2025
Credit card security 7,512 7,656
Licence related restricted bank deposits 700,000 700,000
Total 707,512 707,656
5. Investment in joint venture
Balance, December 31, 2025 9,692,658
Additional funding in joint venture 351,082
Sintana's 49% share of Inter Oil's net loss for the period ended March 31, (13,520)
2026
Foreign exchange adjustments (161,701)
Balance, March 31, 2026 9,868,519
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
6. Intangible assets
Cost
At January 1, 2026 39,288,794
Balance, March 31, 2026 39,288,794
Net book value
At, March 31, 2026 39,288,794
At, December 31, 2025 39,288,794
Intangible assets comprise exploration and evaluation assets recognized by the
Company following the acquisition of Challenger Energy Group in December 2025.
These assets represent historical expenditure incurred by Challenger in
evaluating its interests in the OFF-1 and OFF-3 licences in Uruguay. In
addition, as part of the acquisition accounting process, a further amount was
capitalized in respect of these assets following the fair value assessment
performed on acquisition. The assets are subsequently accounted for in
accordance with IFRS 6 Exploration for and Evaluation of Mineral Resources. As
at the reporting date, management has identified no indicators of impairment
in relation to these assets. Consistent with the Company's successful efforts
accounting policy for exploration and evaluation activities, no further costs
will be capitalized against these assets unless a decision is made to progress
the relevant licences towards commercial development and production.
Accordingly, the carrying values of these assets remain fixed and unamortized,
and will continue to be assessed periodically for impairment.
7. 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 arbitration of disputed joint venture cash
calls with an estimated legal fee of $525,612 currently recognized in respect
of the VMM-37 settlement proceeds:
As at As at
March 31, December 31,
2026 2025
Accounts payable 930,246 2,986,637
Accrued liabilities 1,223,480 1,272,875
2,153,726 4,259,512
The following is an aged analysis of accounts payable and accrued liabilities:
As at As at
March 31, December 31,
2026 2025
Less than 1 month 305,320 3,531,061
1 to 3 months 1,036,835 240,920
Greater than 3 months 811,571 487,531
2,153,726 4,259,512
8. Share Capital
a) Authorized share capital:
At March 31, 2026 and December 31, 2025, the authorized share capital
consisted of an unlimited number of common shares. The common shares do not
have a par value. All issued shares are fully paid.
b) Common shares capital:
The change in issued share capital for the periods presented was as follows:
Number of Amount
common shares $ 000's
Balance, December 31, 2024 374,584,121 113,477,293
Exercise of options (note 9((ii))) 1,691,424 383,521
Balance, March 31, 2025 376,275,545 113,860,814
Balance, December 31, 2025 510,356,240 153,368,585
Restricted shares vested and converted to common shares (note 10) 2,600,000 2,291,377
Exercise of options (note 9((ii))) 1,200,000 211,676
Balance, March 31, 2026 514,156,240 155,871,638
9. Stock options
The following table reflects the continuity of stock options for the periods
presented:
Weighted
Number of average
stock options exercise price
outstanding $ 000's
Balance, December 31, 2024 28,028,093 CAD$0.37
Exercised ((ii)) (1,691,424) CAD$0.15
Balance, March 31, 2025 23,336,669 CAD$0.38
Balance, December 31, 2025 23,100,003 CAD$0.42
Exercised ((ii)) (1,200,000) CAD$0.11
Balance, March 31, 2026 21,900,003 CAD$0.44
(i) Share-based compensation includes $199,847 (three months ended March
31, 2025 - $594,906) relating to stock options granted in current and previous
years in accordance with their respective vesting terms, during the three
months ended March 31, 2026.
(ii) During the three months ended March 31, 2026, 1,200,000 options were
exercised for cash proceeds of $92,565 (three months ended March 31, 2025 -
1,691,424 stock options were exercised for cash proceeds of $173,446) and the
related grant date fair value of the stock options of $119,111 (three months
ended March 31, 2025 - $210,075) was reclassified from contributed surplus to
share capital. The average share price on the exercise of stock options for
the three months ended March 31, 2026 was CAD$0.51 (three months ended March
31, 2025 - CAD$0.81).
The following table reflects the stock options issued and outstanding as of
March 31, 2026:
Weighted
average Number of
remaining Number of options Number of
Exercise contractual options vested options
Expiry date price life (years) outstanding (exercisable) unvested
March 24, 2027 CAD$0.165 0.30 6,750,000 6,750,000 -
December 19, 2032 CAD$0.110 1.43 4,650,001 4,650,001 -
December 19, 2033 CAD$0.270 1.71 4,850,002 4,850,002 -
May 1, 2034 CAD$1.080 0.61 1,650,000 1,100,000 550,000
December 13, 2034 CAD$1.230 1.55 3,900,000 2,600,000 1,300,000
June 27, 2035 CAD$0.730 0.04 100,000 33,333 66,667
5.64 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.
10. 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.
During the three months ended March 31, 2026, 2,600,000 RSUs (three months
ended March 31, 2025 - nil RSUs) vested and were converted to common shares
with a value of $2,291,377 (three months ended March 31, 2025 - nil).
The compensation portion of RSUs granted in the current and prior years and
vested during the three months ended March 31, 2026, amounted to $1,066,044
(three months ended March 31, 2025 - $985,867).
As of March 31, 2026, there were 11,450,000 RSUs outstanding (December 31,
2025 - 6,800,000).
11. Net loss per share
The calculation of basic and diluted loss per share for the three months ended
March 31, 2026 was based on the loss attributable to common shareholders of
$1,127,345 (three months ended March 31, 2025 - loss of $2,283,633) and the
weighted average number of common shares outstanding of 513,120,076 (2025 -
375,182,268). Diluted loss per share did not include the effect of options,
warrants and RSUs for the three months ended March 31, 2026 and 2025 as they
were anti-dilutive.
12. Exploration and evaluation expenditures
Three Months Ended
March 31,
2026 2025*
Namibia
Technical services 10,158 -
10,158 -
Uruguay
Technical service 160,000 -
Professional and consulting fees 51,149 -
211,149 -
Angola
Technical services 2,000 -
2,000 -
Magdalena Basin, Colombia
Administrative and general 5,570 7,153
Professional fees 4,396 1,847
9,966 9,000
233,273 9,000
* Restated. See note 2b for details.
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 FY24.
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.
13. General and administrative
Three Months Ended
March 31,
2026 2025*
Salaries and benefits (note 14) 580,784 313,218
Professional fees (note 14) 296,545 195,226
Share-based payments (notes 9, 10 and 14) 1,265,891 1,579,695
Investor relations 202,142 90,696
Travel 119,310 -
Reporting issuer costs 258,977 67,134
General and administrative costs 208,108 22,677
Depreciation 131 -
2,931,888 2,268,646
* Restated. See note 2b for details.
14. Director and Key Management Compensation, Share Based Payments and
Related party transactions and balances
(a) Director and Key Management Compensation
Remuneration of directors and key management personnel (officers) of the
Company was as follows:
Three Months Ended
March 31,
2026 2025
Salaries and benefits((1)) 478,793 253,347
(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 March 31, 2026 (December 31, 2025 -
$604,939).
(b) Share based payments
During the period ended March 31, 2026 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 9 and 10.
Three Months Ended
March 31,
2026 2025
Share-based compensation((1)) 923,797 1,528,716
(1) Share-based compensation is recorded under general and administrative.
(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 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.
· During the three months ended March 31, 2025, the Company paid
professional fees and disbursements totalling $15,011 to Marrelli Support
Services Inc., and certain of its affiliates, together known as the "Marrelli
Group", for: (i) regulatory filing services, and (ii) press release services.
At March 31, 2025, the Marrelli Group was owed $9,714 and these amounts were
included in accounts payable and accrued liabilities. Subsequent to 16
December 2025, when Carmelo Marrelli ceased office and employment with the
Company upon completion of the Challenger acquisition, Marrelli Support
Services Inc. and its affiliates ceased to be related parties to the Company.
Accordingly, in the three months ended March 31, 2026, there were no
additional transactions with related parties.
· 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.
During the three months period ended 31 March 2026, the Facility remained
available to the Company and was not cancelled by the Company, but the Company
did not draw down on the Facility.
15. 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).
March 31, 2026 Corporate Namibia Uruguay Non-operating Total
Cash and cash equivalents 5,215,413 1,378 10,115 2,952,809 8,179,715
Accounts receivable and other assets 2,259,616 92,365 8,239 7,662 2,367,882
Restricted cash 707,512 - - - 707,512
Tangible assets 3,824 - - 40,437 44,261
Intangible assets - - 39,288,794 - 39,288,794
Investment in joint venture 9,868,519 - - - 9,868,519
Total assets 18,054,884 93,743 39,307,148 3,000,908 60,456,683
Accounts payable and accrued liabilities 1,118,980 12,450 - 1,022,296 2,153,726
Current income tax payable 57,356 - - - 57,356
Deferred compensation 604,939 - - - 604,939
Asset retirement obligation 73,486 - - 2,569,487 2,642,973
Deferred income tax liability 358,234 - - - 358,234
Total liabilities 2,212,995 12,450 - 3,591,783 5,817,228
Three Months Ended March 31, 2026 Corporate Namibia Uruguay Non-operating Total
Exploration and evaluation expenditures 12,158 - 211,149 9,966 233,273
General and administrative 2,759,941 275 125,931 45,741 2,931,888
Net consideration on assignment of exploration licence interest - - - (2,399,388) (2,399,388)
Interest income (60,938) - - - (60,938)
Foreign exchange (gain) loss 472,589 (63,292) - (32) 409,265
Joint venture loss 13,520 - - - 13,520
Net loss 3,197,270 (63,017) 337,080 (2,343,713) 1,127,620
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
Three Months Ended March 31, 2025* Corporate Namibia Uruguay Non-operating Total
Exploration and evaluation expenditures - - - 9,000 9,000
General and administrative 2,249,536 19,110 - - 2,268,646
Foreign exchange (gain) loss 12,358 100,417 - (2,300) 110,475
Interest income (102,465) - - - (102,465)
Joint venture (loss) income 7,723 - - 7,723
Net loss 2,167,152 119,527 - 6,700 2,293,379
* Restated. See note 2b for details.
16. Proposed transactions and VMM-37 settlement/contingent consideration
Investment in KON-16:
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 during Q2 2026, and completion of the
transaction will follow pending satisfaction of conditions precedent,
including regulatory approval, with completion expected in H2 2026.
Investment in PEL 37:
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 initially ran through to April 30, 2026, during which period the
Company has 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 is at an advanced stage of due diligence as to the
technical and commercial merits of this opportunity, and in parallel has been
negotiating suitable transaction terms - present expectations are that
definitive documentation for this transaction will be entered into during Q2
2026, and the transaction will be completed in H2 2026, following satisfaction
of relevant conditions precedent.
VMM-37 settlement:
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 conditional 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 (gross) from ExxonMobil. At 31 March 2025 directly attributable costs
of $600,612 have been offset against the gross proceeds resulting in a net
consideration received of $2,399,388. 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 - the
$6 million to be received as the second instalment has not been recorded in
the accounts as a receivable, and is instead treated as a contingent asset.
17. Subsequent events
On April 24, 2026, 625,000 stock options in the Company were exercised. The
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.
On May 11, 2026, 1,800,000 stock options in the Company were exercised. The
options were exercised at the following prices: 1,000,000 options at a price
of CAD$0.165 per share and 800,000 options at a price of CAD$0.11 per share.
Corporate Directory
DIRECTORS AUDITORS
Keith Spickelmier, Non- Executive Chairman MNP LLP
Robert Bose, CEO & Executive Director
2000, 112 - 4th Avenue SW
Eytan Uliel, President & Executive Director
Calgary, Alberta, Canada, T2P 0H3
Iain McKendrick, Non-Executive Director
Douglas Manner, Non- Executive Director REGISTRAR AND TRANSFER AGENT
Knowledge Katti, Non- Executive Director
Computershare Trust Company of Canada
CO-COMPANY SECRETARIES
320 Bay Street, 14th Floor
Toronto, Ontario, Canada, M5H 4A6
Jonathan Gilmore, Chief Financial Officer
Sean Austin, Financial Controller & Treasurer UK DEPOSITORY
REGISTERED OFFICE Computershare Investor Services PLC
The Pavilions, Bridgwater Road
3300, 421
Bristol, United Kingdom, BS13 8AE
7th Avenue S. W.
Calgary, Alberta NOMINATED ADVISOR
Canada T2P 4K9
Zeus Capital Limited
PRINCIPAL OFFICE
82 King Street
Manchester, United Kingdom, M2 4WQ
Office 4.01
88 Kingsway CANADIAN LEGAL COUNSEL
London, United Kingdom, WC2B 6AA
Fogler, Rubinoff LLP
COMPANY WEBSITE
Scotia Plaza
40 King Street West, Suite 2400
www.sintanaenergy.com
Toronto, Ontario, Canada, M5H 3Y2
LISTINGS UK LEGAL COUNSEL
Exchange: TSX Venture Pinsent Masons LLP
Trading Symbol: SEI
30 Crown Place, Earl Street
Cusip Number: 82938H
London, United Kingdom, EC2A 4ES
Exchange: AIM
Trading Symbol: SEI
ISIN Number: CA82938H1073
Exchange: OTCQX
Trading Symbol: SEUSF
Cusip Number: 82938H
Sintana Energy Inc
Management's Discussion and Analysis of Consolidated
Financial Statements
for the 3 months Ended March 31, 2026
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 three months' period
ended March 31, 2026. 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 consolidated financial
statements of the Company for the three months ended March 31, 2026, 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 May 15, 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 September 28, 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 hold 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.londonstockexchange.com/)
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 January 19, 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;
· 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 an Atlantic-margin exploration company with carried interests
in three active jurisdictions: Namibia, Uruguay and Angola. The following
summarizes key industry trends and operating conditions relevant to each:
(i) Namibia
Over the past four years, Namibia has emerged as one of the world's most
promising deepwater oil frontiers, with discoveries by TotalEnergies, Galp and
Shell collectively representing an estimated 20 billion barrels of combined
resources potential and drawing direct comparisons to Guyana as a
basin-defining exploration success story. Namibia's oil sector has the
potential to play a transformative role in the country's economy, supporting
industrialization, energy security, and broad-based economic transformation.
The pivotal shift in sentiment came in 2022 when Shell's Graff discovery and
TotalEnergies' Venus find in the Orange Basin repositioned Namibia as a
premier deepwater exploration destination. Although Namibia currently has no
commercial oil production to date, the scale of discoveries at Venus and
Mopane, along with the prospective Kudu gas field, established a credible path
to becoming a significant oil and gas producer in Sub-Saharan Africa within
this decade. Venus, operated by TotalEnergies, is targeting a final investment
decision (FID) in Q4 2026, with first oil projected between 2029 and 2030. At
Mopane TotalEnergies, has agreed to acquire a 40% operating interest from
Galp, with operatorship in transition, and is planning a three-well appraisal
and exploration campaign commencing H2 2026, targeting FID in 2028, with first
oil in 2032. Together, these projects define the near-term production horizon
for Namibia's Orange Basin and anchor its position as one of Africa's most
significant new oil and gas jurisdictions.
(ii) Uruguay
Although Uruguay has no commercial oil and gas production, industry attention
shifted decisively toward offshore following the major Orange Basin
discoveries offshore Namibia in 2022. The geological rationale is well
established since Uruguay and Namibia sit on the conjugate margins of the
South Atlantic sharing common geological history from the Lower Cretaceous
period supporting a framework that supports directly analogous plays at
Cretaceous stratigraphic levels. All available offshore blocks in Uruguay are
now under licence, with six of the world's energy companies (Chevron, Shell,
APA Corporation, YPF, ENI, and QatarEnergy) having secured or farmed into
positions across seven offshore blocks. The pace of institutional commitment
has accelerated materially: QatarEnergy entered Uruguay for the first time
in March 2026, farming into two Shell-operated blocks, while Chevron expanded
its presence to a second block in the same month. New 3D seismic acquisition
is currently underway on AREA OFF-1 operated by Chevron and APA Corporation
(formerly Apache), is expected to drill a deepwater exploration well on AREA
OFF-6 as early as H2 2026, which would be Uruguay's first offshore exploration
well in a decade.
(iii) Angola
Angola has one of Africa's longest-established petroleum histories, with
formal hydrocarbon exploration dating back to 1910 in the Lower Congo and
Kwanza basins. After commercial discoveries in both basins in 1968, deepwater
discoveries from the 1990s onward established Angola as one of Africa's
leading oil producers. Attention has more recently turned back to the onshore,
as the government pursues a deliberate strategy to diversify production beyond
its mature offshore fields. The Kwanza Basin, which stretching along Angola's
central-western coast, holds material hydrocarbon potential and remains
historically under-explored relative to Angola's prolific offshore.
A structured licensing programme has opened the basin to both international
operators and local participants, creating renewed upstream activity in a
jurisdiction with a proven petroleum system and an established regulatory
framework.
(iv) General
All of the locations in which the Company holds assets are considered frontier
jurisdictions for oil and gas activity. Financial and commodities markets in
general, and the global market for oil and gas in particular, have been and
are likely to remain volatile for the foreseeable future, reflecting ongoing
conflicts in the Middle East and Ukraine and broader geo‑political
developments in the Americas, the Middle East and Africa. Energy companies
worldwide, including Sintana, can be materially and adversely affected by
these conditions. See also "Risk Factors" below.
C. Q1 2026 Portfolio Highlights & Major Developments
(i) Assets & Operations
On October 9, 2025, the Company announced that it had 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"). The Scheme became effective on December 16, 2025, as a result of
which the Company acquired the entire issued and to be issued share capital of
Challenger, and Challenger became a wholly owned subsidiary of the Company. 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 December 23, 2025. During
the 3 months ending March 31, 2026, the Challenger business was integrated
into the Company's business, with the transition of ownership having
progressed smoothly.
On December 9, 2025 TotalEnergies and Galp Energia announced that they had
entered into an agreement pursuant to which TotalEnergies will assume
operatorship of PEL 83 and receive a 40% participating interest in the
licence. The agreement with TotalEnergies is subject to regulatory approval,
which process continued throughout the period ending March 31, 2026, and is
expected to be completed in H2 2026.
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 paid an initial $500,000 one-third of which is
non-refundable should the Company elect not to proceed. As at the date of this
MD&A, the Company is in advanced stages of due diligence as to the
technical and commercial merits of this opportunity and has in parallel been
negotiating suitable transaction terms. The present expectation is that
definitive documentation for this transaction will be entered into during Q2
2026, and the transaction will be completed in H2 2026, following satisfaction
of relevant conditions precedent.
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 targeted in 2032; (ii) a development concept
based around FPSO and 20,000 boepd of production was contemplated; and (iii)
considerable upside exploration potential of up to a further 1.5 billion
barrels had been identified both within an expansion of the Mopane project and
in the broader PEL 83 block;
On May 14, 2025, the Company entered into head of terms with Corcel plc
("Corcel"), a UK-listed entity focused on oil and gas opportunities in Angola,
to acquire an indirect 5% net interest in the KON-16 licence located in the
onshore Kwanza Basin in Angola. A definitive agreement is expected to be
entered into during Q2 2026, with completion to follow pending satisfaction of
conditions precedent, including regulatory approval, expected in H2 2026. On
February 26, 2026 Corcel, the operator of the KON-16 block in Angola,
announced the completion of a 326-line km high resolution 2D seismic data
acquisition programme over the block. Initial review of the raw field data
confirmed excellent data quality and clear imaging of key pre-salt horizons.
Seismic processing is now underway, followed with results expected throughout
the course of 2026 to support prospect maturation and drilling preparation.
On March 3, 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. As at the end of
the first season on 30 April 2026, approximately 1,600 km(2) of the planned
acquisition had been completed, and which included most acquisition relevant
to the key prospects on AREA OFF-1. 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.
On March 18, 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.
On March 23, 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 billion boe
(gross), the increase being reflective of the success of the exploration
drilling campaign at Mopane. This upgrade represents a 57% increase to the
Mopane resource base.
On April 15, 2026 at the Namibia International Energy Conference in Windhoek,
Chevron announced its intention to proceed with planning and drilling
operations associated with the Nabba-1X well on PEL 90 in Namibia, expected to
be drilled in Q4 2026.
(ii) Finance
As at March 31, 2026, the Company had total assets of $60.5 million (2025:
$62.1 million), including cash of $8.2 million (2025: $10.3 million).
During the period ended March 31, 2026, the Company's net loss was $1.1
million (as compared to the same period in 2025: $2.3 million). The decrease
in net loss as compared to the same period in 2025 was primarily driven by the
receipt of $2.3 million of net proceeds from the Colombian VMM-37 settlement.
However, this benefit was offset by higher general and administrative
expenses, including a $0.3 million increase in non-cash share-based
compensation, a $0.3 million increase in salaries and benefits, a $0.1 million
increase in professional fees, a $0.1 million increase in investor relations
costs, a $0.1 million increase in travel costs, a $0.2 million increase in
reporting issuer costs and a $0.2 million increase in other administrative and
general costs. In addition, foreign exchange losses increased by $0.3 million
and interest income decreased by $0.04 million due to lower average cash
balances as cash resources were utilized during the last fiscal year.
During the three month period ended March 31, 2026:
· on January 6, 2026, 400,000 stock options were exercised for cash
proceeds of $29,359;
· on January 6, 2026, an aggregate of 2,600,000 common shares were
issued upon the conversion of RSUs. The common shares were admitted to
trading on January 7, 2026;
· on March 27, 2026, 800,000 stock options were exercised for cash
proceeds of $63,206.
On February 4, 2026 the Company announced it had reached an agreement with
ExxonMobil to resolve arbitration relating to the VMM‑37 block in Colombia.
Under the terms of the settlement, the arbitration has been dismissed and the
Company had conditionally assigned all its interests in VMM-37 to ExxonMobil;
and ExxonMobil had agreed to make total cash payments of $9 million to the
Company: an initial payment of $3 million which has been received, and a
second payment of $6 million conditional on approval of the assignment by the
appropriate Colombian governmental agencies, expected prior to year end 2026.
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 December 9, 2025 TotalEnergies announced that it has entered into an
agreement with Galp Energia to acquire a 40% operated interest in PEL 83.
Under the terms of the agreement, TotalEnergies will become operator of PEL 83
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.
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 a first oil target in 2032; (ii) a development concept
based around FPSO and 200,000 boepd of production was contemplated; and (iii)
considerable upside exploration potential of up to a further 1.5 billion
barrels had been identified both within an expansion of the Mopane project and
in the broader PEL 83 block.
On March 23, 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 billion boe (gross), the increase is 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) 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 PPL3
to further develop the oil prospectivity on the block. BW Energy is currently
drilling the Kharas appraisal well on PPL 3, with expected completion in early
Q1 2026.
In September 2025, BW Energy spudded the Kharas-1 appraisal well on PPL 3.
Final results were released in November 2025: the well reached a total depth
of 5,100 meters, intersected multiple reservoir intervals, and confirmed for
the first time the presence of liquid hydrocarbons - in the form of condensate
and/or light oil- within the Kudu block. Shallow turbidite reservoirs returned
dry gas shows. The well has been plugged and abandoned as planned, and BW
Energy has indicated that its forward programme will focus on further
high-value targets incorporating both liquids and gas, with a follow-up
appraisal campaign planned for 2026-2027 and an FID targeted for late 2026.
The Barremian Aptian source rock (Kudu shale) is mature and believed to be
within the oil mature window across PEL 79. The initial interpretation of the
block led to the identification of three potential targets. As the block is
adjacent to the Kudu Field there is also potential for the extension of the
Kudu trend within this block. The 2815/15-1 well, drilled by a subsidiary of
Chevron in 1996, had gas shows and 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, at a cost of 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, to the north-west of the Kudu Gas Field.
The block covers an area of 10,970 km(2) and contains the Saturn turbidite
complex, which spans more than 2,400 km(2) and has been estimated by
Pancontinental to hold up to five billion barrels of recoverable oil in a
high-case scenario. Seismic data covers more than 1,400 km(2) of 3D and a
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 the well location. The Aptian/Albian age fan rests
directly on top of source rocks and contains several sands within 280m gross
section. PEL 87 contains the Saturn turbidite complex that spans more than
2,400 km(2) and has significant oil potential.
In March 2023, Woodside entered into an option agreement to acquire a 56%
participating interest in PEL 87, 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 PEL 87 was completed in May 2023 at a
cost of US$40 million, the costs of which were fully borne by Woodside. In
March 2025 Woodside elected not to exercise its option, and as a result
Pancontinental, the operator of the block launched a farm-out process to
secure an alternate partner with equivalent carry rights for the Company.
On March 18, 2026, Pancontinental, the joint venture partner and operator of
PEL 87, received notification from the Namibian Ministry of Industry, Mines
and Energy (MIME) that the Minister had granted approval to extend the current
First Renewal Exploration Period of PEL 87 by 12 months, to January 22, 2027.
The extension carries 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. The EIA commenced
in 2025 and is progressing well. The seismic reprocessing programme is
focussed on improving signal quality across a subset of the PEL 87 3D. As of
the date of this MD&A, Pancontinental is continuing its process to secure
a farm-in partner, with the licence extension providing the runway required to
advance both the technical work programme and partner engagement.
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. PEL 90 is operated by Harmattan Energy, an indirect subsidiary of
Chevron, which holds a 52.5% operating interest. QatarEnergy International
holds 27.5% with NAMCOR and Trago Energy each holding 10%.
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 2025, Chevron drilled the Kapana-1X exploration on PEL 90. The well
did not encounter commercial hydrocarbons, but operations returned valuable
information on key aspects of the basin and increased confidence in the
forward programme. The Company was fully carried in all costs associated with
that well. In December 2024, QatarEnergy 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 on PEL 90. At the
Namibia International Energy Conference in April 2026, Chevron announced its
intention to drill the Nabba-1X well on PEL 90 in Q4 2026. The Company's
indirect interest is not carried for exploration activity on PEL 90 following
the Kapana-1X well; 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.
TotalEnergies Venus discovery, located less than 30 km from PEL 90's southern
boundary, encountered 84 meters of net oil pay in the higher-quality Lower
Cretaceous reservoir with subsequent appraisal including the Mangetti-1X well
drilled in early 2024 further confirming the prospectivity of the broader
area.
PEL 82 - Walvis Basin, offshore Namibia (4.9% indirect interest)
The Company holds an indirect and carried interest in PEL 82 (Blocks
2112B/2212A) offshore Namibia in the Walvis Basin. Approximately 70% of the
total block area is covered by extensive existing seismic data - over 3,500 km
of 2D and 9,500 km(2) of 3D supporting the delineation of a number of material
prospects consisting of Lower Cretaceous submarine fans that are
stratigraphically trapped. Two historic wells have been drilled on the block.
The Wingat-1 well, drilled by a subsidiary of HRT in 2013 recovered 38-41 API
light oil to surface - confirming an active petroleum system. The Murombe-1
well, also drilled by HRT in 2013, penetrated the Baobab sands with
approximately 20% porosity and confirmed the regional presence of the
Barremian-Aptian oil-prone source rock (Kudu shale), though the well did not
encounter commercial hydrocarbons. In April 2024, Chevron agreed to acquire an
80% operated working interest in PEL 82, with the farm-in completing in
February 2025. Under the terms of the farm-in, Chevron carries the full cost
of exploration activity on the block, with NAMCOR and Custos Energy each
retaining a 10% carried interest. Chevron has publicly indicated its
intention to drill the Gemsbok exploration well on PEL 82 in the 2026 to 2027
timeframe. The Company's indirect interest is fully carried for the cost of
this programme.
PEL 37 - Walvis Basin, offshore Namibia (potential indirect interest)
PEL 37 covers an area of 17,295 km(2) in the Walvis Basin, offshore Namibia,
in water depths of 100 to 1,500 meters, with identified prospects at water
depths between 300 and 600 meters. The block contains multiple large fans
directly overlying a proven, mature oil-prone Aptian source rock, and is
located immediately to the north of PEL 82, in which the Company holds an
indirect carried interest through Custos Energy.
On January 19, 2026, the Company entered into a Letter of Intent ("LOI") with
Paragon Oil and Gas Ltd ("Paragon"), the 100% owner and operator of PEL 37,
securing a period of exclusivity through April 30, 2026 to conduct technical,
commercial and legal due diligence and negotiate terms for a capital
contribution that would result in the Company becoming a shareholder of
Paragon and thereby acquiring an indirect approximately 30% interest in PEL
37. The exclusivity period ran 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 paid 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 is in advanced stages of due diligence as to the
technical and commercial merits of this opportunity, and in parallel has been
negotiating suitable transaction terms. The present expectation is that
definitive documentation for this transaction will be entered into during Q2
2026, and the transaction will be completed in H2 2026, following satisfaction
of relevant conditions precedent.
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 basin, providing 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
along with reservoir intervals from Permian to Triassic age. Only a small
portion of the basin has been drilled to date with additional untested
sub-basins likely to exist.
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
reported to have commenced in Q1 2026.
PEL 103 is located approximately 55 km south-west of ReconAfrica's acreage on
PEL 37 in the adjacent Kavango Basin. ReconAfrica's Kavango West 1X well,
drilled to 4,200 meters and completed in November 2025, encountered
approximately 400 meters of gross hydrocarbon-bearing Otavi carbonate section.
Updated petrophysical analysis released in March 2026 revised net hydrocarbon
pay upward to approximately 75 meters within the Huttenberg formation, with a
total of 345 meters of prospective interval identified across multiple zones.
Production testing operations commenced on 26 March 2026, with regulatory
permits received. Halliburton and SLB were contracted for services, and field
crews on site. Results of the production test are expected in Q2 2026. Based
on the geological proximity of PEL 103 to ReconAfrica's acreage, it is
believed that the Permian sediments on PEL 103 could hold similar hydrocarbon
potential.
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
depths of (50 to 1,000 meters). 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 August 25, 2022.
In late 2022, in view of growing industry interest in Uruguay's offshore,
Challenger decided to accelerate and expand the work programme 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. The transaction completed on October 29,
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 December 8, 2025 the Uruguayan Ministry of Environment issued the necessary
environmental permits for seismic acquisition in Uruguayan territorial waters.
On March 3, 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.
At the end of the first season on April 30, 2026, approximately 1,600 km(2) of
the planned acquisition had been completed, including most acquisition
relevant to the key prospects on AREA OFF-1. 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 of (25 to 1,000 meters). 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 June 7, 2024.
The licence for AREA OFF-3 provides for a modest work commitment in the
initial four-year exploration period, with no drilling obligation. The
Company's plan has been to accelerate and expand the technical work programme
during this period. 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 for the initial 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 block. As at the date of this MD&A, the farm-out process is ongoing.
On March 25, 2026, ANCAP, the Uruguayan state-owned oil company and industry
regulator, confirmed that QatarEnergy has farmed-in to Uruguay offshore blocks
AREA OFF-2 (30%) and AREA OFF-7 (30%) (both operated by Shell), and that
Chevron has farmed-in to AREA OFF-7 (30%) - in each case, as a non-operating
partner. AREA OFF-2 is the block immediately adjacent to Sintana's AREA OFF-3,
and AREA OFF-7 is the block immediately outboard of AREA OFF-3.
3. Angola
KON-16 - Kwanza Basin, Angola (5% potential indirect interest)
On May 14, 2025, the Company entered into heads of terms with Corcel to
acquire an indirect 5% net participation interest in the KON-16 licence, which
is located in the onshore Kwanza Basin on central coast of Angola. A
definitive agreement in relation to this acquisition is expected to be entered
into during Q2 2026, and completion of the transaction will follow pending
satisfaction of conditions precedent, including regulatory approval, with
completion expected in H2 2026.
On February 26, 2026 Corcel announced the completion of a 326-line km of high
resolution 2D seismic acquisition programme over the KON-16 block. Internal
review of the raw field data confirms excellent data quality, and clear
imaging of key pre-salt horizons. Seismic processing is underway 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 with an affiliate of Exxon Mobil Corporation that
provided initially for a conveyance to ExxonMobil 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 April 18, 2023, the Company announced that ExxonMobil had provided notice
that it had determined to withdraw from VMM-37 as of May 31, 2023. An
arbitration claim in respect of this matter was subsequently filed by the
Company in July 2023.
On February 4, 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 of $9 million cash
payment to the Company: an initial payment of $3 million within 60 days, and a
second $6 million conditional 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 $3
million from ExxonMobil. The parties are working collaboratively in relation
to securing the requisite governmental approvals, and presently expect payment
of the second instalment prior to year end 2026. Assuming the settlement is
completed and full payment is received as agreed, the Company will have no
further operations or assets in Colombia and no future plans in this regard.
The Bahamas
A subsidiary company of Challenger entered into Licence Agreements with The
Government of the Commonwealth of the Bahamas on April 26, 2007, for each of
the Bain, Cooper, Donaldson and Aneas licence areas, offshore The Bahamas.
Extensive technical work was undertaken on the licence areas between 2008 and
2020 (including 3D seismic acquisition in 2012) and in late 2020, the
Perseverance-1 well was drilled in the licence areas. In March 2021,
consistent with the terms of the licences, application was made to the
Government of The Bahamas to renew the licences for a third exploration
period. However, the Government of The Bahamas has not yet responded to this
application and, given the length of time that has passed since the
application was made, the Company is presently exploring alternative means of
monetizing the value of its historic investment in The Bahamas, including
considering legal remedies available against the Government of The Bahamas. As
such, the licence interests are considered to be legacy assets and Sintana has
no active operations in The Bahamas.
Summary of Select Quarterly Information
The following table provides a summary of the Company's financial statements,
for each of the eight most recently completed quarters:
Profit or (Loss) Basic and
Diluted Income
Total (Loss) Per Total
Revenues Total Share((9)) Assets
Quarter Ending ($) ($) ($) ($)
2026-March 31 Nil (1,127,620)((1)) (0.00) 60,456,683
2025-December 31 Nil (3,207,265)((2)) (0.01) 62,124,845
2025-September 30 Nil (2,561,374)((3)) (0.01) 20,488,044
2025-June 30 Nil (2,161,878)((4)) (0.01) 21,430,996
2025-March 31 Nil (2,293,379)((5)) (0.01) 21,074,912
2024-December 31 Nil (2,213,993)((6)) (0.01) 21,914,585
2024-September 30 Nil (1,375,213)((7)) (0.00) 24,575,680
2024-June 30 Nil (3,798,618)((8)) (0.01) 24,535,794
Notes:
(1) Net loss of $1,127,620 consisted primarily of: exploration and
evaluation expenditures of $233,273, general and administrative expenses of
$2,931,888, foreign exchange loss of $409,265 and a joint venture loss of
$13,520 which were offset by the net proceeds from the Colombian settlement of
$2,399,388 and interest income of $60,938.
(2) 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.
(3) 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.
(4) 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.
(5) Net loss of $2,293,379 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.
(6) 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.
(7) 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.
(8) Net loss of $3,798,618 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.
(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 administrative
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 March 31, 2026 compared with three months ended March 31,
2025
Sintana's net loss totaled $1,127,620 for the three months ended March 31,
2026, with basic and diluted loss per share of $0.00. This compares with a net
loss of $2,293,379 for the three months ended March 31, 2025, with basic and
diluted loss per share of $0.01. The reduction of $1,165,759 in net loss was
principally due to:
· The net proceeds from the Colombian settlement, resulting in the
assignment of the VMM-37 exploration licence to ExxonMobil with net
consideration totaling $2,399,388. This significant income item was offset by:
· Exploration and evaluation expenditures increased to $233,273 for
the three months ended March 31, 2026 compared to $9,000 for the comparative
period - historically, 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. 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.
· General and administrative expenses increased by $663,242.
General and administrative expenses totaled $2,931,888 for the three months
ended March 31, 2026 (three months ended March 31, 2025 - $2,268,646) and
consisted of share-based payments of $1,265,891 (three months ended March 31,
2025 - $1,579,695) salaries and benefits of $580,784 (three months ended March
31, 2025 - $313,218), professional fees of $296,545 (three months ended March
31, 2025 - $195,226), administrative and general expenses of $208,108 (three
months ended March 31, 2025 - $22,677), investor relations of $202,142 (three
months ended March 31, 2025 - $90,696), travel expenses of $119,310 (three
months ended March 31, 2025 - $nil), reporting issuer costs of $258,977 (three
months ended March 31, 2025 - $67,134) and depreciation expenses of $131
(three months ended March 31, 2025 - $nil). Refer below for further details.
The Company incurred a decrease in the amount attributed to share-based
compensation of $313,804 for the three months ended March 31, 2026, compared
to the three months ended March 31, 2025. 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 $267,566 for the
three months ended March 31, 2026, compared to the three months ended March
31, 2025. This increase is driven by the acquisition of Challenger in December
2025, which has resulted in an increased overall headcount across the Company
compared to the three months ended March 31, 2025.
The Company incurred an increase in professional fees of $101,319 for the
three months ended March 31, 2026, compared to the three months ended March
31, 2025. The increase can be attributed to higher legal, audit and accounting
fees during the three months ended March 31, 2026 compared to the three months
ended March 31, 2025.
The Company incurred an increase in investor relations expenses of $111,446
for the three months ended March 31, 2026, compared to the three months ended
March 31, 2025. The increase can be attributed to a moderate increase in
investor communication and outreach efforts.
The Company incurred an increase in travel expenses of $119,310 for the three
months ended March 31, 2026, compared to the three months ended March 31,
2025. The increase can be attributed to higher travel activity by key
executives and management during the period following the acquisition of
Challenger in December 2025, including attendance at board meetings, travel to
key Company assets and attendance at various investor relations events.
The Company incurred an increase in reporting issuer costs of $191,843 for the
three months ended March 31, 2026, compared to the three months ended March
31, 2025. The increase can be attributed to higher share registrar costs
incurred during the period following the acquisition of Challenger in December
2025, including one-off set-up costs associated with the Company's dual
listing on AIM.
The Company incurred an increase in administrative and general costs of
$185,431 for the three months ended March 31, 2026, compared to the three
months ended March 31, 2025. The increase can be attributed to higher general
and administrative costs associated with the enlarged group following the
acquisition of Challenger in December 2025, including costs related to
operating offices in the UK and certain one-off integration costs incurred in
the aftermath of the acquisition.
The Company incurred a foreign exchange loss of $409,265 for the three months
ended March 31, 2026 compared to a loss of $110,475 in the period ended March
31, 2025, which was primarily attributable to US dollar and Canadian dollar
exchange rate fluctuations.
The Company recorded a joint venture loss of $13,520 for the three months
ended March 31, 2026 compared to a loss of $7,723 for the three months ended
March 31, 2025. This is due to the Company's share of the Inter-Oil losses in
each respective period.
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 carry arrangements,
(ii) the Company's overhead and G&A cash costs, which are
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 the three months period ending March 31, 2026.
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 March 31, 2026 totaled $54,639,455
(December 31, 2025 - $54,134,233).
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 March 31,
2026, 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 are 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 considerations as liquidity, capital expenditures
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:
Three months ended Three months ended
March 31, 2026 December 31, 2025
Base Salary/ Base Salary/
Directors' Directors'
Salaries and Benefits((1)) fees Total fees Total
Keith Spickelmier - Director / Executive Chairman 33,642 33,642 28,750 28,750
Robert Bose - Director / Chief Executive Officer 125,000 125,000 75,000 75,000
Douglas Manner - Director 20,947 20,947 27,500 27,500
Sean Austin - Vice President, Controller, Secretary & Treasurer 43,750 43,750 43,750 43,750
Knowledge Katti - Director 63,475 63,475 34,895 34,895
David Cherry - Chief Operating Officer((2)) - - 27,500 27,500
Bruno Maruzzo - Director((2)) - - 7,976 7,976
Dean Gendron - Director((2)) - - 7,976 7,976
Eytan Uliel - Director / President((3)) 114,821 114,821 - -
Iain McKendrick - Director((3)) 24,259 24,259 - -
Jonathan Gilmore - Chief Financial Officer((3)) 52,899 52,899 - -
Total 478,793 478,793 253,347 253,347
Notes:
(1) Salaries and benefits include director fees.
(2) To December 16, 2025 ceased office / employment with the Company
effective on completion of the Challenger acquisition
(3) From December 16, 2025 commenced office / employment with the Company
effective on completion of the Challenger acquisition
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:
Three months ended Three months ended
March 31, 2026
March 31, 2025
Share-based awards (Stock options and RSUs) Options RSUs Options RSUs
Keith Spickelmier - Director / Executive Chairman - 1,000,000 - -
Robert Bose - Director / Chief Executive Officer - 1,500,000 - -
Douglas Manner - Director / President - 1,000,000 - -
Sean Austin - Vice President, Controller, Secretary & Treasurer - 1,250,000 - -
Knowledge Katti, Director - 1,000,000 - -
Eytan Uliel - Director / President((1)) - - - -
Iain McKendrick - Director((1)) - - - -
Jonathan Gilmore - Chief Financial Officer((1)) - - - -
Total - 5,750,000 - -
Notes:
(1) From December 16, 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)) 5.03
Eytan Uliel 9,665,896 1.87
Iain McKendrick 1,029,561 0.20
Douglas Manner 5,595,558 1.01
Knowledge Katti 22,490,001((2)) 4.35
Senior Managers
Sean Austin 6,925,000 1.34
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 516,581,240 common shares of the
Company issued and outstanding on April 29, 2026.
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 24.03.2027
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 three months ended March 31, 2025, the Company paid professional
fees and disbursements totaling $15,011 to Marrelli Support Services Inc., and
certain of its affiliates, together known as the "Marrelli Group", for: (i)
regulatory filing services, and (ii) press release services. At March 31,
2025, the Marrelli Group was owed $9,714 and these amounts were included in
accounts payable and accrued liabilities. Subsequent to 16 December 2025, when
Carmelo Marrelli ceased office and employment with the Company upon completion
of the Challenger acquisition, Marrelli Support Services Inc. and its
affiliates ceased to be related parties to the Company.
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 three months ended March 31, 2025.
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 the three months
ended March 31, 2026.
Future applicable accounting standards:
The following new standards and amendments to standards have been issued as at
March 31, 2026 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 Issuers 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
ongoing.
The following table provides a breakdown of the Company's exploration assets
and expenditures in the three month period ending March 31, 2026 and the
comparative period ending March 31, 2025:
Three Months Ended
March 31,
2026 2025
Namibia
Technical services 10,158 -
10,158 -
Uruguay
Technical services 160,000 -
Professional fees 51,149 -
211,149 -
Angola
Technical services 2,000 -
2,000 -
Magdalena Basin, Colombia
Administrative and general 5,570 7,153
Professional fees 4,396 1,847
9,966 9,000
233,273 9,000
General and Administrative Expenses
The following table provides a breakdown of material components of the
Company's general and administration expenses:
Three Months Ended
March 31,
2026 2025
Salaries and benefits 580,784 313,218
Professional fees 296,545 195,226
Share-based payments 1,265,891 1,579,695
Investor relations 202,142 90,696
Travel 119,310 -
Reporting issuer costs 258,977 67,134
General and administrative costs 208,108 22,677
Depreciation 131 -
2,931,888 2,268,646
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 516,581,240 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 0.25 5,750,000 5,750,000 -
December 19, 2032 $0.110 1,27 3,850,001 3,850,001 -
December 19, 2033 $0.270 1,84 4,850,002 4,850,002 -
May 1, 2034 $1.080 0.66 1,650,000 1,100,000 550,000
December 13, 2034 $1.230 1.67 3,900,000 2,600,000 1,300,000
June 27, 2035 $0.730 0.05 100,000 33,333 66,667
5.74 20,100,003 18,183,336 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.
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
Subsequent events
On April 24, 2026, 625,000 stock options in the Company were exercised. The
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.
On May 11, 2026, 1,800,000 stock options in the Company were exercised. The
options were exercised at the following prices: 1,000,000 options at a price
of CAD$0.165 per share and 800,000 options at a price of CAD$0.11 per share.
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 materialize, 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 PEL 90,
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 PEL 90 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 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 licence.
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 entitle-ments. 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 approvals; failure of ExxonMobil to comply with the settlement agreement
consideration of $9 million in cash payments with the settlement agreement
The nature and timing of anticipated future operations with respect to the All regulatory approvals and permits will be available on a timely basis as permits and regulatory approvals; availability of capital on terms acceptable
Company's property interests, including without limitation, future proposed required, joint venture partners will continue with operations as currently to the Company or at all; changes in proposed plans as operations evolve;
exploration activities at PEL 90 and at the Company's property of interests in anticipated, results from ongoing operations will be positive, the Company and failure to satisfy applicable conditions precedent to the satisfaction of the
Uruguay, and the Company's proposed acquisition of interests in PEL 37 and/or its joint venture partners will have sufficient capital, and all applicable Company on a timely basis
KON 16 conditions precedent will be satisfied on a timely basis to the satisfaction
of the Company
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.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
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