Sintana Energy Inc.

Sintana Energy Inc. (TSXV: SEI) is an oil and natural gas exploration company and has a portfolio of exploration projects in the prolific Magdalena Basin in Colombia.

Guidance: The company is targeting to execute the below Pilot Projects from 2020 to 2022.

• The company would look for the selection of pilot blocks.
• Designate Ecopetrol as Operator of each selected block and would renegotiate the terms of Joint Operating Agreements.
• Execute initial community socialization activities and create local project update communications programs.
• The group would seek final approval from the Council of State.

Q1FY21 Financial Highlights:

• SEI announced its quarterly results, wherein the company posted exploration and evaluation expenditures of CAD 0.026 million, as compared to CAD 0.014 million in the previous corresponding period (pcp).
• General and administrative expense stood at CAD 0.368 million, as compared to CAD 0.372 million in Q3FY19.
• The group reported a net loss of CAD 0.251 million, as compared to a net loss of CAD 0.516 million in Q3FY20.
• The group reported a cash balance of CAD 0.211 million, while total assets were recorded at CAD 0.222 million.

Q3FY20 Income Statement Highlights (Source: Company Reports)

Risks: The Company derives no income from its operations and is continuing with operating losses and limited working capital. As the company does not have any income source, thus it would require additional capital funding in order to meet its expenses. Moreover, the company operates in exploration activities, and hence a sudden increase in operating costs, as compared to the company’s estimates would increase the company’s overall expenses.

Stock Recommendation:

The group is in the preliminary stage of its operations, and is yet to report any promising outcomes, which remains a key concern from the operational point of view. Moreover, the company reported an increase in its expenses, which is also a major challenge for the company. Moreover, the company reported a cash outflow of CAD 0.294 million for 9MFY20, higher than CAD 0.286 million, a year ago, due to an increase in the net loss (CAD 1.382 million in 9MFY20 versus CAD 1.180 in 9MFY19). Hence, considering the aforementioned facts and risks, we prefer to remain on the sideline. Therefore, we recommend an ‘Avoid’ rating on the stock at the closing price of CAD 0.105 on February 24, 2021.

SEI Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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