Invictus Energy - Building Momentum for a Potentially Massive Gas Discovery in Africa

• Invictus Energy is an oil and gas explorer focused on a large gas basin in northern Zimbabwe. They drilled their first well Mercury-1 last year, proving a working hydrocarbon system with light oil, gas condensate and helium.
• They are now preparing to drill an appraisal well Mercury-2 in Q3 2023, which will further prove up the large discovery at their Mukuyu prospect. Success could open up big running room for future prospects.
• Mercury-1 faced some operational challenges, but they have made changes including new service providers, personnel and an improved well design to increase chances of success with Mercury-2.
• Key metrics for success on Mercury-2 are fluid samples to declare a discovery, and pressure data to determine hydrocarbon column heights and commerciality. Testing will come later.
• The region has growing gas demand, with big projects in Zimbabwe and chronic shortages in South Africa. This provides options to monetize any discovery, which is a key advantage.

About Invictus Energy

Invictus Energy is an Australian oil and gas exploration company focused on the Cabora Bassa Basin in northern Zimbabwe. The company holds three license areas in the basin and drilled its first exploration well, Mukuyu-1, in 2021. That well proved the presence of a working petroleum system including gas, condensate and light oil. Invictus is now preparing to drill an appraisal well, Mukuyu-2, in Q3 2023 which could prove up a very large discovery. The company is listed on the Australian Securities Exchange (ASX: IVZ) and in the US on the OTCQB market (IVCTF).

Interview with Scott Macmillan, MD of Invictus Energy

Mukuyu-1 Well Provides Crucial Data Despite Challenges

The Mukuyu-1 well was the first ever drilled in the Cabora Bassa Basin, providing Invictus with vital calibration data despite some operational challenges. The well encountered 13 potential hydrocarbon bearing zones and proved the presence of gas, light oil and helium - a major success considering the frontier nature of the basin. However, the company was unable to declare an official discovery due to two tool failures from its service provider which prevented collecting fluid samples at surface. There were also some unexpected drilling issues related to the conservative approach required for the very first well in an undrilled basin.

While disappointing, Invictus' Managing Director Scott Macmillan emphasised that the well overall was a big success, proving their pre-drill models and giving confidence about the potential scale of the basin. Some personnel and service provider changes have been made to engineer out these issues for the upcoming Mukuyu-2 well.

Mukuyu-2 Appraisal Well Has Transformative Potential

The Mukuyu-2 appraisal well will be drilled updip of Mukuyu-1, about 400 meters higher in the structure in a location with much greater chance of proving up a major discovery. Its proximity, about 6.8km from the first well, will provide excellent correlation while the site should allow penetrating the entire hydrocarbon column.

A key objective is to obtain fluid samples and pressure data to quantify the size of the discovery and reserves. This would allow Invictus to officially declare a discovery - a pivotal moment for confirming the basin's potential. The well has been intentionally designed to avoid the challenges faced in Mukuyu-1.

Given the nearby Mukuyu-1 results, the chance of success and scale of the potential prize at Mukuyu-2 is very high. A big discovery could be transformational for Invictus, validating its large portfolio of prospects and leads.

Clear Roadmap to Commercialization

Invictus has a clear roadmap to advance the project towards commercialization over the next 12-18 months:

• Q3 2023: Drill and evaluate Mukuyu-2 appraisal well
• Q4 2023: Declare discovery if successful & release contingent resource estimate
• 2024: Conduct well testing program to determine flow rates and commerciality
• Acquire 3D seismic over the basin to refine future drilling locations
• 2024 onward: Drill exploration/appraisal wells on additional prospects
• Select development concept and initiate front-end engineering & design
• Engage with offtakers on gas & LPG sales agreements

The company's extensive 2D seismic dataset and nearby well data provides a strong foundation to derisk prospects. Numerous other large prospects have been identified in the portfolio, both in the basin center fairway and in the rift basin margin play.

Invictus is also shooting new seismic over recently awarded acreage which has identified some particularly interesting amplitude-supported leads.

Positive Signs in Commodity Prices & Energy Situation

The global energy situation has strengthened the case for Invictus' project since its Mukuyu-1 well. Energy prices have risen materially, improving project economics. Regional energy shortages in Zimbabwe and South Africa also bolster the need for new gas production which Invictus could bring online relatively quickly. The company has identified multiple promising options to monetize gas including electricity generation, gas-to-liquids, pipeline exports, and more.

Managing director Scott Macmillan emphasized that the gas market is now pulling Invictus rather than the company needing to push the project onto the market. Offtake interest already exists from major regional buyers even before any discovery has been made.

Conclusion

Invictus Energy offers investors exposure to potentially world-class, low cost gas resources in Africa together with an experienced management team, promising initial results de-risking the upside, and a clear pathway to commercializing a major new gas province.

The upcoming Mukuyu-2 well has extremely high chance of success and would be a pivotal moment de-risking recoverable resources in the billions of barrels of oil equivalent. Near term catalysts, extensive exploration running room, and a strengthening gas market provide a compelling investment case. Success at Mukuyu-2 could be the spark to propel Invictus into the top tier of global gas developers.