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Oil price

Very quiet as the USA celebrated Juneteenth day, no real change yet this week.

PetroTal Corp

PetroTal has announced the following operational updates, voting results from the annual shareholder’s meeting, director resignation and appointment of a new joint broker.

Illegal River Blockade Removed
On June 10, 2023, The Indigenous Association for Development and Conservation of Bajo Puinahua (“AIDECOBAP”) removed the illegal river blockade that commenced on June 3, 2023.  The blockade removal also included releasing both the Peruvian and Brazilian oil convoys seized early in the demonstration.  No injuries to crew members were reported after their release and no oil spills or operational accidents occurred through the transition.

AIDECOBAP agreed to remove the illegal blockade after an alliance act (“Acta”) promoted by the Regional Governor of Loreto was signed by the Regional Governor, Perupetro, Puinahua’s District Municipality (“PDM”) and AIDECOBAP; but was not signed by the Junta Autonoma del Puinahua (“JAP”) that represents the majority of the population, nor by PetroTal.  The Acta also reconstituted the 2.5% Fund’s Executive Committee by removing PetroTal’s representation, and adding the Regional Government of Loreto, in its place.  The other four members remained, which include AIDECOBAP, the JAP, Perupetro, and the PDM.  The Company does not recognize the Acta or consider it a binding legal document.  Given the lack of alignment, we are encouraged that the Prime Minister’s Governance Office has taken the lead in ensuring a peaceful and long-lasting resolution.

Removal of the illegal blockade and release of the oil convoys is a positive step for the overall safety in the Loreto area, however, per the above, the Company remains cautious, yet hopeful, that democracy will prevail in deciding who best manages the social fund and the best allocation of its resources in the future. 

Operations Update
With river access reopened, the Peruvian and Brazilian oil convoys have resumed their travel to Iquitos and Bretana, respectively.  PetroTal’s field had been shut in since June 6, 2023 for planned technical maintenance/installation work as previously announced, which the Company completed on June 11, 2023, initiating line fill operations concurrently.  PetroTal quickly ramped up production averaging nearly 22,000 barrels of oil per day (“bopd”) for the past seven days.  Though the river blockade disrupted operational logistics, the Company anticipates being able to maintain production near 22,000 bopd, subject to barge availability, over the coming weeks.  At these levels, the Company estimates that average production during Q2 2023 would be 5% higher than the 17,000 bopd production guidance previously given.

Robust Production From Well 15H
Well 15H, formally commenced full daily production on June 12, 2023 after the river blockade was lifted and the well could be completely opened.  The well was completed on schedule and at a cost of approximately $14.9 million, which included a side-track caused by drilling tool challenges.  Over the past seven days the well has produced at an average rate of 8,700 bopd, ranking it near the top of initial producers drilled to date.

Completed Dividend Payment
PetroTal is pleased to announce the first successful funding of its reinitiated dividend on June 15, 2023 of approximately $14.5 million based on Q1 2023 results.  The Company plans to set and approve its Q2 2023 dividend level at its upcoming early August 2023 board meeting.

A generally upbeat statement here from PetroTal, the blockade is lifted without apparent loss of revenue and the field is reopening and filling lines. Indeed production at 22,000 b/d is still some 5% above current guidance.

Finally, the 15H well is producing 8,700 b/d better than expected despite some niggles and see above, the first reinstated dividend has been funded.

Afentra

Afentra has provided the following update regarding the previously announced acquisition from Sonangol ahead of the Annual General Meeting that will be held electronically today at 10:00 am via https://web.lumiagm.com. In addition to the Chairman’s Statement, Paul McDade (CEO) will provide a short presentation on the status of the Company; this is available on the Afentra website and can be accessed at this link: https://afentraplc.com/investors/

Update on the Sonangol Acquisition
Subsequent to the approval of the licence extension in May 2023, Sonangol is now pursuing the requisite government approvals for the transaction. Based on the outstanding workstreams and associated timeframes, completion of the transaction is now expected to occur in July 2023 and we are working, together with Sonangol, to extend the long stop date for this acquisition accordingly.

In addition, the enhanced fiscal terms associated with the Block 3/05 PSA extension have been submitted for the requisite government approvals.

Operational Update
As previously announced, recent gross production levels in Block 3/05 have continued to remain stable, averaging approx. 18,900 bbl/d in May 2023. Water injection levels have averaged approx. 39,000 bw/d January through May 2023. Finally, production in Block 3/05A, at the Gazela field, has continued at approx. 1,100 bbl/d.

Although a slight delay I’m happy that this deal will complete soon, a great deal of hard graft but it will be worth the while. As to operations the round-up appears to be in-line with expectations.

Petro Matad

Petro Matad has announced its audited final results for the year ended 31 December 2022. All monetary values are expressed in United States dollars unless otherwise stated.

2022 Operational Highlights

•    The Company continued to push the Mongolian government and authorities to register Block XX Exploitation Area as special purpose land.
•    Negotiations with DQE Drilling entered their final stages for a multi-well development drilling contract with the Company securing cost reductions that can make a real difference to project cash flows and asset value.
•    Block V project readiness continued with a cost-effective drilling solution found for Velociraptor.
•    MRPAM announced an Exploration Licensing round covering 14 blocks in the prospective fairways of the southern half of the country.
•    Petro Matad continued to explore opportunities in the Mongolian renewables sector following Board approval to do so.

Current situation

•    On Block XX, the Company continues to push government on certification of the Exploitation Area as special purpose land and finally conclude the process. The Ministry of Construction and Urban Development has completed its internal work and has submitted the documentation to all other government ministries for comment prior to submission to Cabinet.
•    The Velociraptor-1 exploration well in the Taats Basin of Block V located in central Mongolia spudded on 13 June, targeting an inversion anticline prospect estimated to have 200 million barrels (MMbo) of Mean Prospective Recoverable Resource potential. Encouraging results in the Velociraptor prospect would significantly de-risk two adjacent prospects on the Raptor Trend which together have Mean Prospective Recoverable Resource potential of an additional 375 MMbo.
•    The Company raised US$6.6 million through a capital raise that will allow the Company to test the low-cost, high impact Velociraptor exploration prospect, evaluate new areas offered for licencing by the Mongolian government in the 2022/23 tender round and explore renewable energy projects.
•    The Company formed a joint venture (JV) with a very active and successful Mongolian renewable energy project developer called SunSteppe Energy (“SunSteppe”). This JV will give the Company an opportunity to compete in Mongolia’s growing renewables sector.

2022 Financial Highlights

•    As of 31 December 2022, the Group’s cash position was $5.1 million (Financial Assets) (31 December 2021: $8.2 million)
•    The Group’s net loss after tax for the twelve months ended 31 December 2022 was $2.95 million (31 December 2021: loss $2.1 million)

Mike Buck, CEO of Petro Matad, said:
“2022 saw an easing of Covid-19 related delays that had impacted service providers and cross-border activity. We were pleased that we were able to progress our preparations for Heron development, our negotiations with DQE Drilling and to continue our investigations on the Block V Exploration PSC.

This year we hit the ground running and set to work on a capital raise to allow Petro Matad to move ahead with testing the low-cost, high impact Velociraptor exploration prospect and evaluate new areas offered for licencing by the Mongolian government. We have also ventured into the renewable energy sector in Mongolia through the SunSteppe Renewable Energy joint venture which we hope will generate near term opportunities for us and our partner.

We continue to push forward with our 2023 work programme which of course includes urging the government to certify Petro Matad’s Block XX Exploitation Area as special purpose land. Meanwhile we are delighted to have spudded Velociraptor-1 which we have wanted to drill for some time. Encouraging results here would significantly de-risk two adjacent prospects on the Raptor Trend which together have a resource potential of an additional 375 MMbo.

I would like to thank our loyal shareholders for their continued support and hope that the recent spudding of the Velociraptor well demonstrates our firm commitment to our work programme. I very much look forward to updating you in the coming months with our progress on multiple workstreams that are now in play.”

Nothing new here, excitement about Velociraptor and no deal on Block XX.

Kistos

Kistos yesterday announces the conclusion of exploration drilling on the Benriach well, West of Shetland. The well encountered gas bearing sands in the target Royal Sovereign formation. However, the discovered resource is expected to be sub-commercial.  The well has been drilled ahead of schedule and the final cost is expected to be within previous guidance. Kistos Energy Limited holds a 25% non-operated working interest in licence P.2411, partnered with TotalEnergies (“operator”, 50%) and Rockrose Energy (25%).

The Transocean Barents rig was mobilised from Olen, Norway and spud the well on 21 March. A total measured depth of ~4,400 metres was reached, and an extensive data acquisition programme has been conducted. This confirmed the presence of gas-bearing sands in the target Royal Sovereign formation. Analysis of the acquired data will now be undertaken by the operator.

Highlights

• Gas bearing reservoir confirmed in the Royal Sovereign formation
• Excellent operational performance by the Transocean Barents rig, resulting in completion of activities ahead of schedule.
• Zero Lost Time Incidents / First Aid Cases reported by either staff or contractors to date.
• Extensive data acquisition programme completed, including rotary sidewall cores, full wireline coverage, live pressures and fluid samples.

Andrew Austin, Executive Chairman of Kistos, said:
“The operational performance has been excellent, and I would like to thank TotalEnergies and the team on the Transocean Barents rig, who drilled the well safely and efficiently. Kistos remains committed to bringing additional gas volumes through the Shetland Gas Plant to add shareholder value and contribute towards domestic energy security, and we look forward to providing further updates to the markets in due course.”

This report from yesterday, which I wrote about in a flash blog, has seemingly gone astray, however my comments were brief. Clearly the fact that Benriach didn’t come in is a disappointment, but it used allowances and I understand cost only around £2m.

Compared to the huge growth expected from the Mime deal it will effectively be of little significance, yes, a disappointment but not a reason to abandon Kistos which looks very cheap right now.

Arrow Exploration Corp

Arrow yesterday provided an update on the operational activity at the Carrizales Norte (“CN“) field on the Tapir Block in the Llanos Basin of Colombia where Arrow holds a 50 percent beneficial interest. Again I did write a flash blog awaiting my interview with CEO Marshall Abbott.

CN-1
The CN-1 well was spud on May 1, 2023, and reached target depth on May 11, 2023. CN-1 was the first well drilled into the CN field and results from this well have confirmed the productive potential of the multi-pool field. The well was drilled to a total measured depth of 9,190 feet (8,511 feet true vertical depth) and encountered multiple hydrocarbon-bearing intervals.

Arrow has completed the final test on the CN-1 well in the C7 formation which has approximately 26 feet of net oil pay. The pay zone is a clean sandstone exhibiting consistent 30% porosity and high resistivities. An electric submersible pump (ESP) has been inserted in the well after perforating.

Specific data for the production test on the C7 formation are as follows:

• The production test took place over a 62-hour period.
• The well was tested at three different flow rates to evaluate productivity and to plan for water cut management.

o  The first flow period was held for 12 hours and showed an average oil rate of 662 BOPD gross,

o  The second flow period was for 32 hours and showed an average oil rate of 902 BOPD gross, and,

o  The third flow period was held for 17 hours and showed an average oil rate of 1,134 BOPD gross.

• Oil production tested at a peak rate of 1,272 BOPD, and a final stabilized rate of 1,134 BOPD gross.

In the final 24 hours of the test, CN-1 produced at a rate of 1,103 BOPD gross (552 BOPD net) of oil at 33.5° API and with a 12% water cut (completion fluid and formation water). The production test utilized running the ESP at 30 Hz, the lowest setting on the pump. In addition, a 28/128 choke was inserted to efficiently manage the reservoir. Water cut decreased throughout completion testing. The CN-1 well is currently on production, producing from the C7 formation at 1,100 BOPD gross (550 BOPD net). The testing results indicate the well is capable of higher rates and the ultimate flow rate will be determined in the first few weeks of production.

Initial production results are not necessarily indicative of long-term performance or ultimate recovery.

CN-2
The CN-2 well was spud on June 15, 2023. The drilling, testing and completion of the well is expected to take three weeks. CN-3 will be drilled immediately upon completion of the CN-2 well.

Operations Update

Production
Incorporating CN-1, total Corporate production is between 2,700 and 2,900 boe/d. The Capella field, in which Arrow has a 10% non-operated interest, remains shut in due to ongoing protests. There is currently no timeline for when the field will begin production. The lost production is approximately 280-300 BOPD net to Arrow.

Upcoming Drilling
After the CN-3 well is completed, the rig will move to the Rio Cravo Este field to drill two dedicated Gacheta wells, RCE-6 and RCE-7. A third well, Rio Cravo Sur-2, is also expected to be drilled at that time targeting the C7 formation.

Following completion of the RCE and RCS wells, the rig will move back to the CN field where low risk infill drilling is expected to begin before the end of 2023.

West Tapir 3D Seismic Program
The West Tapir 3D seismic acquisition program was completed on April 10, 2023. Processing has been completed and Management is currently analyzing results and determining the location of future drilling prospects.

In late fall, 2023, Arrow plans a second 3D acquisition program in the southern part of the Tapir block.  The program is expected to cover a 90 km2 area, where 2D seismic has highlighted a large lead.

Cash Balance
On June 1, 2023, the Company’s cash balance was US$11.2 million.

Marshall Abbott, CEO of Arrow commented:
“Initial production from the CN-1 well has exceeded expectations and is an exciting event for Arrow. In addition to the thick pay zones encountered on the Carbonera C7 formation, additional pay zones currently behind pipe provide further opportunities for production and reserve increases. This includes the successful production testing of the Ubaque Formation that produced at over 1,200 BOPD gross.”

“The Company is looking forward to the CN-2 and CN-3 results which will further develop the exploration discoveries and help determine the size of the pools in the field and the potential reserve additions. Arrow plans to undertake a third-party reserve evaluation of the CN field once the current drilling program is complete.”

“Once the CN-2 and CN-3 wells are complete and on production, Arrow plans to move the rig to the RCE field to further exploit the multi-zone RCE structure with two dedicated Gacheta wells and the follow up to the RCS-1 C7 producer.  We look forward to providing further updates on this low-risk development drilling program.”

“The RCE field is currently producing better than budgeted, and the Company is controlling pump speed and choking wells back to efficiently manage the reservoir and discourage premature water production. Additional material production from RCE is expected with the completion of the upcoming three-well development program.”

Following these results and on his latest visit to London I was able to interview Arrow CEO Marshall Abbott, we talked about this announcement and how CN is going as well as RCE and indeed the rest of the company. The link to the interview is below.

Core Finance CEO Interview: Marshall Abbott, Arrow Exploration

KeyFacts Energy Industry Directory: Malcy's Blog