WTI (June) $78.63 +61c, Brent (July) $82.75 +37c, Diff -$4.12 -24c
USNG (June) $2.42 -5c, UKNG (June) 71.65p -0.35p, TTF (June) €29.705 -€0.475

Oil price

Oil is up a little today, the EIA inventory stats were better than forecast showing a crude draw of 2.508m barrels with small draws in gasoline and distillates. 

Arrow Exploration

Arrow has announced the spud of the Carrizales Norte B pad Horizontal Well 1 (“CNB HZ-1”) on the Tapir Block in the Llanos Basin of Colombia.

The CNB HZ-1 well will develop the Ubaque formation which has been successfully delineated by the CN Q1 2024 well program.  The CNB HZ-1 well is expected to be drilled to a true vertical depth of 8,400 feet and have a horizontal length of 1,800 feet.

Once CNB HZ-1 is on production in June, Arrow plans to drill a water disposal well and three more horizontal wells from the CNB pad.  Following further drilling during the second half of 2024 at Baquiano and Matteguafa, the Company expects to drill additional horizontal wells at the CNB pad towards the end of the year.

The Baquiano pad and road construction are now complete and the RCE-1 well has been successfully converted to a water disposal well.  The process of converting the CN-4 well to a water disposal well has begun, which is estimated to take up to four months.

Arrow is also in the initial planning stage for a 3D seismic program in the southern end of the Tapir block where the intent is to further develop the Icaco and Macoya Este leads.

The Company continues to have a strong balance sheet with US$12.4 million cash and no debt as of May 1, 2024.  Arrow expects to release Q1 2024 results at the end of May.

Marshall Abbott, CEO of Arrow commented: 
“Spudding Arrow’s first horizontal well at the CNB pad is a significant milestone in Arrow’s development plan for the hydrocarbon dense Ubaque reservoir.  After the Carrizales Norte discovery, we determined that the Ubaque reservoir could be developed most efficiently using horizontal drilling technologies and the successful spudding is a result of a year of preparation and geological, seismic, engineering and simulation work.”

“The Q1 2024 well program has helped determine the extent of the Ubaque zone, both proving that the sands are continuous, thick and permeable, and adding to reserves at the Carrizales Norte field. Arrow believes the horizontal wells at Carrizales Norte will be transformative for the Company, resulting in a step change in production, and that the technology will be effective in other prospects on the Tapir block.”

“I want to thank everyone at Arrow for their dedication and hard work over the last year which has enabled us to progress Arrow to the next level.”

This is indeed a significant milestone in Arrow’s development plan, over recent months I have watched Arrow very carefully and in the next few days I hope to comment about how well they have done and how the recent period of success has set them on their horizontal journey.

The success of drilling in the last 15 months or more has meant that Arrow has achieved a great deal of success and in particular that has opened up opportunities in this case in the Ubaque formation. There are significant advantages of the horizontal play, in this case a vertical well costing say $3-4m would expect to produce around 700 b/d whereas a horizontal well should cost say $5-7m and might deliver some 2000b/d.

These numbers, should they be confirmed next month, will be the highlight of the 2024 drilling campaign, after this the company expect to drill three more wells from this pad which was being completed when I visited Bogota recently. Finally, water disposal will be a necessary measure and such a well will be ready on the pad, further water disposal wells are planned.

I am expecting significant interest in this, the next phase of Arrow’s drilling campaign here in the CN field in the Tapir Block in the Llanos Basin. Recently the Canacol overhang has been cleared away and with such a formidable operational success rate I’m convinced that my 50 Target Price will be achieved.

Scirocco Energy

Scirocco has today provided an update with regards to the cancellation from trading on AIM following shareholder approval for the Cancellation at the Company’s General Meeting on 7 May 2024.

The Company reminds Shareholders that today, 16 May 2024, will be the last day of dealings in the Company’s ordinary shares on AIM. Admission to trading on AIM will be cancelled at 7am BST on Friday 17 May 2024.

As discussed in the circular, published on 17 April 2024, the Company stated it would update shareholders on the selection of service provider that can facilitate a secondary market trading platform. Scirocco Energy can confirm that its ordinary shares will be admitted to trade on JP Jenkins (https://jpjenkins.com/) share dealing platform on Friday 17 May 2024.

JP Jenkins provides a share trading venue for unlisted or unquoted assets in companies, enabling shareholders and prospective investors to buy and sell equity on a matched bargain basis. JP Jenkins is a trading name of InfinitX Limited and Appointed Representative of Prosper Capital LLP (FRN453007). Shareholders wishing to trade these securities can do so through their stockbroker. Trades will be conducted at a level that JP Jenkins is able to match a willing seller and a willing buyer.

The Board is now engaged with pre-liquidation preparation and expects to notify shareholders in late June of a further (and final) GM to enter Members Voluntary Liquidation (“MVL”) with the aim of distributing cash to Shareholders over the 2024 – 2026 (and potentially 2027) period in accordance with the outcome of the 19 March 2024 GM. The matched bargain trading platform will cease if the Company enters an MVL. Shareholders are reminded that the timing of any distributions pursuant to the MVL – which are not guaranteed – will depend on a number of factors, most predominantly the development of the Ruvuma asset (in line with the expected plan of its owners which the Company has no control over), and will be under the control of the liquidator, if the Company enters an MVL.

The Company will issue notices via the JPJ platform and post them on its website site which will remain live.

The shareholders have voted and now they can wait until possibly 2027 until the wisdom of their decision finally pays out in its entirety. This is no time to get into the whys and wherefores of the decision but I have to say that I was in a number of those presentations at which management outlined the transition of the company into the renewables space and it was impressive. Yes, shareholders get some money back but one thinks of what might have been…

KeyFacts Energy Industry Directory: Malcy's Blog