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A flash blog today as I have meetings in London although one fewer that I had hoped for. As always I will add more tomorrow as appropriate, I really hope to have conversations with senior management. 

Arrow Exploration

Arrow has announced the filing of its Interim Condensed (unaudited) Consolidated Financial Statements and Management’s Discussion and Analysis (“MD&A”) for the three and six months ended June 30, 2025, which are available on SEDAR (www.sedar.com) and will also  be available shortly on Arrow’s website at www.arrowexploration.ca. 

Q2 2025 Highlights:

• Average corporate production of 3,768 boe/d (Q2 2024: 2,546 boe/d), representing a 48% increase when compared to the same period in 2024.
• Recorded $15.9 million of total oil and natural gas revenue, net of royalties, representing a 5% increase when compared to the same period in 2024 (Q2 2024: $15.1 million).
• Realized corporate oil operating netbacks(1) of $27.36/bbl. 
• Cash position of $13.2 million at the end of Q2 2025.
• YTD generated operating cashflows of $13.9 million (YTD 2024: $18.9 million).
• ·    Drilled five (5) additional development wells in the Alberta Llanos (AB), Carrizales Norte (CN) and Rio Cravo Este (RCE) fields in the Tapir block.  RCE HZ10 was also spud in Q2.
• Invested in road and pad infrastructure from CN to Mateguafa Attic at a net cost of $2 million to the Company
• Completed acquisition and processing of a 90 square km 3D seismic program over the southern part of the Tapir block at a cost of $3 million. 
• Entered into a $20 million prepayment agreement with an integrated energy company.
• Net YTD income of $1.7 million (YTD 2024 $1.2 million)

(1) Non-IFRS measures 

Post Period End Highlights:

• Spud the first horizontal well, RCE HZ-10, in the Rio Cravo Este (RCE) field in the Tapir block.
• RCE HZ-10, CN HZ12 and AB HZ5 were brought on production.

Current Production

The Company is currently producing approximately 4,200 boe/d with two additional wells expected to be brought on production in the next two weeks, CN HZ13 targeting the Ubaque formation and a recompletion at AB3 targeting the C7 formation. 

Tapir Water Disposal Infrastructure

In Q2, the Company paid $0.8 million on trucking water.  During Q2 the Company invested significantly in water disposal infrastructure, of which $1.7 million is included in operating costs for the quarter.  This investment includes conversion work and stimulation of the AB-2, CN-4 and CN-5 water disposal wells.  The water handling infrastructure is now operational and expected to deliver a significant reduction in water handling costs and support higher production rates.  The Tapir block water disposal capability is now over 130,000 barrels of water per day.  With the water handling infrastructure in place, the Company is turning up production in current wells.

Tapir Extension and COR-39 Block

The Company is engaged in continuing discussions with authorities on the Tapir block extension.  Arrow considers that all requirements for the extension have been met. Furthermore, the Company is in discussions with regulatory bodies on the termination of COR-39 Block licence obligations.  Discussions with authorities are going well and Arrow will keep the market updated in future releases.

Upcoming Drilling

At this time, Arrow is operating one rig and has dismissed the second rig.  The Company has spud the CN HZ 13 well, which is expected to be on production in the beginning of September. Thereafter, the Company expects to drill its first exploration well at Mateguafa Oeste. If the vertical exploration well at Mateguafa Oeste is successful, the Company plans to drill four additional horizontal wells on the prospect.  If the Mateguafa Oeste 1 well is not successful, the rig will move to Mateguafa Attic to drill three low risk vertical wells targeting the C7.  The Company has the option to engage a second rig to drill the other prospects if Mateguafa Oeste 1 is successful. The total budgeted capital expenditure planned for 2025 is approximately $50 million, net to Arrow, of which $24 million was spent in H1 2025. 

Marshall Abbott, CEO of Arrow Exploration Corp., commented:
“The second quarter of 2025 has been very busy for Arrow. The two horizontal development wells at Alberta Llanos have highlighted the potential for horizontal development in the Ubaque in other areas of the Tapir block.  The Company plans to further test this potential with an exploration well at Mateguafa Oeste in Q3 and is putting the infrastructure in place for exploration wells at Mateguafa Attic, Capullo and Icaco, all of which could have a material impact on the Company.”  

“The Company continues to work with regulatory authorities on the extension of the Tapir block.  The Company considers it has met all of the requirements for an extension and discussions with regulatory officials continue to progress.” 

“In Q2, Arrow made large investments in the future drilling programs of the Company.  The Tapir South 3D seismic program was completed during the quarter, at a net cost of $3 million, showing additional prospects and drilling opportunities.  The Company is expected to test one of these prospects, Icaco, in early 2026.  During Q2 the company also completed the road joining the CN pad with the Mateguafa Oeste, Capullo and Mateguafa Attic prospects at a net cost of approximately $2 million.”

“The focus for the remainder of 2025 will be to explore low risk new prospects in the Tapir block, starting with Mateguafa Oeste, which has the potential to be larger than the Carrizales Norte field.  The pad and cellars for Mateguafa Oeste have been completed and the first well is expected to be spud in late Q3.    Arrow looks forward to updating the market post drilling the first well at Mateguafa Oeste.”

This has been a good quarter for Arrow which the market has yet to appreciate. It’s the wrong time of day to speak to the management but I hope to do so very soon and report back. But the production figure is good at 3,768 boe/d at quarter end (2,546) up 48% on this time last year, in addition it is currently 4,200 boe/d and with two wells to be added in the next two weeks looks better.

Revenue has increased to $15.9m (15.1m) up 5%, good in the circumstances and that left cash of $13.2m which means investment in the business continues, a first, exploration well  at Mateguafa Oeste. ‘If the vertical exploration well at Mateguafa Oeste is successful, the Company plans to drill four additional horizontal wells on the prospect.  If the Mateguafa Oeste 1 well is not successful, the rig will move to Mateguafa Attic to drill three low risk vertical wells targeting the C7’. 

The Company has the option to engage a second rig to drill the other prospects if Mateguafa Oeste 1 is successful. The total budgeted capital expenditure planned for 2025 is approximately $50 million, net to Arrow, of which $24 million was spent in H1 2025. 

I hope to add more once I have spoken to the senior management over the pond, in the meantime I am remaining confident about its prospects.

FINANCIAL AND OPERATING HIGHLIGHTS

Discussion of Operating Results

During Q2 2025, the Company’s production has decreased due to natural declines and increasing water cuts across its fields in the Tapir block. Production growth is expected to resume since the Company has developed water handling capacity and executes on the 2025 budget.   Nevertheless, the Company has maintained good operating results and healthy EBITDA.  

Average Production by Property

The Company’s average production for the three months ended June 30, 2025 was 3,768 boe/d which consisted of crude oil production in Colombia of 3,493 bbl/d, natural gas production of 1,587 Mcf/d, and minor amounts of natural gas liquids. The Company’s Q2 2025 production was 48% higher than its Q2 2024 production and 7% lower than Q1 2025 due to natural declines and water handling capacity.

Discussion of Financial Results

During Q2 2025 the Company experienced a reduction in both crude oil and gas prices, as summarized below:

Operating Netbacks

The Company also continued to realize good oil operating netbacks, as summarized below 

 (1) Non-IFRS measure

The operating netbacks of the Company have been affected in 2025 due to increased water production from its Colombian assets and decreased crude oil prices. During Q2 2025, the Company incurred $15 million of capital expenditure, primarily in connection with the drilling of additional development wells in the Tapir block. This tempo is expected to continue during the remainder of 2025, funded by cash on hand and cashflow.

Hunting

Hunting has announced its results for the six months ended 30 June 2025.

Commenting on the results Jim Johnson, Chief Executive, said:  
“I would like to thank all our employees for delivering a strong set of first half results, in what has been a volatile macro-economic backdrop. Our successful delivery of orders with the Kuwait Oil Company has supported these results, and our outlook remains positive given the tender pipeline of new orders available to the Group.

“We continue to make significant progress executing our Hunting 2030 Strategy. With the recent acquisitions of Flexible Engineered Solutions and the Organic Oil Recovery technology, Hunting has added strong revenue and cash flow opportunities to the Group for the medium-term, as offshore markets continue to demonstrate robust activity, along with the oil and gas industry demanding new technologies to deliver production improvements and efficiencies.

“The significant progress we have made over the last few years coupled with our strong financial performance has allowed us to enhance our shareholder returns profile, with increased dividend distributions and the share buyback, which commences today.”

This is a very good set of results, not surprising given recent announcements. I hope to make more comments if I get a chance to chat to management but I will remain with my 500p TP and very positive stance.

Regrettably things have changed somewhat at Hunting with regards to its IR process. They seem to no longer have a City based company and that has led to a cutting back in access to the company. This meant that for the analysts meeting today I was not invited despite having had a really good relationship with the company for many years and I think I have a close relationship with the CEO and CFO. I suspect it is because I recently criticised the company for sneaking out an important announcement at 4.30pm thus avoiding appropriate viewing. 

I hope that I’m wrong and whilst Sodali & Co may be a great company over there, in London they don’t seem to have quite the spin required…

I hope to catch up with the management in the not too distant future, one thing that the lack of IR can’t do is to stop my bullish feeling about Hunting’s future…

Financial Highlights

Financial Performance measures as defined by the Group 

*Non-GAAP measure
**Adjusted profit measures, recorded before items agreed to be one-off and excluded by the Audit and Risk Committee

Financial Performance measures as derived from IFRS 

Hunting’s EBITDA result in the period has been driven by strong results from the OCTG product group, and an improving Perforating Systems result, while Subsea, Advanced Manufacturing and Other Manufacturing report period-on-period declines due to contract timings and revenue recognition.

Interim dividend declared of 6.2 cents per share up 13% (H1 2024: 5.5 cents). The dividend payment date will be 31 October 2025, with a record date of 3 October 2025 and an ex-dividend date of 2 October 2025.

Share buyback of up to $40m commencing today. The buyback will be completed in three tranches, and will conclude during 2026.

Delivering our Hunting 2030 Strategy

Excellent strategic progress with $83m of acquisitions completed in the period to increase the profit and cash flow profile of the Group in the medium-term

• $64.8m acquisition of Flexible Engineered Solutions (Group) Holdings Limited completed in June 2025 to broaden subsea platform
• $18.2m acquisition of Organic Oil Recovery technology in March 2025 to accelerate global commercialisation of its enhanced oil recovery solution  

$69m of new subsea orders secured in H1 2025 driving a strong sales order book

• $46m of titanium stress joint orders received for Gulf of Mexico and Black Sea
• $23m of bespoke orders for Enpro’s proprietary equipment received for the North Sea

Continued execution of OCTG and Subsea orders for key customers

• Faultless execution of orders for Kuwait Oil Company completed in May 2025, with strong margins delivered in final four shipments
• Uaru and Yellowtail Titanium Stress Joint orders completed in June 2025 for ExxonMobil Guyana

Reshaped Hunting well-positioned to capture profitable growth through optimising our portfolio and operations

• $13m divestment of low-margin Rival Downhole Tools investment
• Expanded cost reduction and restructuring of operating footprint in Europe with c.$11m of annualised cost savings now targeted from the consolidation of our Aberdeen operations
• Commissioning of new facility in Dubai, UAE

Enhanced capital allocation policy announced reflecting continued strategic execution

• Strong financial performance and cash generation leading to period-end total cash and bank / (borrowings) of $79.3m following deployment of $80.0m on acquisitions
• Enhanced capital allocation policy announced including increased dividend distributions to 13% growth p.a. from 10%
• $40m share buyback programme commencing today

Trading Outlook

While commodity prices and the geopolitical landscape have been extremely volatile during the reporting period, oil and gas demand has remained steady and is likely to remain at a consistent level in the medium to long term.

The Group’s tender pipeline remains in excess of $1bn, with opportunities for new OCTG and Subsea being pursued. Non-oil and gas sales are being progressed through our Advanced Manufacturing businesses, as recently exemplified by our orders from Pratt & Whitney.

The Directors continue to examine bolt-on acquisition opportunities across all of the Group’s key product groups but remain disciplined in pursuing those businesses with strong intellectual property and a financial profile which aligns with the Company’s 2030 strategic objectives.

With the increased dividend distribution and share buyback programme underway, our capital allocation policy supports the strong outlook for the Group as Hunting continues to support delivery of the world’s energy needs.

In the near term, the geopolitical and macro-economic outlook remains choppy, given the actions of the OPEC+ cartel, coupled with some project deferrals reported by our clients. However, growth in the North American market continues to be pursued as longer lateral wells are drilled, demanding higher volumes of OCTG, coupled with a strengthening in gas-related drilling observed in a number of basins. Large OCTG tenders are likely to be issued across the Middle East in the second half of the year, while Subsea growth in South America and West Africa continue to provide opportunities.

In summary, while there is a level of market uncertainty that may impact the Group’s full year outturn, the Directors reiterate current guidance, underpinned by the efficiencies achieved as part of the Group’s ongoing restructuring programme, with a full year EBITDA of between $135-$145m, supported by a strong balance sheet and net cash.

Delivering against our Hunting 2030 strategy

1. Excellent strategic progress with $83.0m of acquisitions completed in the period to increase the profit and cash flow profile of the Group in the medium-term

$64.8m acquisition of Flexible Engineered Solutions (Group) Holdings Limited to enhance subsea product offering

On 24 June 2025, the Company announced the acquisition of Flexible Engineered Solutions (Group) Holdings Limited (“FES”) for a total consideration of $64.8m, net of cash received, including $3.0m contingent consideration in relation to the collection of certain receivables. FES owns proprietary fluid transfer technologies and system solutions for the offshore oil and gas and renewable energy markets, which are deployed on Floating Production, Storage and Offloading (“FPSOs”) vessels. The addition of FES to the Hunting Group not only adds new product lines to our Subsea product group but also enhances Hunting’s sales opportunities in the growing global FPSO and subsea infrastructure market. Strong cross-selling and product bundling opportunities for the Group’s existing businesses are also provided by this transaction, particularly in the higher-margin deepwater and ultra-deepwater sectors of the industry. With the completion of this transaction, Hunting now has four strong product platforms which cover the lifecycle of an offshore well and on which to capture additional long-term revenue and profit growth as well as providing new revenue opportunities for Hunting’s existing businesses.

$18.2m acquisition of Organic Oil Recovery technology

On 7 March 2025, Hunting announced the acquisition of the Organic Oil Recovery (“OOR”) technology from its founding shareholders for a consideration of $18.2m. The acquisition brings control of the commercialisation of this exciting, enhanced oil recovery solution, and follows the securing in H2 2024 of up to $60m of orders for deployment of the technology into North Sea projects over the next five years. In July 2025, a maiden treatment, which forms part of these orders, was deployed to a key client. The acquisition brings full ownership of the intellectual property into the Group, in addition to commercialisation rights in the key regions of North and South America, which was previously unavailable to the Group. Therefore, Hunting now has global market access to a large proportion of the existing oil reservoirs in production today. To accelerate commercialisation, new sales and technical personnel have been hired, with plans to establish a new sampling and test laboratory in Dubai, UAE, where a number of high potential customers are located.

2. $69m of new subsea orders secured in H1 2025 driving the rebuild of the sales order book

$46m of titanium stress joint orders received for Gulf of Mexico and Black Sea

Hunting secured a new titanium stress joint order in the Gulf of Mexico with BP during the period, which reflects a new blue-chip client for this product line. Following the receipt of orders for phase two of a deepwater gas development in the Turkish area of the Black Sea in 2024, Hunting won additional orders for phase three of the development, which includes the supply of six stress joints to TPAO.

$23m of bespoke Enpro orders received for work in the North Sea

The Enpro Subsea business unit secured bespoke orders for its proprietary equipment in the North Sea.

3. Continued execution for key customers across OCTG and Subsea

Strong execution of orders for Kuwait Oil Company (“KOC”)

In H1 2025, Hunting’s Asia Pacific operating segment completed the $231 million order for KOC, delivering the final four shipments comprising the balance of OCTG and SEAL-LOCK XD™ premium connections. Increased production and freight efficiencies have led to a strong financial performance from the segment and OCTG product group in the period.

Continued execution of orders for ExxonMobil Guyana

Hunting’s Subsea Spring business continued to complete orders for deployment to ExxonMobil in

Guyana in the reporting period. Orders for the Uaru and Yellowtail developments were delivered in the

period, with Hunting continuing work on titanium stress joints for the Whiptail development.

4. Reshaped Hunting well-positioned to capture profitable growth though optimising our portfolio and operations

$13.0m divestment of Rival Downhole Tools investment (“Rival”)

In March 2025, Hunting announced the divestment of its 23% interest in the Rival drilling tools business for $13.0m, with $12.0m received in cash and $1.0m placed in an escrow account. Following the resolution of all outstanding matters, the escrow amount has been received in full by Hunting in July 2025. The capital received has been deployed into higher growth businesses, including supporting the acquisition of the OOR technology.

Expanded cost reduction and restructuring of operating footprint in Europe

In January 2025, the Group announced a major cost cutting and restructuring programme across its European footprint to align with the current market outlook in the region. This programme was expanded in August 2025, as Hunting plans to wind down operations at its OCTG threading and pipe storage yard at Fordoun, UK, with outstanding contracts being completed by June 2026 and certain capabilities being relocated to Badentoy, prior to the proposed sale of the site. Along with the closure of the Fordoun site. Hunting is in the process of closing its operating sites in the Netherlands and Norway and reducing its headcount across the EMEA operating segment by 33% by mid-2026 to restore profitability to the operating segment.

Commissioning of new facility in Dubai, UAE

As part of the wider Group shift from Europe to the Middle East, In H2 2025 Hunting will be opening a new 45,000 sq. ft. operating site in Dubai, UAE, which will contain the Group’s well testing and well intervention manufacturing, while continuing to support Hunting’s sales efforts for its Organic Oil Recovery, Perforating Systems and OCTG product groups. On commissioning, Hunting will have invested $6m in this new facility to date.

5. Enhanced returns policy reflecting strategic execution

Strong financial performance and cash generation leading to period-end total cash and bank/ (borrowings) of $79.3m following deployment of $80.0m on acquisitions

The Group delivered period-on-period EBITDA growth of 16% to $70.2m in H1 2025, and an EBITDA margin of 13%. Free cash flow in the reporting period of $66.2m, together with the $12.0m receipt on the disposal of Rival, were deployed to equity shareholders through dividend payments of $9.5m; acquisition-related investments totalling $80.0m; and the net purchase of treasury shares of $17.6m.

Share buyback commenced, enhanced capital allocation policy announced, including increased dividend distributions and a share buyback

The Directors are pleased with the financial progress of the Group since 2023, which includes a strong increase in the cash generation of the Company, and have announced the intention to increase its annual dividend distributions from 10% per annum to 13%. In addition, the Company today commenced a share buyback of up to $40m. Those shares purchased will be cancelled.

Gulf Keystone Petroleum

Gulf Keystone, a leading independent operator and producer in the Kurdistan Region of Iraq, today announces its results for the half year ended 30 June 2025.

Jon Harris, Gulf Keystone’s Chief Executive Officer, said:
“We delivered strong operational and financial performance in the first half of 2025, with material free cash flow generated from increased production and realised prices, capital discipline and cost control. Following the temporary shut-in of the Shaikan Field in July related to security concerns, production restarted earlier this month after consultation with the Kurdistan Regional Government and has gradually ramped back up towards full well capacity. Given the return to stable sales and our robust cash balance, we are pleased to announce today the declaration of a $25 million interim dividend, increasing total dividends declared in 2025 to $50 million.

Looking ahead, we have tightened 2025 gross average production guidance to 40,000 – 42,000 bopd primarily reflecting the production losses from recent temporary disruptions. We are excited to have sanctioned the installation of water handling facilities at PF-2 which we expect, once operational, to unlock incremental production above the anticipated field baseline and reduce downside risk to reservoir recovery. We continue to engage with government stakeholders regarding the restart of Kurdistan crude exports, with increasing momentum towards a solution in recent weeks.”

Nothing much to add for GKP today after recent trading updates and again I’m off the list and not invited to analysts call…

Highlights to 30 June 2025 and post reporting period

Operational

• Zero Lost Time Incidents for over 950 days with rigorous focus on safety maintained
• Gross average production increased 12% to 44,100 bopd in H1 2025 (H1 2024: 39,252 bopd), reflecting consistently robust local market demand and good reservoir performance
• Gross average production of c.40,600 bopd in 2025 year to date (as at 26 August 2025):
  • Primarily reflects precautionary field shut-in in July following drone attacks on certain other oil fields in Kurdistan
  • Production has gradually returned towards full well capacity after operations were restarted in August following a security assessment and consultation with the Kurdistan Regional Government (“KRG”)
  • Realised prices have averaged around $27-$28/bbl in the post reporting period
• Continued execution of disciplined work programme focused on safely maintaining existing production capacity and reliability
• Investment decision taken on installation of water handling facilities at PF-2:
  • Commissioning expected at the beginning of 2027
  • Once operational, the facilities are expected to unlock an estimated 4,000 – 8,000 bopd of incremental gross production above the anticipated field baseline while reducing reservoir risk
  • To minimise upfront capital expenditure and provide flexibility, the facilities will be leased over multiple years following commissioning, with limited incremental net capex expected in 2025

Financial

• Free cash flow generation of $24.6 million in H1 2025 (H1 2024: $26.6 million), enabled by increased production and realised prices, capital discipline and cost control
• Adjusted EBITDA increased 13% to $41.1 million (H1 2024: $36.4 million) as higher production, stronger prices and lower other G&A expenses offset the increase in operating costs and share option expense:
  • Revenue increased 17% to $83.1 million (H1 2024: $71.2m) as strong production was bolstered by a 6% increase in the average realised price during the period to $27.8/bbl (H1 2024: $26.3/bbl)
  • Gross operating costs per barrel of $4.2/bbl were flat (H1 2024: $4.2/bbl), with the decrease from the 2024 average of $4.4/bbl primarily reflecting higher production
• Net capital expenditure of $18.1 million (H1 2024: $7.8 million) reflecting the Company’s focused work programme of safety critical upgrades at PF-2 and production optimisation expenditures:
  • Includes a non-cash charge of $5.4 million associated with the capitalisation of drilling inventory previously classified as held for sale
• Interim dividend of $25 million paid in H1 2025 (H1 2024 shareholder distributions: $21 million)
• Cash balance of $99.0 million as at 30 June 2025 (31 December 2024: $102.3 million), with no outstanding debt; latest balance as at 27 August 2025 of $105.7 million

Outlook

• 2025 gross average production expected to be between 40,000 – 42,000 bopd (previous guidance: 40,000 – 45,000 bopd), reflecting production losses from the recent temporary disruptions:
  • Guidance remains subject to local sales demand and a stable security environment
• 2025 net capital expenditure expected to be $30-$35 million (previous guidance: $25-$30 million):
  • Unchanged expectation of c.$20 million net capex on PF-2 safety upgrades and maintenance and $5-$10 million on production optimisation initiatives
  • Increase in guidance primarily reflects the incremental net capex associated with the water handling project
• Unchanged guidance for operating costs of $50-$55 million and other G&A expenses below $10 million
• The Company is pleased to declare a $25 million interim dividend, equivalent to 11.52 US cents per Common Share based on the Company’s total issued share capital as at 27 August 2025:
  • The dividend will be paid on 30 September 2025, based on a record date of 12 September 2025 and ex-dividend date of 11 September 2025
  • Shareholders will have the option of being paid the dividend in either GBP or USD, with the default currency GBP
• The Company continues to engage with government stakeholders regarding a solution to enable the restart of Kurdistan crude exports through the Iraq-Türkiye Pipeline:
  • The Company remains ready to resume oil exports provided satisfactory agreements are reached on payment surety for future oil exports, repayment of outstanding receivables and preservation of current contract economics

Original article   l   KeyFacts Energy Industry Directory: Malcy's Blog