A flash blog today as I’m in London today…As usual further comments etc when I hear it.

Apologies for wordage yesterday, as in the reprint I meant when not if…

Arrow Exploration

Arrow has 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% beneficial interest.

CN-2 Well

The CN-2 well was spud on June 15, 2023, and reached target depth on June 23, 2023.  The well was drilled to a total measured depth of 9,474 feet (8,582 feet true vertical depth) and encountered multiple hydrocarbon-bearing intervals.

Arrow has completed testing the CN-2 well in the Ubaque formation which has approximately 60 feet of net oil pay. The pay zone is a clean sandstone exhibiting consistent 26% porosity, four Darcy permeability and high resistivities from top of sand to base of sand. An electric submersible pump (ESP) was inserted in the well after perforating.

The logs responses from the Ubaque formation are very similar in both CN-1 and CN-2 wells. Due to this, the Company made the decision to proceed directly to the perforation and well production of the Ubaque in CN-2. Company drilling targets and recompletion opportunities in the future.

Specific data for the initial production from the Ubaque formation are as follows:

·    The well initiated production with a flow rate of 1,012 barrels of fluid per day.

·    After 31 hours of production, the water cut stabilized at 3%.

·    Measured oil from the Ubaque formation shows an API gravity of 13.6°.

To efficiently manage the reservoir, the ESP is currently running at 30 Hz, minimum optimum pump frequency, and a 128/128 choke size is being used. The CN-2 well is currently on production, producing from the Ubaque formation at 680 BOPD gross (340 BOPD net).  Build-up analysis indicates the well can produce at 1,400 BOPD gross at a consistent producible rate.  However, Management’s intention is to produce the well conservatively, at current rates, to ensure the highest estimated ultimate recovery (EUR). This provides significant operational flexibility.

The CN-2 well also tested the C7 formation where early water production resulted in the Company making the decision to move immediately to the Ubaque formation where more economic results were encountered.

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

Forward Work Program

The CN-3 well was spud on July 20, 2023, and is continuing to be drilled as per schedule. After the CN-3 well, 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 RCE-6 C7 producer. The drilling rig will then return to the CN field to drill additional Ubaque wells that include second and tertiary formations in the borehole.

The 134 km2 3-D seismic survey at the West Tapir project has been successfully shot and processed. Interpretation is ongoing on this high-resolution data set. Multiple prospects have initially been identified with further interpretation to be finalized over the next 60 days.

Marshall Abbott, CEO of Arrow commented:

“Production from the CN-2 well provides additional evidence that the CN field is a material discovery for Arrow. Further to the thick pay zones encountered in the Ubaque formation, additional pay zones currently behind pipe provide further opportunities for production and reserve increases.”

“The Company is looking forward to the CN-3 well results which will help determine the size of the pools in the field and the potential reserves additions. Multiple development locations are anticipated based on current results. Arrow plans to undertake a third-party reserve evaluation of the CN field once the current three well drilling program is complete.”

“As with the RCE field, the Company plans to limit production at the CN field by controlling pump speed and choking wells back to efficiently manage the reservoir and discourage premature water production. Arrow believes this is in the best long-term interest of the reservoir and will result in maximum recovery for both fields.”

“There is strong momentum at Arrow, as we continue with our fully funded, low risk drilling program across our extensive portfolio with the spudding of two wells at the RCE structure targeting the Gacheta formation to follow drilling at CN-3. Alongside this we are encouraged by the initial interpretation of the Tapir 3D seismic and look forward to providing further updates in due course.”

Further good news today from Arrow who continue to provide good well results that will add to the CN field economics in due course, more after Ive spoken to Marshall and will certainly keep my 50p TP.

SDX Energy

FUNDING TO ACCELERATE CORPORATE DEVELOPMENT AND MOROCCAN GAS PRODUCTION

·    Drilling campaign underway to increase Moroccan production on higher gas pricing

·    Complementary energy transition opportunities being explored with funding partners that leverage existing Moroccan footprint

·    Company continues to evaluate the proposals received for its Egyptian assets

SDX is pleased to announce that, following the securing of higher gas prices, the Company has secured financing to expand its Moroccan gas production. The syndicated convertible loan agreement with Aleph Finance Ltd for up to $3.25 million (the “Convertible Loan”) of which an initial amount of $2 million has been drawn and will be immediately used to reduce outstanding debt to the European Bank for Reconstruction and Development (“EBRD”), pay critical service providers to accelerate the Moroccan drilling campaign and for general corporate purposes. The Convertible Loan enables the Company to move the business forward, towards an energy transition strategy, as it continues with the process to sell its Egyptian assets with a view to deliver value to shareholders. 

The syndicated Convertible Loan is unsecured, convertible at any time at the option of the individual lenders and repayable 364 days after the initial drawdown of the Convertible Loan is made. The conversion price is approximately 4.5 pence per Ordinary Share (or, if lower, the lowest issue price for any Ordinary Shares issued during the life of the Convertible Loan). If conversion occurs within ten business days of maturity, the conversion price is approximately 6.6 pence per Ordinary Share.

Interest of SOFR+15% on the Convertible Loan will be payable on a quarterly basis with an option for payment in kind, upon mutual agreement by the borrower and lenders.

Daniel Gould, the Managing Director, commented:

“Our vision for SDX is to become the leading energy provider in Morocco, delivering combined gas and renewable energy solutions to our existing and growing customer base. SDX is uniquely positioned to leverage its long presence and infrastructure in Morocco to execute this vision. In order to deliver on this vision, the Company will access a wider capital market for the renewable projects, which may be financed on a standalone basis.”

Good news from SDX, looking forward to catching up with Jay very soon….

Deltic Energy

Deltic has provided an update in relation to the five Southern North Sea gas exploration licences held jointly with Capricorn Energy PLC.

Following recent changes at Capricorn that include a decision to exit from its exploration assets outside Egypt, the Company has been formally notified of Capricorn’s intention to withdraw from the Licences.  As part of ongoing rationalisation and high grading of its portfolio, Deltic has decided to withdraw from three of the Licences (P2560, P2561 and P2562) and therefore the JV partnership will move to relinquish these three licences as soon as practicable.

With respect to Licences P2567 (Cadence) and P2428 (Cupertino), Deltic recognises the significant prospectivity highlighted by the technical work programmes completed by Capricorn on behalf of the JV and intends to continue with these two licences following the withdrawal of Capricorn.  

Across the P2567 and P2428 acreage position, the committed work programme has been completed in relation to both licences, and Deltic has been fully carried by Capricorn through nearly US$10 million of technical work to date including the pre-funding of nearly 700km2 of new 3D seismic as well as the reprocessing of a number of legacy 3D seismic surveys.  During this intense period of geological evaluation, the JV identified and matured 17 leads and prospects in the Carboniferous with combined, gross P50 gas-initially-in-place of more than 2.6 TCF, located on Licences P2567 and P2428 .  Many of these prospects are analogous with the Pegasus and Andromeda discoveries located on the blocks immediately to the south of these licences.

The current terms of Licences P2567 and P2428 are due to expire on 30 November 2023 and 31 March 2024 respectively and, once Deltic has been re-appointed as Administrator of these licences, Deltic intends to request an extension of the current licence terms from the North Sea Transition Authority (“NSTA”).  If such extension requests are approved by the NSTA, Deltic would continue to assure and high grade the prospects identified and matured, while seeking to attract another partner or partners to assist with future drilling activity across the two licences.

Graham Swindells, Chief Executive of Deltic Energy, commented:    

While we would have preferred to continue in partnership with Capricorn on these  exploration licences, Capricorn has recently changed strategic direction. Our extensive work together has advanced our understanding of the potential of the area; further demonstrated the excellent prospectivity present on the two most advanced licences and allowed us to focus on those licences showing excellent potential. We look forward to advancing the key exploration prospects on this acreage.”

“Following our success earlier this year with the Pensacola gas and oil discovery, Deltic remains committed to exploring in the Southern North Sea which has the potential to provide high quality UK based employment, tax revenues and energy security while at the same time offsetting higher carbon intensity imports as the UK continues its transition towards a net zero future.”

Again more early next week I hope.

Ithaca Energy

Ithaca Energy is pleased to announce the results of exploration drilling at the K2 prospect, located in Block 22/14c of the Central North Sea of the UK Continental Shelf.

Upon entering the reservoir, Ithaca Energy, acting as the operator, discovered that hydrocarbons were present in the reservoir in the Forties member sandstones, with 45 feet of net thickness.  Logs were acquired to establish reservoir quality and further analysis of the well results will be performed to determine future activity and the recoverable resources estimate. Ithaca Energy, together with its joint venture partner, have decided to perform an appraisal sidetrack following these encouraging results in the main bore.

Ithaca Energy holds a 50% working interest in the licence with the remaining 50% working interest held by Dana Petroleum.

Alan Bruce, Chief Executive Officer, commented:

“I am delighted to report encouraging well results at K2, located in close proximity to existing infrastructure, further enhancing our portfolio.”

I’m looking at Ithaca a bit more closely having spoken to the company recently, looks interesting down here.