WTI (Sep) $81.25 -$2.02, Brent (Oct) $87.07 -$1.91, Diff -$5.82 +11c.

USNG (Sep) $2.73 -5c, UKNG (Sep) 151.0p +4.24p, TTF (Sep) €61.33 +€1.725.

Oil price

Oil is up around a dollar this morning after the UAE announced that Iran attacked two of its ships in the Strait of Hormuz last night. The situation has now, as the phrase goes, pivoted somewhat and as reported in recent days here and elsewhere TACO has taken a different form.

The US has said overnight that it can maintain the blockade ‘indefinitely’ and has vowed to take economic measures ‘like have never been seen’ and is readying an ‘economic isolation plan for Iran’.

So that’s the war sorted then……..

Natural gas prices in Europe rose yesterday and I thank the highly respected Ashley Kelty for finding this absolute gem…

This comes into the category of things you never thought that you would hear…

Three reactors at ‌France’s Gravelines nuclear power plant were shut down late on Monday due to a massive swarm of jellyfish, triggering preventative measures put in place last year after the entire plant went offline, operator EDF said.
The plant in northern France is one of the ​largest in the country and is cooled from a canal connected to the North Sea. ​Its six units produce 900 megawatts of power each, or 5.4 gigawatts in ⁠total.

Arrow Exploration

Arrow has announced a property acquisition in Alberta, Canada.

Highlights

·    Acquisition of 100% working interest in 550 boepd oil producing property in Thorsby, Central Alberta Canada

·    Highly cash generative asset having generated $2.0 million CAD of operating income1  in last 12 months

·    $12.15 million CAD (approximately $8.9 million USD) purchase price funded directly from on-hand cash reserves

·    Significant 1P reserve base of 4.973 million boe, 2P of 7.537 million boe and prospective opportunities across 9,501 net acres of land

·    Management plans to deploy development program across lower Cretaceous Sparky reservoir, having identified 22 low-cost, quick payout drilling locations on the property

·    Current production is approximately 27% oil and liquids.  1P and 2P volumes approximately 55% oil and liquids.

Thorsby Property Acquisition

Arrow is pleased to announce it has acquired an oil producing property in the Thorsby area of Central Alberta Canada. The acquisition is a 100% working interest purchased from a private company. The Thorsby asset has current production of 550 boepd, with low decline rates of 15%, and a third-party reserve report estimating 4.973 million boe of total proved reserves (1P) and 7.537 million boe of total proved plus probable reserves (2P).

The acquisition price is $12.15 million CAD (approximately $8.9 million USD) and is being funded from Arrow’s cash reserves.  In the last 12 months the property has generated approximately $2.0 million CAD of operating income1. The third-party reserve report, with an effective date of 31 December 2025, has pre-tax NPV 10 for the 1P and 2P reserves of $38 million CAD ($27 million USD) and $71 million CAD ($51 million USD) respectively. Arrow is assuming decommissioning liabilities of $8.7 million CAD ($6.3 million USD).

Thorsby is 9,501 net acres of 100% working interest land approximately 200km north of Calgary.  All lands and associated infrastructure have been acquired as part of the transaction.   Alberta Energy Regulator applies 55 million stock tank barrels original oil in place with a 3% recovery to date. Arrow believes there is significant original oil in place with secondary recovery potential to arrest declines and boost recovery factor.

The lower Cretaceous Sparky reservoir is up to 25m in places with a 15-meter net pay average at a 9% cutoff.  Management has identified 22 upside drilling locations on the property.

1 Revenue less royalties less operating costs and workovers

Marshall Abbott, CEO of Arrow commented:

“The Thorsby acquisition represents a low-risk, exceptional return inventory suite of development drilling opportunities. The development focus is on the Cretaceous Sparky Formation as a proven reservoir where management has years of geologic fluency. It gives the Company a significant increase in reserves, a low-risk development program with 22 initial drilling locations, while the Company remains debt free and financially healthy.”

“The 2-mile lateral horizontal wells that Arrow plans to drill at Thorsby are expected to cost approximately $2.2 million CAD .  Each well pad is planned to contain 3 wells.  The Thorsby area has year-round access and is close to abundant infrastructure.”

“The Sparky wells have high initial production (300 BOPD) rates with low declines and pay out very quickly.  The Sparky reservoir has a history of reacting positively to secondary recovery, such as water flood.”

“Management believes that the Thorsby acquisition complements the Colombian operations very well. Geologically the play type and trapping mechanisms are very similar. That is 3-way structure juxtaposed against a sealing barrier. This also represents very similar reserve capture and adds significant cash flow and IRRs that exceed 500% on a well-by-well basis. Thorsby also represents additional drilling inventory that is complementary to Colombian inventory. This provides significant optionality in pursuing highest value add prospects.”

“The dedicated Arrow team remains committed to pursuing additional high return opportunities in both jurisdictions.”

This looks to be an interesting deal for Arrow, it is in their own back yard and appears to be being acquired on very attractive metrics. They are acquiring a 100% WI in a 550 boepd oil producing property in Thorsby, Central Alberta, Canada for C$12.15m

For me it ticks a number of boxes, it is highly cash generative having generated some C$2m of operating profit in the last 12 months and is being paid for out of Arrows significant cash reserves. The 1p reserve base is 4.973m boe with 2P of 7.537m boe and also has prospective opportunities across 9,501 net acres of land. 

I like that there is a development of 22 low-cost, quick payout locations and has current production that is ‘27% of oil and liquids and with 1P and 2P volumes of approximately 55% oil and liquids. The deal represents a ‘low-risk, exceptional return inventory suite of development drilling opportunities’.

There is another point worth making which alludes to the significant tax losses and pool that Arrow has and which give them an advantage when looking at Canadian acquisitions. With them the opportunities they look at have stronger economics over a company that needs to pay tax, and as such it is worth noting the comments by CEO Marshall Abbott when he stated that the deal ‘adds significant cash flow and IRRs that exceed 500% on a well-by-well basis’.

I also like that the Cretaceous Sparky Formation is a proven reservoir where the management has ‘years of geologic fluency’ and gives a more than useful contribution which complements the existing Colombian assets very well, specifically in its subsurface play types and trapping mechanisms.

Arrow has performed very well operationally in Colombia recently and this deal is well placed to diversify with another big low-risk development programme at a low cost in a familiar location. The company is debt free, has a robust, healthy balance sheet  with increasing production and an excellent reserve base. 

The share at 28.5p are up 3.28% today on this news, they have risen 14% m/m, 65% over 6 months and 98% year on year so they have more than justified my confidence and their spot in the Bucket List is assure for some time to come. I recently increased my target price to 50p and that seems perfectly achievable as the portfolio continues to  grow with excellent deals like this one.

Touchstone Exploration

Touchstone has reported its financial and operating results for the three and six months ended June 30, 2026 and provides an operational update. Selected financial information is outlined below and should be read in conjunction with Touchstone’s June 30, 2026 unaudited interim condensed consolidated financial statements and related Management’s discussion and analysis, both of which are available on the Company’s profile on SEDAR+ (www.sedarplus.ca) and website (www.touchstoneexploration.com). Unless otherwise stated, all financial amounts presented herein are in United States dollars, and all production volumes disclosed herein are sales volumes based on Company working interest before royalty burdens.

Second Quarter 2026 Financial and Operating Highlights

·     Funds flow from operations: Increased to $7.13 million from $1.85 million in the prior quarter, primarily driven by a $4.07 million increase in operating netback.

·     Net income: Delivered net income of $2.34 million ($0.01 per basic and diluted share), reversing the first quarter 2026 net loss of $2.38 million.

·     Capital investments: Deployed $1.52 million in capital expenditures focused on high-impact development initiatives, including the FR-1836 crude oil development well and the Cascadura booster compression project.

·      Production: Achieved 4,433 boe/d, representing a 5% decrease from 4,657 boe/d in the first quarter of 2026, primarily due to planned third-party infrastructure maintenance at Atlantic LNG that temporarily constrained natural gas production.

·      Petroleum and natural gas sales: Totalled $17.47 million, a 39% increase from $12.54 million in the prior quarter, driven primarily by higher realized pricing across all commodity streams.

·      Realized commodity pricing:

–     Crude oil and liquids: Averaged $70.13 per barrel, a 19% improvement from $59.02 per barrel in the first quarter of 2026.

–     Natural gas: Combined pricing averaged $4.93 per Mcf, up from $3.00 per Mcf in the preceding quarter. Ortoire block realized pricing remained steady at $2.55 per Mcf. Central block realized pricing increased 93% sequentially to approximately $6.56 per Mcf, as June natural gas volumes were redirected to Atlantic LNG Train 2/3 during the Train 4 downtime.

·     Operating netback: Generated $24.37 per boe, representing a 77% improvement over the $13.73 per boe recorded in the previous quarter.

·     Net debt and deleveraging: Reduced net debt by 10% sequentially to $68.71 million at quarter-end, supported by $3.55 million in bank debt principal repayments funded through cash flow and financing proceeds.

·     Strategic financing and capital structure: Completed a multi-jurisdictional integrated financing in the quarter for net proceeds of $10.20 million, initially comprising an issuance of 26,631,330 common shares and an $8.40 million debenture. Subsequent to quarter-end, the $8.4 million debenture was repaid in full, and the repayment proceeds were redirected to the related subscription by Purebond for 89,765,000 common shares, fully converting the financing into equity and eliminating the debt obligation.

Paul R. Baay, President and Chief Executive Officer, commented:

“Our second quarter financial and operating results demonstrate the strong underlying earning power of our assets when supported by favourable pricing and disciplined execution. Driven by a 77 percent quarterly improvement in operating netback to $24.37 per boe, we generated $7.13 million in funds flow from operations and delivered $2.34 million in net income, successfully reversing our first quarter loss.

Operationally, Touchstone exited the quarter with improved production capacity, enhanced infrastructure, and multiple near-term production optimization opportunities. With the Cascadura booster compressor operating reliably and delivering initial performance ahead of expectations, and several well intervention programs scheduled for the second half of 2026, the Company is well positioned to enhance production as regional pipeline constraints normalize following the planned Atlantic Train 4 outage.

Concurrently, we have taken decisive steps to strengthen our capital structure. Supported by cash flow and financing proceeds, we reduced quarterly net debt by 10 percent, while the post-quarter repayment of our $8.40 million debenture and redirection of proceeds into common shares provides Touchstone with a clearer financial runway to execute our growth strategy.“

This is a good quarterly result and very much worth waiting for, underlying production is good and the booster compressor at Cascadura is delivering ‘initial performance ahead of expectations’.

With several well interventions scheduled for the second half the company is ‘well positioned to enhance production as regional pipeline constraints normalise following the planned Atlantic Train 4 outage’. 

The expected price realisations are clear, crude oil and liquids averaged $70.13 per barrel up 19% on Q1 but the one I have been waiting for is the gas pricing model effects. Here, combined pricing averaged $4.93 per Mcf, up from $3.00 per Mcf in the preceding quarter.

The split revealed that the Ortoire block realised pricing remained steady at $2.55 per Mcf while Central block realized pricing increased 93% sequentially to approximately $6.56 per Mcf, as June natural gas volumes were redirected to Atlantic LNG Train 2/3 during the Train 4 downtime.

Touchstone is also well positioned to enhance production as the regional pipeline constraints normalise following the planned Atlantic Train 4 outage, combined with the news on the pricing front I am sure that there is good news to come both financially and operationally.

The shares at 9.8p are up some 23% today, have risen 45% m/m and are up 13% over 6 months, year on year they lag still but that is working itself out and my target price of 30p does not look so incongruous after these results. 

And finally…

Another pretty grim weekend sports fans, no real cricket (except if you like seeing the Aussies taken down by the Bangas)  racing at Newbury, Ripon and Newmarket uninspiring, but of course you ask, it’s weeks since the last footy something must be happening…

Of course it is, the Championship starts this weekend, amongst the fixtures are the Robins hosting the Lions, the Baggies visit the Canaries, the Addicks welcome the Rams, Pompey host the Super Hoops and on Sunday the Sinners, the club formerly known as the Saints are at the Hornets and in the claret and blue derby the Hammers visit Burnley.