Oil price, PetroTal, Pharos, Zephyr, Reabold, Beacon. And finally…

WTI (Nov)* $90.52 -$2.51, Brent (Nov) $99.25 -$1.09, Diff -$8.73 +$4.17.

USNG (Oct) $2.97 +13c, UKNG (Oct) 182.11p -1.01p, TTF (Oct) €73.2 -€0.675.

*Denotes expiry of October contract.

Oil price

Oil is up today, likely short closing ahead of the meeting between Presidents Trump and Xi tomorrow. Other news is very similar to all week, at the UN General Assembly Trump offered Iran a choice between a deal or annihilation but talks are expected this week. 

In Libya the Petroleum Facilities Guard have closed the Sharara pipeline, the Zawiya refinery and the Brega facility, it looks like up to 200/- b/d is shut-in.

The API stats showed another build in crude of 1.786m barrels but Gasoline drew 2.16m and distillates also fell by 2.164m, showing as has been consistently reported that products are where the problem lies. 

And the US retail gasoline and diesel prices for last week were published yesterday. Gasoline has risen again, at $4.478 per gallon on average it is up 15.9 cents on the week, +39.3c on the month and the full $1.305 year on year. Unsurprisingly diesel is worse, at $6.529 it is up 24.4c on the week, +87.7c on the month and up $2.780 year on year. 

PetroTal Corp

PetroTal has provided the following operational update. All amounts are in US dollars unless stated otherwise.

Key Highlights

Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented:

“I am very excited to announce that we have spud the 25H development well, our first new well at Bretana since January 2025. The resumption of development drilling at Bretana is the culmination of months of hard work from our entire team and represents the first step in restoring our production base to a sustainable plateau of approximately 20,000 bopd. With a drilling inventory of 22 locations remaining to fully exploit Bretana 2P reserves of 106 million barrels, I am confident that PetroTal is on the path to unlocking the full value of the Bretana field.”

This is clearly very good news for PetroTal and the resumption of drilling at Bretana, earlier than I expected, shows that operationally the company is in very good shape under the new COO. This spud will in short order grow production, with a target I imagine of an aggressive 20/- b/d within a year something that will place the company in the top decile of its peer group.

Another point that I have been making recently is that PetroTal is in a remarkably strong financial position, with recent results showing $105m in unrestricted cash and just $37m of debt making a potential distribution pretty likely.

Add to that the current modest market cap and the above average operating margins and the company is generating a run rate of some $40m of monthly EBITDA which is exceptional. As I have already said with my target price of 75p against the current price of 30p, with these positive financials in play and a great operating outlook the company could easily be in the sights of those looking for serious value.

Bretana 25H Drilling Update

At 7:00pm local time on Monday September 21, PetroTal formally commenced the next phase of its development drilling program at Bretana, spudding the 25H horizontal well approximately one week ahead of schedule. This will be the 20th horizontal well that PetroTal has drilled at the Bretana field, and the first well using the higher-spec Estrella 2027 drilling rig. Consistent with horizontal development wells previously drilled at Bretana, well 25H will be drilled to a measured depth of approximately 4,300 meters, targeting the producing Vivian formation at a vertical depth of approximately 2,700 meters. Well 25H is expected to take approximately eight weeks to drill and complete, at a total cost of $15 million. PetroTal will continue to provide updates on drilling progress as necessary.

Block 95 Operations Update

As disclosed previously, PetroTal recently conducted stimulations on two water injection wells at the Bretana field. Since the operations were completed on September 3, water injection capacity at the Bretana field has averaged just over 190,000 barrels per day, an increase of 9% compared to the August 2026 monthly average. These efforts are part of a larger, ongoing initiative to increase the Bretana field’s water injection capacity to a total of 320,000 barrels per day by the end of 2028. Supported by the improvements in injection capacity, Bretana field production has averaged 11,960 bopd in September, an increase of approximately 600 bopd compared to the prior month. PetroTal’s total group production is averaging 12,286 bopd thus far in September.

Pharos Energy

Pharos has announced its interim results for the six months ended 30 June 2026. 

Katherine Roe, Chief Executive Officer, commented:

“It has been a busy first half of the year for Pharos as we progressed multi-rig drilling campaigns in both Vietnam and Egypt. In Vietnam, our final well completed at the end of July, concluding a six-well offshore drilling campaign which has been successfully and safely delivered by our team and partners. In Egypt, we have resumed drilling, with the first two wells of a six-well programme already completed and a second rig mobilising to drill a third. These wells are contributing to production and reserves growth, supporting our production guidance and cash flow generation.

“Underpinning our operational performance is our continued debt-free balance sheet. Our financial position strengthened further in the first half, benefitting from strong commodity prices and the collection of all outstanding Egyptian receivables. This ongoing position allows us to work with our partners in Vietnam to take advantage of our strong in-country premiums to Brent and operational momentum from the recently completed campaign to drill an additional appraisal well, TGT-20X, in late September, demonstrating an attractive opportunity to reinvest in our portfolio whilst making efficient use of supplies from the recent campaign.

“The recommended acquisition of Pharos by Ratio Petroleum, approved by shareholders on 28 August 2026, continues to progress and remains subject to the satisfaction of the remaining conditions set out in the Scheme Document and the sanction of the Scheme by the Court at the Sanction Hearing.

“Pharos continues to be cash generative, reflecting stable operations, disciplined capital allocation, and the quality of our asset base. We would like to thank our shareholders and all our stakeholders for their continued trust and support.”

This has been a great period for Pharos on many fronts, EBITDAX grew and production at 5,650 boe/d was up and has led to a tweaking of guidance to 5.3-5.9 boe/d. Cash is $45.4m which gives a debt free, solid balance sheet with obviously the receivables all settled in the period. 

Drilling in Vietnam in the period will add to production and another well is expected to start later this month whilst in Egypt two of the six well campaign have been completed and a third about to spud, these will also add to production. The farm-out process for Blocks 125 & 126 continues ‘with encouraging engagement from potential partners’. 

But the operational performance and excellent financials were overshadowed by the bid war that engulfed Pharos and has resulted in a successful takeover by Ratio Petroleum. The management should be congratulated in getting a very good price for shareholders although I for one still think that the company had long term potential but shareholders decide these things…

Operational Highlights

• Group working interest production was 5,650 boepd net (1H 2025: 5,642 boepd net), in line with full year guidance:
  • Vietnam 4,583 boepd (1H 2025: 4,183 boepd)
  • Egypt 1,067 bopd (1H 2025: 1,459 bopd)

• In Vietnam:
  • Six-well campaign successfully completed; current production rate is in line with pre-drill expectations and contributing to production and reserves
  • TGT: All three infill wells and one appraisal well, TGT-18X, completed by April 2026; in total, the TGT drilling campaign contributed 3,800 bopd gross (1,130 bopd net) in June
  • CNV: The infill well completed in March 2026 and contributed c.700 bopd gross (175 bopd net) in June; appraisal well CNV-5X commenced on 15 March and completed on 30 July. The well is undergoing production testing
• In Egypt:
  • The first well of the 2026 six-well programme, Silah 8-2, completed drilling on 9 July; the second well, Aboud 1-5, completed drilling on 9 September; a third well is expected to be spud shortly following mobilisation of the rig

Financial Highlights

• Group revenue $85.5m1 (1H 2025: $65.6m)
• Cash generated from operations $50.6m (1H 2025: $31.9m)
• Operating cash flow $34.9m2 (1H 2025: $16.1m)
• Net loss $0.4m (1H 2025: $2.8m net loss)
• Cash operating costs $18.38/bbl3 (1H 2025: $17.04/bbl) 
• Cash as at 30 June 2026 of $45.4m (31 Dec 2025: $40.2m)
• Egypt receivable balance at 30 June 2026 was $1.7m (31 Dec 2025: $7.4m), having received a total of $13.7m in 1H 2026
• Average realised crude oil prices:
  • Vietnam: $99.10/bbl (1H 2025: $77.25/bbl), including premium over Brent, representing a 28% increase overall. Prices ranged from a low of $72/bbl in January to a high of $126/bbl in April 2026. Average premiums for 1H 2026 were $5.57/bbl for TGT and $5.83/bbl for CNV. Premiums for 2H 2026 TGT cargoes have been agreed for July to October 2026 and average $12.26/bbl. For CNV, the September 2026 cargo achieved a premium of $13.78/bbl
  • Egypt: $86.36/bbl (1H 2025: $65.85/bbl), after discounts, representing an increase of 31%. Prices ranged from a low of $60/bbl in January to a high of $114/bbl in April 2026. Egypt’s average discounts to Brent for the first half of the year were $6.65/bbl for El Fayum and North Beni Suef combined

• Approximately 58% of the Group’s 2H 2026 forecast entitlement production and 20% of the Group’s 1H 2027 forecast entitlement production hedged, utilising a mix of zero-cost collars, fixed-price swaps, and put options:
  • 2H 2026 hedging portfolio secures average floor and ceiling prices at $60.7/bbl and $81.5/bbl, respectively, and includes swap hedges at an average fixed price of $88.4/bbl4
  • 1H 2027 hedging portfolio secures average floor and ceiling prices at $67.3/bbl and $85.1/bbl, respectively, and includes swap hedges at an average fixed price of $79.0/bbl

• Interim dividend in respect of 2025 of 0.3993 pence per share was paid in January 2026. The final dividend of 0.9317 pence per share was paid in July 2026. This took the full year 2025 dividend to 1.331 pence per share, amounting to $7.4m in total

1 Stated before realised hedging loss of $3.7m (1H 2025: no realised hedge gains or losses)

2 Operating cash flow = Net cash from operating activities, as set out in the Cash Flow Statement

3 See Non-IFRS measures on page 30

4 Due to the timing of execution, the average swap strike is higher than the zero cost collar ceiling price, as swaps were entered into following the significant Brent price increase, while zero cost collars were executed earlier at lower market prices

Corporate Highlights

• On 24 June 2026, the board of directors of each of Ratio Petroleum Energy LP (“Ratio”) and Pharos announced that they had reached agreement on the terms of a recommended acquisition by Ratio of the entire issued and to be issued share capital of Pharos (the “Acquisition”), to be effected by court-sanctioned scheme of arrangement (the “Scheme”). The scheme document in respect of the Acquisition was published on 21 July 2026 (the “Scheme Document”)
• On 7 August 2026, the board of directors of each of Ratio and Pharos announced that they had agreed the terms of an increased recommended all-cash offer by Ratio for the entire issued and to be issued share capital of Pharos (the “Increased Ratio Offer”) to be effected by way of the Scheme. The Increased Ratio Offer followed the earlier announcement of a competing offer for Pharos by Serica Energy plc on 26 July 2026, which subsequently lapsed on 13 August 2026
• On 28 August 2026, at the court-convened meeting to approve the Scheme (the “Court Meeting”) and the associated general meeting to approve its implementation (the “General Meeting”), the requisite majority of Pharos shareholders voted to approve the Scheme and pass the resolution proposed at the General Meeting
• Completion of the Acquisition remains subject to the satisfaction (or, where applicable, waiver) of the remaining conditions set out in the Scheme Document, including the remaining Regulatory Conditions and the sanction of the Scheme by the Court at the Sanction Hearing. The Company and Ratio are pursuing the required consents and approvals in both Vietnam and Egypt and will keep shareholders updated on the progress towards completion

Outlook

• 2026 production guidance range narrowed to 5,300 – 5,900 boepd from 5,200 – 6,400 boepd, reflecting increased production from the six-well programme in Vietnam and lower than expected production in Egypt
• Vietnam:
  • The JOCs received approval from PetroVietnam to drill an additional sidetrack appraisal well (TGT-20X) in 2026, utilising supplies from the recently completed drilling campaign. Drilling is expected to commence in late September 2026
  • Exploration farm-out process of Blocks 125 & 126 to continue with encouraging engagement from potential partners
• Egypt:
  • The second rig is mobilising to NBS to drill the third well of the six-well work programme in Egypt
  • Formal ratification of the consolidation of the existing assets expected in due course
• Group estimated cash capital expenditure for 2026 is c.$54m, which includes c.$4m for the additional appraisal well TGT-20X. Expenditure incurred in 1H 2026 was $29.2m, with $27.0m spent for Vietnam and $2.2m for Egypt.

Zephyr Energy

Zephyr has provided initial hydrocarbon production results for the second quarter of 2026 (“Q2”) from the Company’s non-operated asset portfolio.

• Q2 production averaged 914 barrels of oil equivalent per day (“boepd”), net to Zephyr, versus first quarter 2026 average production of 918 boepd and second quarter 2025 average production of 632 boepd.
  • Q2 production totals exceeded management’s forecast.
  • Q2 production averaged 69% oil (by volume).

• At 30 June 2026, the portfolio consisted of interests in over 600 gross wells (or approximately 30 net wells) available for production.

• The portfolio now consists of well and acreage interests in Utah, Colorado, Wyoming, Montana and North Dakota, providing strong production diversity and lowered risk across multiple operators and basins.

• During Q2, the Company hedged a total of 27,000 barrels of oil (circa 32% of the quarter’s oil production) at a weighted average price of US$65.91 per barrel of oil.

• The portfolio delivered strong cash flow to the Company in Q2 due to greater-than-expected production levels and higher than anticipated commodity prices during the period.

• The Company will report revenues from the non-operated portfolio as part of its unaudited interim financial statements for the six months ended 30 June 2026, which are expected to be published by 30 September 2026.

Semi-annual redetermination of Zephyr’s borrowing base completed

In September 2026, the Group’s senior lender (First International Bank & Trust or “FIBT”) completed its semi-annual valuation of the Company’s non-operated portfolio, which estimated the current value of the Group’s non-operated production base at US$43 million and re-affirmed the level of Zephyr’s existing borrowing facilities with the bank.

Zephyr’s current borrowings with FIBT are approximately US$19.9 million, compared with US$35.3 million in January 2024 and US$22.1 million in November 2025 (the dates of the previous bank redetermination).

FIBT’s policy is to lend up to 50% of its independent PV-10 valuation of Zephyr’s proved developing producing (“PDP”) assets, all of which currently reside in the Company’s non-operated asset portfolio.

In addition to the non-operated PDP assets, the Company holds significant non-operated proved undeveloped (“PUD”) reserves in the Powder River (WY) and Williston (ND and MT) Basins.  In Q2, these undeveloped interests generated additional drilling opportunities, including interests in four new Powder River wells drilled by Chord Energy in which Zephyr participated using existing cash resources.

The new wells are located on acreage acquired in 2025 as part of the Company’s US$7.3 million acquisition of working interests in production and development assets situated in core U.S. Rocky Mountain basins.

Colin Harrington, Zephyr’s Chief Executive, said:

“I am pleased to report on the ongoing growth in our non-operated production portfolio which continues to deliver strong cashflow for Zephyr.

“I would also like to thank FIBT for their continued support of Zephyr. FIBT has been an excellent partner for the Company as we further develop our non-operated portfolio. 

“Our non-operated cash flows provide an excellent foundation for growth, generating excess capital capable of supporting our operated project in the Paradox Basin, Utah, U.S.  This two-tiered strategy (non-operated investment returns designed to sustain corporate costs and deliver outsized growth potential in the Paradox Basin) continues to be key to our corporate strategy.”

I think that sometimes the market has yet to fully appreciate these non-operated assets, they are an incredible, strategically important feature of the Zephyr portfolio and it has been invaluable in covering the opex and indeed the capex for the Paradox basin.

Additionally the portfolio brings a strength and quality as well as diversification and spread across many basins and of course this invaluable cashflow which not only funds the Paradox, but also has been impressive on the debt repayment profile, into the bargain.

The company has also announced that the semi-annual redetermination of its borrowing base has been completed, with the Group’s senior lender FIBT, estimating the current value of the non-op production base at 443m and ‘re-affirmed the level of zephyr’s existing borrowing facilities with them of $19.9m’.

Reabold Resources

Reabold has noted the announcement made by Beacon Energy PLC (“Beacon”) today providing an update on well integrity and testing at Colle Santo.

The full Beacon announcement can be viewed here:

https://www.londonstockexchange.com/news-article/BCE/update-on-well-integrity-testing-at-colle-santo/17799888

Beacon Energy

Beacon has announced it has been informed by LNEnergy Limited that the equipment required to undertake well testing operations on the two existing wells, MP-1 and MP-2, will shortly be mobilised to the Colle Santo site.

Initial well integrity tests were completed in August 2026, with a variety of corrosion and integrity tests conducted. All tests performed on MP-1 and MP-2 indicate integrity. Certain tests on MP-1 could not be performed due to a stuck valve, although those tests will now be performed as part of the well testing operation in October 2026. The wellhead pressure on both MP-1 and MP-2 was recorded at 121 barg, in line with expectations.

A 5-day production test is expected to commence in the coming weeks. The outcome of the production test is anticipated around the end of October 2026.

Stewart MacDonald, Chief Executive Officer of Beacon Energy, commented:

“As a reminder, the Colle Santo field is a fully appraised 73 BCF gas field with eight well penetrations since discovery and, of those, seven wells having flowed gas to surface.

“The most recent wells, MP-1 and MP-2, were drilled and tested in 2007 and 2008 at a combined rate of 20 mmcf/d, far in excess of the 11 mmcf/d planned during the production phase.

“It is reassuring that based on the tests conducted to date, the integrity of the MP-1 and MP-2 wells has been confirmed and that wellhead pressure in both wells is in line with expectations.

“We look forward to the outcome of the 5-day production test around the end of October.

All seems to be going as expected at Beacon, the integrity results and pressure suggest everything is as expected, the flow test will confirm this. It seems that there is a great deal going on in the background at the moment and Colle Santo is certainly picking up speed.

I note that a recent article on Reuters that suggested that the Italian Government is highly supportive and is open to fast-tracking fossil fuel projects. Readers know that I have am very positive on European gas plays and with the pricing outlook pretty good it looks like Beacon is very well placed.

And finally…

In the first ODI of the series yesterday England scored 265 in 48.1 overs but Sri Lanka could only muster 176 in reply in 37 overs.