AUCTUS ON FRIDAY - 21/06/2024

AUCTUS PUBLICATIONS
________________________________________
Arrow Exploration (AXL LN/CN)C: target price of £0.65 per share: Flow rate of high impact horizontal well above expectations – The first CN Horizontal well (CNB HZ-1) from the Carrizales Norte B pad has been on production since 14 June at a rate of 3,150 bbl/d (~1.6 mbbl/d net) with less than 1% water cut while still recovering load fluid. The flow rate is currently constrained with the ESP operating on the minimum setting. The flow rate is above expectations. While the stabilized production rate will be determined in the next few weeks, this initial flow rate represents 2x what we carry in our model for the well in 3Q24 (1.5 mbbl/d gross or 0.75 mbbl/d net). The flow rate is very important for Arrow’s growth story as horizontal drilling will form the basis of the development of the Carrizales Norte field. Arrow will now drill a water injector before three further horizontal wells at the Carrizales Norte B pad. This should have a material impact on production. Pending confirmation of the stabilized rate, we have not changed our forecasts with production reaching 5.6 mboe/d in 4Q24 (assuming 1.5 mbbl/d gross production per new horizontal well).
See website for full report

Longboat Energy (LBE LN)C: Exiting Norway, refocusing on South East Asia – Longboat is selling its interests in Longboat JAPEX to JAPEX for US$2.5 mm in cash plus Longboat’s share of drawn debt under the JAPEX acquisition facility (currently US$8.5 mm net). The company will reposition itself as a South East Asia E&P. Longboat plans to launch a farm-out process for its interest in Block 2A offshore Sarawak in 2H24. Longboat has been granted an award for acreage in shallow water offshore Sarawak containing several material, undeveloped gas fields capable of near-term development.

IN OTHER NEWS
________________________________________
AMERICAS

Active Energy (AEG LN): Liquidation and cancellation from AIM – Active Energy could not raise sufficient working capital to continue the commercialisation of its CoalSwitch biomass assets. The trading of the shares will be cancelled and the company liquidated.

Helix Exploration (HEX LN): Acquiring helium assets in the USA – Helix has acquired a 100% WI the Rudyard project with 5,600 acres in Hill County, Montana for US$0.10 mm in cash plus US$0.15 mm through the issue of 0.51 mm shares. The seller will also receive 0.6 mm shares as an introducer fee. Helium has been proven from two wells in a 640-acre section on the northern anticline and adjacent to the Rudyard Project (but not part of the project). Helium concentration was up to 1.3% with raw gas flow test rates of 1.15-3.1 mmcf/d. Helium contingent resources are estimated at 0.48 bcf. Drilling is expected to take place in 3Q24.

Maha Energy (MAHA- A SS): Production update in Brazil – May production was 2,608 boe/d up from 1,901 boe/d in April.

ASIA PACIFIC

Shell (SHEL LN): Buying gas business – Shell is acquiring Pavilion Energy from Tamasek. Pavilion holds a global LNG trading business with a contracted supply volume comprising about 6.5 million tonnes per annum. The acquisition will be absorbed within Shell’s FY24 cash capital expenditure guidance, which remains unchanged.

EUROPE

Aker bp (AKERBP NO): Discovery in Norway – 3.3-4.7 mmboe recoverable resources have been discovered at the Ferdinand prospect.

DNO (DNO NO): Discovery in Norway – Gross recoverable resources of 16-38 mmboe have been encountered at the Cuvette prospect.

Equinor (EQNR NO): Dry hole in Norway – The Snoras prospect was dry.

Horizon Petroleum (HPL.H CN): Reserves and resources update in Poland – The Lachowice natural gas field is estimated to hold ~6 mmboe of 2P reserves plus 28.5 mmboe of risked contingent resources (2C). There are also 20.7 mmboe of risked prospective resources.

UK Oil & Gas (UKOG LN): Negative ruling for planning permission at UK project – The Supreme Court found that in its 2019 grant of planning consent for oil production at Horse Hill, did not request and consider in their assessment an estimate of the end-use carbon combustion emissions of produced hydrocarbons. The ruling now retrospectively requires that the end-use combustion emissions must be included in the development's Environmental Impact Assessment and assessed as part of the grant of planning consent for the development.

FORMER SOVIET UNION

Caspian Sunrise (CASP LN): Reserves update in Kazakhstan – The Airshagyl structure, one of the two deep structures on the BNG Contract Area, is estimated to hold ~49 mmbbl of C1 resources.

MIDDLE EAST AND NORTH AFRICA

Energean (ENOG LN): Selling assets in Egypt, Italy and Croatia – Energean is selling its assets in Egypt, Italy and Croatia with 34 mboe/d production (FY23) and 150 mmboe of 2P reserves for an enterprise value of up to US$945 mm, to Carlyle. Energean expects to pay a special dividend of up to US$200 mm and repay a corporate bond of US$450 mm upon completion. Energean will receive US$504 mm in cash on completion with working capital adjustment since the effective date of YE23. Energean will also hold a US$139 mm vendor loan with a 6.25 year tenor carrying interest at SOFR +7% in year one, increasing by 0.5% each year thereafter. A contingent payment of up to US$125 mm will depend on the performance of the Italian assets (for production above the proven reserve profile) and commodity price. Carlyle will also make a contingent payment for the 2P reserves associated with the Location B well in Egypt based on US$5-7/boe for gas plus US$4.5/boe for condensate and US$3.75/boe for LPG. The transaction removes over 60% of the Energean’s decommissioning liabilities (US$516 mm according to the YE23 accounts).

Gulf Keystone Petroleum (GKP LN): Operating update in Kurdistan – Gross local sales have averaged 48,200 bbl/d in May. June average sales to date were ~40,500 bbl/d, reflecting the temporary impact of Eid al-Adha celebrations on truck availability. Realised prices have further improved, recently increasing from ~US$$27/bbl to ~US$$28/bbl. The Company’s cash balance was US$99 mm as at 20 June. An interim dividend of US$15 mm has been declared.

Sound Energy (CNE LN): Selling a stake in Moroccan project – Sound is selling 55% of the Tendara Production Concession, 47.5% of the Grand Tendara Permit and 47.5% of the Anoual exploration permit to Managem SA for up to US$45.2 mm. This includes US$13 mm of back costs, up to US$30.7 mm net carry and a contingent consideration of US$1.5 mm.