AUCTUS ON FRIDAY - 29/08/2025

Arrow Exploration (AXL LN/CN)C; Target price of £0.50 per share: High impact exploration drilling in 2H25 – 2Q25 production averaged 3,768 boe/d, impacted by water handling constraints and steeper-than-anticipated early declines at newly drilled wells. Current WI production stands at ~4,200 boe/d, down from the July peak of 4,600–4,800 boe/d, which reflected initial flush output from AB-HZ5 and AB-HZ4. While first-month decline rates are steep, Arrow has observed that post-month-one declines are minimal. For example, recent horizontal wells have delivered initial rates exceeding 1,000 bbl/d, declining to ~350 bbl/d by day 30, with stable output thereafter. Two additional wells are scheduled to come online in September—one at Alberta Llanos and one at Carrizales Norte—supporting a 3Q25 production forecast of ~4.2 mboe/d. The upcoming drilling programme will target the Mateguafa Oeste prospect, which holds ~6 mmboe of net prospective resources and carries an unrisked NAV of £0.25 per share. In the event of success, Arrow plans to re-mobilize its second rig (currently being released) to drill four horizontal wells, which would materially enhance YE25 production. If the results are inconclusive, the company will pivot to Mateguafa Attic, using its current rig to drill three low-risk vertical wells targeting the C7 interval. We have revised our 2025 production forecast to ~4.2 mbbl/d, reflecting a more conservative IP30 assumption and a development scenario based on Mateguafa Attic rather than Mateguafa Oeste. We also incorporate higher transportation costs and a quality discount for Tapir volumes. Our new target price of £0.50 per share has been set close to our new ReNAV..
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Criterium Energy (CEQ CN)C; Target price of C$0.35 per share: Flow rate of up to 8 mmcf/d at South East MGH. Reducing FY25 capex guidance – The SEM-01 well at South East MGH flowed 7–8 mmcf/d on test on 40/54” and 48/64” choke sizes. Further choke expansion was constrained by surface facility limitations. This follows the MGH-20 well at North MGH, which flowed at 2.8 mmcf/d on test. The successful re-entry of SEM-01 de-risks the entire project and confirms the phased development across both fields, with initial production of 5–7 mmcf/d expected in 1Q26, rising to 7–10 mmcf/d in 2Q26. Criterium is projected to generate positive free cash flow from 1Q26. South East MGH is estimated to contain 15 bcf of 2C contingent resources, which are expected to be reclassified as reserves following the execution of a gas sales agreement by YE25. No formal resource estimate has been disclosed for North MGH pending an extended well test program. This will evaluate multiple zones across four wells (only one tested to date) and assess potential liquids output. Our unrisked NAV for the combined MGH assets stands at C$0.14 per share. Capital efficiency has improved as no further wells are required at South East MGH. Capex to first gas has been revised down from US$3–5 mm to US$2.5–4 mm, of which ~50% has already been spent. With US$1.6 mm in cash at end-June and US$2 mm in operating cash flow (pre-working capital) in 2Q25, we expect the company to be able to fully fund the development.
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Zephyr Energy (ZPHR LN)C; Target price of £0.15 per share: Completing Rockies acquisition with lower abandonment costs. Non-op drilling imminent – Zephyr has completed the acquisition of its new Rockies portfolio. On closing, the company divested a small package of newly acquired operated wells in North Dakota and Wyoming to a neighbouring private upstream operator for US$0.7 mm in cash. The buyer also assumed approximately US$0.8 mm in predominantly near-term plugging and abandonment liabilities that Zephyr would otherwise have incurred within the next year. Post-divestment, the net acquisition is expected to contribute 388 boe/d of production to Zephyr, broadly in line with prior estimate of ~400 boe/d. The newly acquired non-operated drilling inventory has expanded from 13 to 18 potential locations, with initial drilling expected imminently. These wells may be funded through Zephyr’s US$100 mm strategic partnership facility. We anticipate near-term approval of several opportunities by the funding partner, which could act as a catalyst for share price re-rating. Notably, our valuation currently attributes no upside to the non-operated Rockies drilling inventory.
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IN OTHER NEWS
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AMERICAS

Alvopetro Energy (ALV CN): Operating update in Brazil – The 183-D4 well on the Murucututu field flowed 5.7 mmcf/d plus 60 boe/d of condensate on test.

Helium Evolution (HEVI CN): Issuing a convertible to main shareholder – Helium Evolution has issued a US$8.3 mm convertible to ENEOS. The convertible has a conversion price of C$0.205 per share and will accrue interest at a rate of 8.5% per annum. Proceeds from the note will be used to fund HEVI’s 20% WI in the helium processing facility in the Mankota area. ENEOS has also been granted an overriding royalty of 2%-5% on some of the future wells.

Karoon Energy (KAR AU): Pump failure and production restriction in Brazil. Reserves upgrade – An ESP failed in a well at Karoon’s main field (Bauna). Production from the well was restored to 2.5-3.0 mbbl/d (8.5-9.0 mbbl/d previously). Restoring full production requires a rig and the work-over is not expected to start until 2Q26. The reserves estimates at Bauna have increased by 30% (+13.7 mmbbl) from YE24 following the acquisition of the Bauna FPSO.

ASIA AND AUSTRALASIA

Georgina Energy (GEX LN): Equity raise for Australia helium - Georgina has raised £1 mm of new equity at a price of 5p per share to advance the ongoing work programmes in relation to Hussar and Mt Winter.

EUROPE

Aker BP (AKERBP NO): Discovery in Norway – 16-33 mmboe have been discovered at the Talisker exploration well.

Prospex Energy (PXEN LN): Successful work over in Spain but production restart delayed – The recompletion workover of the Viura‑1B well, was achieved without the need for a coil tubing unit, resulting in cost savings. The well was tested at rates of 3.5-7.1 mmcf/d. The reinstatement of production is delayed due to technical and equipment issues.

FORMER SOVIET UNION

Nostrum Oil & Gas (NOG LN): 2Q25 results – 1H25 production in Kazakhstan was 16,974 boe/d. Net debt at the end of June was US$473 mm.

MIDDLE EAST AND NORTH AFRICA

Gulf Keystone Petroleum (GKP LN): 2Q25 results. New dividend – 1H25 gross production in Kurdistan was 44.1 mbbl/d. The company expects to produce 40-42 mbbl/d in 2025 with net capex of US$30-35 mm (US$25-30 mm previously). A dividend of US$25 mm mm has been declared for 1H25 (US$21 mm for 1H24). In 2027, Gulf Keystone will install a water handling facility at PF-2 unlocking 4,000 - 8,000 bbl/d of incremental gross production. Net cash at the end of June was US$99 mm.

SUB-SAHARAN AFRICA

Invictus Energy (IVZ AU): Strategic investor and creation of a JV dedicated to Africa E&P – Al Mansour Holdings is acquiring 19.9% of Invictus for A$37.8 mm at a share price of A$0.095. Al Mansour will also provide up to US$500 mm of conditional future funding for the Cabora Bassa project in Zimbabwe. Al Mansour and Invictus have established a joint venture company, Al Mansour Oil & Gas, focused on acquiring producing and near-term development oil and gas assets across key jurisdictions in Africa.

Savannah Energy (SAVE LN): Trading update in Nigeria – Gross production from January to July averaged 21 mboe/d. Net debt at the end of July was US$592 mm.