Malcy’s Blog – Oil price, Arrow Exploration Corp, Longboat Energy & finally

WTI (Feb) $72.40 -28c, Brent (Mar) $78.29 +14c, Diff -5.89 +42c.

Author @mgrahamwood

USNG (Feb) $2.90 -41c, UKNG (Feb) 73.17p -1.82p, TTF (Feb) €28.715 -€0.84

Oil price

Another tit for tat day in the crude market, as following Houthi rebels hitting a bulk carrier, the US fleet responded by attacks on the Yemen. Milder weather in the US saw the natural gas price lose some of the huge gain that it had had in recent weeks.

Arrow Exploration Corp

Arrow has given an operations update and report the exercise of options by a Director and PDMR. 

Carrizales Norte Update

The Petroworks 1,500-horsepower rig has arrived at the Carrizales Norte (CN) field in the Tapir block and is currently being erected. Arrow expects the CN-4 well, targeting the Ubaque formation at CN, will spud in the latter half of January.

CN-4 will be followed by CN-5 which will test the Carrizales Noroeste prospect. The CN-5 well is expected to spud in February. Following CN-5, the Petroworks 1,500 horsepower rig will remain at the CN pad and continue development of the CN field targeting the C7 formation.

Arrow is currently constructing the CN horizontal well pad (B Pad) and expects construction will be completed in March. Once the pad is complete the Company plans to bring in a 2,000-horsepower rig to drill the Company’s first horizontal well (CN HZ-1).  On success, Arrow plans to follow the first well up with additional horizontal wells from the B Pad.

Mateguafa Attic and Baquiano Updates

Work has begun upgrading the Mateguafa pad and construction of the Baquiano road and pad, both of which are located in the Tapir block. 

The plan is for the first Mateguafa Attic well (MA-1) to spud in late Q1 or early Q2 using an additional 1,500 horsepower rig. The Company expects the Baquiano prospect to be drilled later in 2024.

Oso Pardo

Oso Pardo-1 (OP-1), on the Santa Isabel Block in the Middle Magdalena Valley Basin of Colombia, where Arrow has a 100 per cent working interest, is back on production after the pump was changed in late December.  The Oso Pardo-3 (OP-3) and Oso Pardo-4 (OP-4) development wells were both drilled successfully targeting the Umir formation. The completion of these wells is pending well stimulation operations, to mitigate typical skin damage, which the Company plans to complete in Q1.

Options Exercised

Arrow announces that a Director exercised 2,277,721 options for common share of no par value (“Common Share”).  A summary of the options exercised is as follows (all figures converted to pounds sterling):  

 The option exercise was accepted by the Company on January 15, 2024.  The options, some which were set to expire immediately, were exercised at this time as the Company is expected to be continually operationally active over the next six months with limited periods in which Directors would be able to exercise options. The options have been exercised on a “cashless” basis. Under the terms of the Company’s share option plan approved at the Company’s AGM on 20 September 2023, this ‘cashless’ method results in the Company paying the option holder the value of the option (market price less strike price) from cash reserves. Accordingly, no new shares were issued for the option exercise.

Following the exercise of the options referred to above, there has been no change in the shareholding of PDMR’s and Directors. Mr. Abbott holds 5,369,702 Common Shares (representing 2.29 per cent of the issued Common Shares).

Arrow expects the CN-4 well, which is targeting the Ubaque formation in the Carrizales Norte to spud later this month. Then the CN-5 well will test the technically interesting Noroeste project, it is worth listening to the comments of CEO Marshall Abbott, on interview with me last week with regard to this prospect and the link is below.

Also he comments on the Matequata Attic and Baquiano prospects which are scheduled for Q1 and Q2, at the time the company will be constructing the pad which will enable drilling of the company’s first horizontal well. Elsewhere at Oso Pardo the OP-1 well is back on and the OP-3 and OP-4 wells are waiting for stimulation operations.

Core Finance CEO Interview: Marshall Abbott, Arrow Exploration

Longboat Energy

Longboat has announced the award of a new licence under the Norwegian 2023 APA Licensing Round to its Norwegian joint venture, Longboat JAPEX Norge AS  and to provide an update on the completion of the acquisition of the Statfjord Satellites.

Licence 1212 S Block 35/7, 10 – Magnolia 

Longboat JAPEX is pleased to announce it has been awarded a 20% interest in Licence PL 1212 S which contains the Magnolia prospect, together with partners Equinor Energy AS (operator) 40% and DNO Norge AS (40%).

Magnolia lies in the prolific Northern North Sea, an area in which Longboat JAPEX has built a significant presence since 2021 pursuing an emerging Paleogene injectite play. The Magnolia area includes the Company’s significant Kveikje discovery (Company 10%), the Kjøttkake/Lotus exploration well (Company 15%) which is expected to spud in Q3 2024, and the Jasmine and Sjøkreps prospects (Company 25%) located in PL1049. The Lotus and Jasmine/Sjøkreps prospects were recently subject to a successful farm-down by Longboat JAPEX to Concedo. 

The Magnolia prospect comprises Eocene injectite sandstones, analogous to the Kveikje reservoir, characterised by good quality reservoir properties, with seismic amplitude support. The Magnolia award allows Longboat JAPEX to continue to build its presence in this prolific exploration and development area and exploit its deep knowledge of injectite reservoirs gained through the Kveikje discovery.

The Company estimates Magnolia to contain gross mean prospective resources of 39 mmboe* with further potential upside estimated at 57 mmboe*. The chance of success associated with the Magnolia prospect is 34%* with the key risk being hydrocarbon retention and phase.

If successful, Magnolia and Kjøttkake/Lotus are likely to form part of an area cluster development together with several other recent discoveries in the area. The Magnolia licence award further increases the attractiveness of Longboat JAPEX’s existing position in the Northern North Sea.

The work programme consists of the acquisition and/or reprocessing of modern 3D seismic and G&G studies within the initial one-year period.

Statfjord satellites acquisition update

The fifth and final of the new infill wells in Statfjord Øst redevelopment has now been successfully drilled and the Statfjord Øst and Sygna fields are expected to start ramping up production during Q1 2024. The transaction is progressing towards completion, which is expected at the end of this month.

Helge Hammer, Chief Executive of Longboat, commented:

“We are pleased to have been awarded this additional licence, which will add to our core area around Kveikje, where Longboat has already discovered significant volumes and will be drilling the carried exploration well on Kjøttkake/Lotus later this year. We look forward to working with our partners to build on the success and add further value in this emerging development area.”

A typical addition to the portfolio by Longboat and the Statfjord 5 well is now ramping up production.

And finally…

In the FA Cup 3rd round replays Wolves beat the Bees, Hull lost to Birmingham, the Hatters beat Bolton and the Robins had a good win agains the Hemmers while Newport’s victory at Eastleigh gave them a dream draw against the Red Devils at home in the next round.

Tonight Blackpool play Forest, Bristol Rovers host the Canaries and the Eagles go to the Toffees.

Later today the England 6 Nations squad will be announced, some new names I suspect after the totally useless tie their hands behind their backs by limiting selection…

Author @mgrahamwood

Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. The writer may or may not hold investments in the companies under discussion