WTI (June) $94.81 -27c, Brent (July) $100.26, Diff -$5.25 -94c.
USNG (June) $2.77 +4c, UKNG 111.47p +2.92p, TTF (June) €44.2 -€0.445.
Oil price
Oil is up only a little today, WTI by 53c and Brent by $1.16 despite renewed skirmishes in and around the Gulf as both sides claimed that the other had started a shootout in the Strait of Hormuz. What might change things is that the Wall Street Journal has apparently claimed that Saudi Arabia and Kuwait have lifted the ban on US military access to their bases and airspace.
Arrow Exploration
Arrow has provided an update on operational activity at the Mateguafa Attic field on the Tapir Block in the Llanos Basin of Colombia where Arrow holds a 50 percent beneficial interest.
Mateguafa H-Z12 Well
The Mateguafa HZ12 well (M-HZ12) was spud March 27, 2026, and reached target depth on April 7, 2026. The M-HZ12 well was drilled, on time and under budget, to a total measured depth of 13,824 feet (8,455 feet true vertical depth) and encountered multiple hydrocarbon-bearing intervals.
Arrow put M-HZ12 on production on April 16, 2026 in the Carbonera C9 formation (“C9”), which has approximately 30 feet of net oil pay (true vertical depth) at this location. The pay zone is a clean sandstone exhibiting an average porosity of 24% with high resistivities. An electric submersible pump (ESP) has been inserted in the well after perforating. During the clean-up period the well reached a maximum rate of 668 BOPD gross (334 BOPD net) before settling into the current stable production rate.
The M-HZ12 well also encountered approximately 15 feet of net oil pay (true vertical depth) in the Carbonera C7 formation (“C7”).
The well is currently on production at 33/128 choke, 36 Hz pump frequency resulting in a heavily restricted rate of approximately 564 BOPD gross (282 BOPD net). The oil quality is 32° API and there is a 60% water cut (completion fluid and formation water).
The testing results indicate that the well is capable of higher rates, and the ultimate flow rate will be determined over the coming weeks of production.
Initial production results are not necessarily indicative of long-term performance or ultimate recovery.
Mateguafa Pad
The Mateguafa Pad currently has the following wells on production:
|
Well |
Production Gross BOPD |
Production Net BOPD |
Water Cut |
Formation |
|
M-HZ12 |
564 |
282 |
60% |
C9 |
|
M-11 |
460 |
230 |
50% |
C7 |
|
M-10 |
336 |
168 |
67% |
C7 |
|
M-HZ9 |
948 |
474 |
64% |
C9 |
|
M-HZ7 |
1,850 |
925 |
49% |
C9 |
|
M-6 |
236 |
118 |
56% |
C7 |
|
M-5 |
366 |
183 |
87% |
C9 |
Forward Drilling Plans
The rig is currently at the Icaco pad where the Icaco 1 (A-1) well, an exploration well, was spud on May 5, 2026. Dependent upon the success of the A-1 well, Arrow plans a development program at the Icaco location.
The Company is also in the process of contracting a workover rig for a number of recompletions on the Tapir block. Arrow expects the workovers to begin late in the second quarter.
Production
Including the restricted production from the M-HZ12 well, total gross corporate production is approximately 5,000 boe/d. Currently the CN-HZ12 well is offline waiting on a workover. The well was producing approximately 330 BOPD gross (165 BOPD net) when it was shut in. Arrow has also shut in the Pepper gas field due to low natural gas prices in Alberta which was producing approximately 130 boe/d when it was shut in.
Prices
During March and April 2026, Arrow’s oil field realized prices averaged $87 US/barrel and $90 US/barrel respectively, which reflects the increase in Brent oil prices caused by the unrest in the Middle East. Brent averaged $103.13 and $103.91 during the March and April 2026 periods.
Field prices reflect the deduction of the Vasconia differential and logistics fees (mostly transportation and quality differential) and are the prices Arrow receives for production.
Cash Balance
On May 1, 2026, the Company’s cash balance was US$24.2 million. The Company continues to have no debt.
Tapir Extension
Arrow and its partner in the Tapir block remain in discussions with regulatory employees on the extension of the Tapir block. To date the dialog has been very constructive and we are working towards an agreement. Management remains very confident that the extension will be granted. Once the Colombian Federal election has been decided Arrow expects the focus of the regulatory bodies to return to the extension application process. The Company will continue to update the market on developments as they occur.
Marshall Abbott, CEO of Arrow commented:
“The continued success of the Mateguafa wells reinforces the materiality of the Mateguafa field to Arrow. Future work at Mateguafa will include both horizontal and vertical development wells, workovers and co-mingling.”
“The Icaco prospect has been developed by the Arrow team using both 2D seismic and the more recently shot 3D seismic program. The Icaco prospect demonstrates the same technical scope and repeatability of the play type that has proven to be highly successful for Arrow in the Tapir Block in the Llanos Basin of Colombia. Management looks forward to updating shareholders on the progress at Icaco in the near term.”
“Arrow aims to maintain a strong balance sheet with a healthy cash position, no debt and significant cash flow. This provides a stable platform with optionality to pursue both organic growth and accretive acquisitions.”
This is yet another highly successful well for Arrow at the Mateguafa Attic field in the Tapir Block and the M-HZ12 well is already on production having encountered oil pay in both the C9 and C7 intervals.
Production is currently running at some 564 b/d (gross) having reached a maximum rate of 668 b/d during clean up and there is a clear indication that as it is on a highly restricted choke the well is capable of higher rates and that ‘the ultimate flow rate will be determined over the coming weeks of production’.
This shows just what a gem the Attic is turning out to be and CEO Marshall Abbott confirms that view by saying ‘the continued success of the Mateguafa wells reinforces the materiality of the Mateguafa field to Arrow. Future work at Mateguafa will include both horizontal and vertical development wells, workovers and co-mingling’.
Arrow now has around 5,000 b/d of production which delivers high realisations at current netbacks and as at 1st of May the cash total was $24.2m and with no debt the company is fully funded for all its upcoming drilling programme.
And the next stop in the programme is the Icaco prospect which looks highly prospective after the 2D and more recent 3D seismic data which shows that it ‘should demonstrate the same technical scope and repeatability of the play type that has proven to be highly successful for Arrow in the Tapir Block in the Llanos Basin of Colombia’.
I am delighted that my confidence in Arrow is being rewarded by this fantastic run of drilling results so far this year and the shares are already rewarding holders, up 10% today but also up a healthy 88% on six months and 42% y/y.
Accordingly, with a strong cash position making for a robust balance sheet, exciting drilling upcoming at Icaco and the Mateguafa Attic being prepared for a bigger pad, more wells are on the way. My target price remains at 40p, the shares are fully justifying their spot in the Bucket List and my confidence in Arrow is obviously undimmed after this excellent result with the drill bit.
Diversified Energy Company
Diversified has announced its financial and operational results for the three months ended March 31, 2026.
First Quarter and Recent Highlights
- Camino Natural Resources Acquisition: Innovative Carlyle acquisition financing structure utilized for joint acquisition of $1.175B Oklahoma asset, further expanding the Company’s leading Oklahoma operations
- Closing of Sheridan Acquisition: Acquisition closed on April 30th, adding ~62 MMcfepd of production and ~$52M of NTM EBITDA contiguous to our portfolio of assets in East Texas
- Shareholder Returns: Returned $94M to shareholders in 1Q26, including $72M in share repurchases in conjunction with the full exit of EIG, the former primary owner of Maverick Natural Resources
- Portfolio Optimization: Recorded over $100M in proceeds from optimization activities in 1Q26, further extending the Company’s ability to generate material free cash flow from its extensive portfolio of assets
- Expanded Non-Op Portfolio: Expanded to three non-op partnerships with leading operators, including Mewbourne (Anadarko Basin) and Continental Resources (Permian Basin), positioning the Company to increase future production and reserves from highly profitable new wells
First Quarter 2026 Results
- Average production: 1,198 MMcfepd (200 Mboepd)
- Production exit rate(a): 1,228 MMcfepd (205 Mboepd)
- Total Commodity Revenue: $556M
- Net Loss: $161M, inclusive of $398M loss on non-cash unsettled derivatives
- Adjusted EBITDA(b): $287M
- Operating Cash Flow: $169M
- Adjusted Free Cash Flow(c): $160M after $11M of transaction costs
- Capital Expenditures: $58M
Rusty Hutson, Jr., CEO of Diversified, commented:
“We are off to a terrific start in our 25th year of business. In this year of celebration and reflection of our history, I am very pleased that our teams started 2026 by delivering another strong quarterly performance, and were able to produce year-over year adjusted free cash flow growth of 157%, while managing through a quarter that saw Winter Storm Fern and the war in Iran creating challenging operating conditions and nearly unprecedented commodity price volatility. Importantly, the robust cash flow generated by reliable production of our assets allowed us to further strengthen the balance sheet through $92 million of systematic debt reduction, returned $94 million to shareholders through a combination of dividends and share repurchases, and deployed capital into two strategic acquisitions.
Looking ahead, I am incredibly excited about the future of Diversified Energy. With the Sheridan acquisition recently closed and the innovatively structured Camino acquisition, with our partners at The Carlyle Group, expected to close in the third quarter, we are once again transforming our platform and enhancing our long‑term positioning as the leading consolidator of cash-generating energy assets in the US. On a pro forma basis, these transactions increase our cash flow and expand our vast acreage position, creating significant optionality within our portfolio optimization program. Our scale positions Diversified to benefit from powerful, long‑term demand drivers, including power generation, data center growth, LNG exports, and the continued importance of U.S. energy production amid global geopolitical uncertainty. As the largest individual shareholder in Diversified Energy, I believe our differentiated and proven business model, expanded footprint, culture of focused execution, and our ability to generate consistent free cash flow position us better than ever before to capitalize on these trends and drive sustainable, long‑term shareholder value.”
Yet again DEC has provided another good set of results with increasing production and with its trade mark cash flow generation and smart acquisitions, this time accentuated by the ‘innovative’ Carlyle financing structure.
Indeed the company continues to deliver really powerful M&A deals, the Sheridan deal has just closed and the Camino deal with Carlyle as discussed above is expected to close in the third quarter. CEO Rusty Hutson Jr states that ‘we are once again transforming our platform and enhancing our long‑term positioning as the leading consolidator of cash-generating energy assets in the US’.
So, this combination was good news for shareholders as DEC returned $94m to them through a combination of dividends and share repurchases and that is before making capital available for these major strategic acquisitions.
Diversified remains, as long as it has a foothold in the London market, a high quality and in its own way, unique investment proposition. Having watched them closely since their arrival in London the model has rewarded shareholders and recent performance has justified both their Bucket List position and my target price of 2,500p.
| Financial and Operational Metrics |
|||||
| Three Months Ended | |||||
| March 31, 2026 | March 31, 2025 | 1Q/1Q % Change | December 31, 2025 | 1Q/4Q % Change | |
| Production (Mmcfe/d) | 1,198 | 864 | 39% | 1,198 | 0% |
| Production volume mix | |||||
| Natural gas | 71% | 82% | 72% | ||
| NGLs | 14% | 12% | 14% | ||
| Oil | 15% | 6% | 14% | ||
| Total Commodity Revenue (millions) | $556 | $329 | 69% | $429 | 30% |
| Net Income (Loss) (millions) | $(161) | $(323) | 50% | $196 | (182)% |
| Adj. EBITDA(b) (millions) | $287 | $138 | 108% | $254 | 13% |
| Adj. Free Cash Flow(c) (millions) | $160 | $62 | 157% | $130 | 23% |
Financial Strength and Shareholder Returns
- Liquidity: $529M of credit facility availability and unrestricted cash as of March 31, 2026
- ABS principal reduction: Retired $92M in outstanding debt under certain ABS notes
- Leverage ratio(d): 2.2x as of March 31, 2026;
- Consolidated debt consists of ~72% in deleveraging non-recourse ABS notes
- 1Q26 dividend: $0.29 per share declared
Strategic Execution and Transformational Growth
Camino Natural Resources: Carlyle Partnership in full-force, with joint acquisition of $1.175B Oklahoma asset
- Innovative acquisition financing structure that drives enhanced returns for shareholders and bolsters the continuation of long-term growth
Non-Op Platform Continues to Provide Additional Lever for Value Generation
- Continental Resources Permian Basin joint development program bolsters Non-Op platform alongside Mewbourne JDA in Oklahoma and private operator JDA in the Northwest Shelf
- Oklahoma Joint Development Partnership continues to generate an estimated 60% IRRs with ~135 wells drilled under the JDA in the last 3 years, with ~160 wells remaining in JDA inventory
- Non-Op development efficiently adds incremental production that offsets an estimated ~50% of natural decline (2026 estimated avg. ~10,800 Boepd) annually across three partnerships
- DEC Oklahoma inventory includes 450 economic locations pro forma for Camino
Unlocking Value Through Portfolio Optimization
- Our Portfolio Optimization Program (“POP”) realized over $100M from non-core asset and leasehold divestitures
- Our POP highlights optionality in DEC’s expansive and diverse portfolio to monetize our acreage position via Non-Op Partnerships or leasehold divestitures
- Generated ~$3M of cash flow from environmental credits related to Coal Mine Methane (CMM) in 1Q26
Operations and Finance Update
First Quarter Production
The Company recorded exit rate production as of March 31, 2026 of 1,228 MMcfepd (205 Mboepd)(a) and delivered average daily production of 1,198 MMcfepd (200 Mboepd) for the three months ended March 31, 2026. The Company’s production volume mix was approximately 71% natural gas, 14% natural gas liquids (“NGLs”), and 15% oil, with approximately 66% of production volumes from the Central region and 34% from Appalachia for the three months ended March 31, 2026. Production for the quarter continued to benefit from Diversified’s peer-leading, shallow decline profile.
First Quarter Margin and Total Cash Expenses per Unit
For the three months ended March 31, 2026, Diversified delivered per unit revenues of $4.87/Mcfe(e) ($29.22/Boe) and Adjusted EBITDA Margin(b) of 68%. Notably, these per unit metrics reflect an increase in both revenues and expenses from the incorporation of greater liquids production following the 2025 Maverick Natural Resources & Canvas Energy acquisitions. The Company’s per unit expenses are anticipated to improve as the Company implements its playbook to achieve long-term, sustainable synergies and cost savings. For example, General and Administrative expenses decreased during the three months ended March 31, 2026 compared to prior period levels, despite the higher per unit costs of Maverick, supporting our progress on cost savings and synergy capture and highlighting our ability to profitability add assets due to our scale and existing capabilities.
| Three Months Ended | |||||||||||||||||||||
| March 31, 2026 | March 31, 2025 | December 31, 2025 | |||||||||||||||||||
| $/Mcfe | $/Boe | $/Mcfe | $/Boe | $/Mcfe | $/Boe | ||||||||||||||||
| Average realized price(1) | $ | 3.76 | $ | 22.56 | $ | 3.57 | $ | 21.42 | $ | 4.08 | $ | 24.48 | |||||||||
| Other revenue(2)(e) | 0.17 | 1.02 | 0.19 | 1.14 | 0.12 | 0.72 | |||||||||||||||
| Proceeds from divestitures(3) | 0.94 | 5.64 | 0.03 | 0.18 | 0.15 | 0.90 | |||||||||||||||
| Total revenue and proceeds from divestitures, excluding Next Level Energy(4) | $ | 4.87 | $ | 29.22 | $ | 3.79 | $ | 22.74 | $ | 4.35 | $ | 26.10 | |||||||||
| Lease operating expense(5)(e) | $ | 1.19 | $ | 7.14 | $ | 0.91 | $ | 5.46 | $ | 1.12 | $ | 6.72 | |||||||||
| Production taxes | 0.28 | 1.68 | 0.21 | 1.26 | 0.21 | 1.26 | |||||||||||||||
| Midstream operating expense | 0.19 | 1.14 | 0.24 | 1.44 | 0.18 | 1.08 | |||||||||||||||
| Transportation expense | 0.26 | 1.56 | 0.34 | 2.04 | 0.22 | 1.32 | |||||||||||||||
| Total operating expense(6) | $ | 1.92 | $ | 11.52 | $ | 1.70 | $ | 10.20 | $ | 1.73 | $ | 10.38 | |||||||||
| Employees, administrative costs and professional fees(7) | 0.25 | 1.50 | 0.30 | 1.80 | 0.29 | 1.74 | |||||||||||||||
| Adjusted Operating Cost per Unit(8) | $ | 2.17 | $ | 13.02 | $ | 2.00 | $ | 12.00 | $ | 2.02 | $ | 12.12 | |||||||||
| Adjusted EBITDA Margin(9) | 68 | % | 47 | % | 55 | % | |||||||||||||||
| (1 | ) | Total commodity revenue, including settled derivatives. |
| (2 | ) | Total midstream and other revenue, excluding Next Level Energy revenue. |
| (3 | ) | Proceeds from divestitures represents cash proceeds related to asset optimization |
| (4 | ) | Total revenue and proceeds from divestitures related to asset optimization, excluding Next Level Energy revenue. |
| (5 | ) | Total lease operating expense, excluding Next Level Energy lease operating expense. |
| (6 | ) | Total operating expense, excluding Next Level Energy lease operating expense. |
| (7 | ) | Total employees, administrative costs, and professional fees, excluding Next Level Energy. These costs include payroll and benefits for our administrative and corporate staff, costs of maintaining administrative and corporate offices, costs of managing our production operations, franchise taxes, public company costs, fees for audit and other professional services, and legal compliance. |
| (8 | ) | Adjusted Operating Cost per Unit excludes lease operating expense and employees, administrative costs and professional fees attributable to Next Level Energy. |
| (9 | ) | Adjusted EBITDA Margin represents adjusted EBITDA, as a percentage of total revenue, excluding (gain) loss on fair value adjustments of unsettled derivatives. |
Share Repurchase Program
For the three months ended March 31, 2026 and through May 6, 2026, the Company repurchased 5,033,364(f) shares, representing approximately 7% of the shares outstanding.
2026 Outlook
The Company is reiterating its previously announced Full Year 2026 guidance. Following the recently completed acquisitions Diversified expects to realize continued significant operational synergies associated with a larger, consolidated position in Oklahoma, additional cash generation from its portfolio optimization program, and the ability to continue to improve the overall cost structure of its established producing assets while continuing to prioritize returns and Free Cash Flow generation.
| 2026 Guidance(1) | |
| Total Production (Mmcfe/d) | 1,170 to 1,210 |
| % Liquids | ~28% |
| % Natural Gas | ~72% |
| Total Capital Expenditures (millions) | |
| Non-Op JV Partnership | $135 to $155 |
| Maintenance/Other | $70 to $80 |
| Adj. EBITDA(b) (millions) | $925 to $975 |
| Adj. Free Cash Flow(c) (millions) | ~$430 |
| Leverage Target | 2.0x to 2.5x |
| (1 | ) | Includes the value of anticipated cash proceeds for 2026 asset optimization of ~$100 million; based on January 2026 strip prices. Excludes changes in cash from working capital. Does not incorporate recently closed Sheridan Production acquisition or recently announced Camino acquisition. The Company includes Adjusted EBITDA and Adjusted Free Cash Flow in the Company’s Full Year 2026 Outlook. Adjusted EBITDA and Adjusted Free Cash Flow are non-GAAP financial measures and have not been reconciled to the most comparable GAAP financial measures because it is not possible to do so without unreasonable efforts due to the uncertainty and potential variability of reconciling items, which are dependent on future events and often outside of management’s control and which could be significant. Because such items cannot be reasonably predicted with the level of precision required, we are unable to provide an outlook for the comparable GAAP measures. |
And finally…
In last nights Boropa Cup semis Villa saw off Forest easily and will now play Freiburg in the final. In the Plate competition the Eagles cruised through as well and will play Rayo Vallecano in their final.
This weekend the play-offs start, more important the first step towards a higher and more rewarding league. In the Championship tonight Hull host Millwall at 20:00, the second leg is on Monday night. The other match is tomorrow when Boro entertain the Saints, their second leg is Tuesday night. There are also play-offs in League 1 where Stevenage face Stockport County and Bolton host Bradford, in League 2 it’s Grimsby v Salford and Chesterfield v Notts County.
In the Prem tomorrow Liverpool play out of form Chelsea, Wolves visit the Seagulls, the Cottagers host the Cherries, the Red Devils are at the Black Cats and the Noisy Neighbours host the Bees. On Sunday Burnley host Villa, the Toffees visit the Eagles, Forest host the Magpies and the Gooners are at the London Stadium.
Racing is an underrated meeting, the Lingfield Oaks and Derby trials day which I have always not only rated but really enjoyed, and until recently was quite a good pointer to Epsom success.
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.
