Malcy’s Blog: Oil price, Kistos, Arrow, Southern, Petro Matad. And finally…

WTI (Apr) $67.68 +$1.43, Brent (May) $70.95 +$1.39, Diff -$3.27 -4c. 

USNG (Apr) $4.08 -37c, UKNG (Apr) 104.17p -0.28p, TTF (Apr) €42.5 -€0.055.

Oil price

Oil was strong yesterday on favourable news on US inflation and the dollar weakened again. Inventory stats were ok, crude built but by less than forecast and gasoline stocks fell sharply by 5.737m barrels and distillates also fell by 1.559m b’s, twice the whisper.

Kistos

Kistos notes the announcement made today by Vår Energi, the Operator of the Balder Area, regarding the tow-out of the Jotun FPSO from the Worley Rosenberg yard in Stavanger, Norway.

The first stage of the Jotun sail away programme will commence with the FPSO vessel performing inclination tests at the quayside before being towed to Åmøyfjorden for inshore sea trials and anchor installation work. After this, the vessel will be towed to the field for installation. With all 14 production wells completed and associated subsea equipment installed, the tie-up and final commissioning of the Jotun FPSO is expected to be undertaken over the coming months, with first oil targeted for the end of Q2.

The Jotun FPSO sail away represents an important milestone in the Balder Future project and redevelopment of the Balder Area, extending the life of the field beyond 2045. Once online, the project is expected to increase the area’s peak daily production by 80,000 boepd (gross), which is expected to occur approximately three to four months following first oil.

Furthermore, it is expected that the completion of Balder Future and the commitment of the partners to this project will unlock future infill drilling, exploration opportunities, and tie-back developments with a short time to market. Kistos, alongside the Operator, is progressing with further development and exploration projects across the Balder Area with a view to converting 2C resources to 2P reserves in the short to medium term.

Andrew Austin, Executive Chairman of Kistos, commented:

“The Jotun FPSO sail away is a major milestone for the Balder Future project, ensuring it remains on track to deliver first oil by the end of Q2 ahead of reaching peak production by year-end, with 8,000 boepd net to Kistos in addition to the current Balder Area Production of circa 3,000 boepd net. This near-term production uplift is expected to have a meaningful impact on our cashflow.

Beyond first oil, we remain focused on converting contingent resources into reserves and are actively working alongside the Operator to progress the new appraisal and development opportunities that the installation of the Jotun FPSO will offer across Balder. This represents a significant upgrade in the infrastructure to extract hydrocarbons from what is recognised as a prolific basin. We are excited to be part of this journey.”

The Jotun FPSO sailing away is indeed very good news for Kistos and its shareholders, as it starts the usual tests and pre-commissioning ahead of hook-up and then first oil at the end of 2Q 2025. The Balder X development will give Kistos 8,000 boepd net to add to the current circa 3,000 boepd net and is clearly going to deliver ‘a meaningful impact on cashflow’. 

Perhaps more important is that the increase in production brings with it expansion and as mentioned above, opportunities to progress new appraisal and development across the entire Balder project.

Described as a ‘prolific basin’ it can give upgrades to production, reserves and of course cash generation. This adds significant value to the shares which will rise in due course and I would expect to return money to shareholders at some stage and thus are remarkably cheap.

Arrow Exploration Corp

Arrow has announced the results of its 2024 year-end reserves evaluation by Boury Global Energy Consultants Ltd.

All reserves volume figures stated below are on a Working Interest Gross Reserve basis. Currency amounts are in United States dollars (unless otherwise indicated) and comparisons refer to December 31, 2023.

Arrow’s reserves growth in all categories demonstrates the high resource density of our Tapir block.  Further, moving forward, the Company is confident that it can continue to grow through the drill bit at Tapir.

Highlights

–      Proved Developed Producing (“PDP”) reserves:

o  Increased by 92% to 2.38 million barrels of oil equivalent (“MMboe”), driven principally through the successful horizontal drilling campaign in Carrizales Norte, on the Tapir Block, Colombia; and

o  Net present value before tax, discounted at 10% (“NPV-10”) is $71.3 million ($29.89/boe) for PDP reserves.

–      Proved (“1P”) reserves:

o  Increased by 10% to 5.80 million barrels of oil equivalent (“MMboe”), driven principally through the discovery of the Alberta Llanos field and the successful horizontal drilling campaign in Carrizales Norte, both on the Tapir Block, Colombia; and

o  Net present value before tax, discounted at 10% (“NPV-10”) is $114.57 million ($19.75/boe) for 1P reserves.

–      Proved plus Probable (“2P”) reserves:

o  Increased by 15% to 13.62 MMboe; 

o  Before tax NPV-10 is $284.9 million ($20.92/boe) for 2P reserves.

–      Proved plus Probable plus Possible (“3P”) reserves:

o  Increased by 25% to 22.28 MMboe;

o  Before tax NPV-10 is $524.1 million ($23.52/boe) for 3P reserves.

–     Strong well performance that translated into a higher reserves volumes in comparison with the year-end 2023

–     Despite using a lower forecast price deck than 2023, before tax NPV10 values have increased in the PDP, 2P and 3P categories;

–   Before tax NPV-10 per share of US$0.40/share, US$1.00/share, and US$1.83/share for 1P, 2P, and 3P reserve categories, respectively;

–      Excellent Reserves Recycle Ratios of 2.7 for 1P, 4.6 for 2P and 8.7 for 3P; and

–      Reserves Replacement Ratios of 1.34 for 1P, 2.31 for 2P and 4.39 for 3P 

CEO Commentary

Marshall Abbott, CEO of Arrow, commented:

“Our exciting growth story continues and we are pleased to be able to report further material reserves increases from our extensive acreage in Colombia. Arrow delivered significant increases in volumes of 1P, 2P and 3P reserves in 2024, due to the Alberta Llanos Carbonera, Guadalupe and Ubaque discoveries and successfully drilling horizontal wells at Carizales Norte. Reserves replacement ratios amounted to 134% 1P and 231% 2P, showing the sustainability of our business model to continue its growth trajectory into the future. We are pleased with the results of the BouryGEC reserves evaluation, which reinforces the significant value of our Colombian and Canadian assets.

“The BouryGEC 2024 report does not reflect the most recent drilling activity at Alberta Llanos or Carrizales Norte where particularly AB-3 (drilled and on production in Q1 2025) and CN HZ-9 (drilled in Q1 2025 and currently cleaning up) have not been incorporated into the report. The CN HZ-10 well has spud, as part of the further development of the Carrizales Norte field to the north of the existing development with results to be reported in due course.

“Arrow’s prospect inventory is multifaceted and demonstrates the hydrocarbon density of the Tapir block in the fertile Llanos Basin. Over the rest of 2025, we look forward to a successful drilling campaign on a fully funded $50MM capital budget that is balanced between development and low risk exploratory wells”.

I’m looking forward to interviewing CEO Marshall Abbott, hopefully before long as the shares have drifted ahead of this eagerly awaited announcement. The announcement hasn’t disappointed the market and has delivered significant increases in volumes of 1P, 2P and 3P reserves in 2024, due to the Alberta Llanos Carbonera, Guadalupe and Ubaque discoveries and successfully drilling horizontal wells at Carizales Norte.

So, reserves replacement ratios amounted to 134% 1P and 231% 2P, showing the sustainability of the Arrow  business model to continue its growth trajectory into the future, also it should be noted that these numbers do not include recent drilling activity at Alberta Llanos or Carrizales Norte where particularly AB-3 (drilled and on production in Q1 2025) and CN HZ-9 (drilled in Q1 2025 and currently cleaning up) or the CN HZ-10 well on the Carrizales Norte field. 

A company that can virtually double production and still show such excellent reserves replacement is surely a gem and drilling in the last 15 months has been exceptionally successful as we can now see as confirmed by the consultants. 

The shares have had a poor run but in my view this is due to the flaky oil price at the moment and, ironically, investors waiting for this announcement. Arrow has a big upcoming drilling programme and as CEO Marshall Abbott states, ‘the prospect inventory is multifaceted and demonstrates the hydrocarbon density of the Tapir block in the fertile Llanos Basin. Over the rest of 2025, we look forward to a successful drilling campaign on a fully funded $50MM capital budget that is balanced between development and low risk exploratory wells’. 

I remain confident that my target price of 75p is not unrealistic, indeed I consider it if anything to be a touch light and may be reassessed after the upcoming drilling campaign.

2024 Year-End Reserves Summary

Management has presented below a summary of Arrow’s reserves as at December 31, 2024, on a working interest gross reserves basis, which have been estimated by BouryGEC, an independent qualified reserves evaluator, in a reserves report with an effective date of December 31, 2024.  The figures in the following tables have been prepared in accordance with the standards contained in the most recent publication of the Canadian Oil and Gas Evaluation Handbook (the “COGEH”) and the reserves definitions contained in National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”). In addition to the summary information disclosed in this announcement, more detailed information will be included in Arrow’s annual reserves evaluation for the year ended December 31, 2024 to be filed on SEDAR (www.sedar.com) and posted on Arrow’s website (www.arrowexploration.ca).

After tax values have been calculated without taking into account the tax shelter created by capital spending on projects that do not have reserve values associated with them, such as the Tapir 3D seismic project, drilling at Carrizales Norte and annual G&A. Spending on these projects will provide a tax shelter and result in a reduction in future income tax payments. 

Brent Crude Oil Price and AECO Gas Price Forecasts in BouryGEC Reserves Evaluation

Year-End Working Interest Gross Reserves – Breakdown by Category and Country (Mboe)

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

(1)      “Core” assets include Arrow’s share of reserves in the Tapir Block, the Santa Isabel Block (Oso Pardo), and Mateguafa. Arrow’s 50% interest in the Tapir Block is contingent on the assignment by Ecopetrol SA of such interest to Arrow.

(2)      “Non-core” assets include the Ombu Block (which includes the Capella Field)

(3)      “Canada” assets include Fir and Pepper

Year-End Net Present Value at 10% – Before Tax ($ Thousands)

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

Year-End Net Present Value at 10% – After Tax ($ Thousands)

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

Forecast Revenues and Costs – Undiscounted ($ millions)

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

(1)      BT = Before Taxes and AT = After Taxes

(2)      Operating Cost less processing and other income

(3)      Revenue includes Petrolco Income

2024 Year-End Working Interest Gross Reserves Reconciliation (Mboe)

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

Southern Energy

Southern has announced its intention to conduct an equity fundraise to raise aggregate gross proceeds of approximately US$6.0 million (approximately £4.8 million / C$8.5 million) of units of the Company, at a price of 4.3 pence  or C$0.08 per Unit.

The fundraising consists of a placing of new Units to new and existing institutional investors on AIM (the “Placing”) and a concurrent public offering of new Units in Canada (the “Prospectus Offering” and, together with the Placing, the “Fundraising”), including an intended subscription by certain Directors and members of the Company’s senior management. Each Unit will consist of one new Common Share and one half of one Common Share purchase Warrant. Each whole Warrant will entitle the holder to subscribe for and purchase one Common Share at an exercise price of price of 5.3 pence (in the case of the Placing) or C$0.10 per Common Share (in the case of the Prospectus Offering) for a period of 36 months following closing of the Fundraising.

The Fundraising will launch immediately following the release of this Announcement. Research Capital Corporation (“RCC”) is acting as sole agent and sole bookrunner (the “Agent”) in connection with the Prospectus Offering. Tennyson Securities, a trading name of Shard Capital Partners LLP (“Tennyson Securities”) and Hannam & Partners, a trading name of H&P Advisory Limited (“H&P”) are acting as joint bookrunners (the “Joint Bookrunners”) in connection with the Placing. 

Overview of the Fundraising

·    Southern intends to conduct an approximate US$6.0 million equity fundraise to accelerate the completion of its three drilled and uncompleted (“DUC”) wells, drilled as part of its Q1 2023 drilling campaign on its Gwinville acreage, as well as fully funding (alongside cashflow) the drilling of two vertical Cotton Valley wells on its Mechanicsburg acreage;

·    The Company expects to benefit from strengthening U.S. natural gas prices in the near-term, currently                                         > US$4.40/MMbtu (equivalent to C$6.40/MMbtu), further supporting the timing for completion of the DUC wells;

·    The accelerated development program in Gwinville and Mechanicsburg is anticipated to be accretive to Southern through the addition of > US$20.0 million ⁽¹⁾ in proved developed producing (“PDP”) NPV10 value;

·    Based on type curve estimates, the Company expects the Gwinville DUCs, once completed, to have initial production (IP30) rates of approximately 5.5 MMcf/d per well, with expected ultimate recovery per well of approximately 3.5 Bcfe, while the Mechanicsburg wells are expected to have IP30 rates of approximately 4.2 MMcf/d plus 75 bbl/d of liquids per well, with ultimate recovery per well of approximately 3.7 Bcfe;

·   The Gwinville DUCs are expected to have an IRR of 86% ⁽²⁾ while the new Mechanicsburg wells are expected to have an IRR of 77%;

·    Completion of the Gwinville DUCs and Mechanicsburg drilling is expected to begin in Q2 2025 and will provide Southern with a significant platform for organic growth, with production expected to reach > 4,000 boepd by year-end 2025, representing approximately 100% growth;  

·    The Company has identified over 100 additional horizontal drilling locations at Gwinville which it will target for development in appropriate gas price environments. Future wells are expected to achieve a ~ 30% IRR at a natural gas price of US$3.75/MMBtu;

·    The net proceeds from the Fundraising are expected to fully fund, alongside existing cash, cash flows and undrawn debt facilities, the completion of the Gwinville DUCs at a cost of approximately US$2.5 million per well and the drilling of the Mechanicsburg wells at a cost of approximately US$3.5 million;

·    The Company has executed an amendment to the Credit Facility to reduce monthly principal amortization payments to approximately 15% per annum, which is expected to free up more than $2.5 million over the remaining term of the loan to support continued organic growth;  

·    The Company intends to seek the approval of the holders of its outstanding convertible unsecured subordinated debentures (the “Debentures”), by way of obtaining extraordinary resolutions of greater than 66.67% of the aggregate principal amount of the Debentures, to amend the terms of the indenture governing the Debentures such that, subject to and concurrent with the completion of the Fundraising, an amount equal to 102.5% of the principal amount outstanding under the Debentures plus all accrued and unpaid interest as of the closing date would convert into Units at the Prospectus Price (the “Debenture Amendment”). The completion of the Debenture Amendment and the issuance of the Units upon the conversion of the Debentures remain subject to acceptance of the TSXV. The Units to be issued pursuant to the Debenture Amendment will be subject to customary lock-up provisions.

Ian Atkinson, President and CEO of Southern, commented:

“I am pleased to announce the launch of our proposed fundraising today, which will accelerate Southern’s work program, starting with the completion of the three DUC wells in our Gwinville acreage in Mississippi.  After pausing our previous development program at the end of Q1 2023, we are excited to resume operations at Gwinville to capitalize on the significant uptick in Henry Hub natural gas pricing and bring this high-impact production on-line.  Current Henry Hub natural gas pricing is very supportive with balance of 2025 and calendar year 2026 averaging greater than US$4.80/MMBtu and US$4.40/MMBtu, respectively.  In addition, Southern continues to receive strong basis premium pricing that was approximately 15% higher on average than Henry Hub in January and February 2025.   We’ve made a significant capital investment in these wells, and we are now positioned to realize substantial cash flow generation as we rapidly ramp up production in a short timeframe alongside a very constructive natural gas price.

“We continue to see an increasingly positive macro environment for the U.S. natural gas market, and we believe that Southern is firmly positioned to capitalize on the opportunity presented to us through this structural imbalance. Today’s capital raise will enable us to increase our exposure to the opportunity, as we see gas prices react to increasing LNG export capacity from the U.S. Gulf Coast region, increasing natural gas fired power consumption, and seasonal demand factors. I look forward to allocating the raised capital to our portfolio of highly productive and profitable assets, and increasing shareholder value as we enter a resurgent U.S. natural gas market.”

This is a smart move from Southern who have been sensibly holding fire on increased investment in its high quality portfolio of assets and now with a better visibility in US natural gas prices can up production from the asset base. 

Indeed, with Henry Hub looking like a solid $4.80 for the rest of this year and $4.40 for next year Southern are able to inject a measure of gearing into the portfolio by taking advantage of these rack rates and ‘rapidly ramping up production in a short timeframe alongside a very constructive natural gas price’. 

I have written the past that Southern has one of the highest quality managements in the business and in particular one that has invested in the past waiting for prices to rise and not to produce at the wrong prices and waste that investment. 

The company remind us today that they are seeing an ‘increasingly positive macro environment for the U.S. natural gas market, and believe that Southern is firmly positioned to capitalize on the opportunity presented to us through this structural imbalance’. I remain convinced that Southern is indeed one of the best long term value propositions around and hence inclusion in the Bucket List.

Petro Matad

Petro Matad Limited, the AIM quoted Mongolian oil company is pleased to provide the following operational update.

Key Company Updates

·    Heron 1 production continues with c. 25,000 barrels now in storage in Block XIX.

·    The Block XIX operating committee has today confirmed acceptance of the oil sales agreement and execution copies are being uploaded to their online system for sign off.

·    Evaluations are underway to support a set of low-cost activities for 2025 in Block XX focused on operating cost reduction and production increases at Heron 1 and the potential to conduct workovers/well tests at Heron 2, Gazelle 1 and Gobi Bear 1.

·    With oil now flowing from Block XX and the investment environment improving under the current government, Petro Matad is stepping up efforts to secure a partner to accelerate its oil development activities. Discussions with three entities are ongoing.

·    Sunsteppe Renewable Energy is progressing four exclusively held projects with strong government support for the sector.

Operational Update

Block XX

The Heron 1 well continues to produce steadily at c. 200 barrels of oil per day. Pressure data is being acquired to facilitate production analyses to determine what modifications can be performed to increase the sustainable production capacity of the well. To date the well has produced over 25,000 barrels of oil with a water cut of c. 4% and pressure data shows no signs of boundaries encountered within the reservoir as yet. With a recent upgrade to the eastern Mongolian power grid, a short (4 km) tie-in of Heron 1 to the electricity grid can reduce power generation costs significantly, offering a saving in operating expense of c. 25%. The Company is going out to tender for this work.

Oil continues to be shipped to Block XIX. The operating company has today confirmed acceptance of the oil sales agreement and that execution copies are now being uploaded to their in-house online system for sign off. Petro Matad has been chasing for progress on this as the start of revenue is already long overdue. It now appears we are in the final stretch. Even though Block XIX has tank capacity available to store many more months of Block XX production, Petro Matad has been investigating arranging its own shipments and sale of Block XX crude in case of further delay. The current inventory of Block XX oil in the Block XIX facilities constitutes a suitable cargo size to offer for sale. However, the cooperation with Block XIX remains the most cost effective and the preferred solution.

Block XX – Heron 2

Analyses of the Heron 2 well continue in order to evaluate the potential for remedial work that may help deliver a commercial flow rate. That the nearby Heron 1 well has yet to see any pressure impact of a boundary, that might reflect a degradation in reservoir quality (that is suspected as the reason for low production in Heron 2), gives reason to believe that a workover and further stimulation of Heron 2 may be worthwhile. A workover at Heron 2 could be combined in a cost-effective manner with well testing of the nearby Gazelle 1 oil discovery. Gazelle 1 is now considered to be a candidate for test production as it can share the nearby Heron 1 production operation and infrastructure. A well test at Gazelle, if successful in achieving a similar production rate to Heron 1, would pay back within a couple of months. A well test of Gobi Bear 1 is also being considered. Geochemical analysis of rock samples has given an indication of migrated hydrocarbons in the well. More samples are being sent to the contractor to confirm this finding which would give support to the log interpretation of potential oil pay in the well.

In light of the fact that the current Mongolian government acted quickly in 2024 to overcome previous delays and so facilitated operations on Block XX and in 2025 is striving to improve the overall investment climate, Petro Matad is stepping up its efforts to secure a partner to join it in developing the Heron oil field and the rest of Block XX. The Company is targeting financially and technically competent companies with a view to secure an injection of capital investment to drill new wells to accelerate production ramp up and so enhance value. Discussions are ongoing with three entities at this time. The Integrated Service Agreement signed with Mongolia’s main provider of well services, DQE Drilling, for a multi-well development drilling and completion programme remains in force and the Company has the option to utilise this arrangement as may be appropriate and with minor adjustments to facilitate regulatory approval.

Sunsteppe Renewable Energy (SRE)

Mongolia’s coalition government, which came into power in June 2024, has given very strong support for renewable energy and has prioritized reform of the domestic energy sector including the acceleration of tariff increases for end-users, in order to improve the investment environment and to attract local and international investors. In parallel, the Ministry of Energy has announced that Mongolia’s domestic energy demand will double by 2030, increasing by c. 1.6 gigawatts. This highlights the need for new power generation capacity in Mongolia and SRE is well-positioned to capitalise on the opportunities this new government focus is generating.

Additionally, Mongolia is in advanced discussions with Gulf countries including the United Arab Emirates and Saudi Arabia and their respective major renewable energy investors, to accelerate the development of large renewable energy export projects from Mongolia to China. Interactions between the Mongolian and Chinese governments have intensified with China officially agreeing to begin collaboration on Mongolia’s energy export projects. China has announced its need for over 450 gigawatts of clean energy to meet its increasing domestic demand and sees renewable energy imports from Mongolia as a component to meet this need.

Recognising SRE’s international experience and its active involvement in renewable projects in Mongolia, the government invited SRE’s CEO to participate in recent visits to the Gulf and to China and this has given SRE some excellent exposure and insight. In parallel with this, SRE has signed confidentiality agreements with a number of potential investors and has shared with them details of its ever-increasing portfolio of projects in Mongolia.

SRE’s portfolio currently includes four exclusively held projects:

1.    Oyu Tolgoi (OT) mine Green Hydrogen: The completed feasibility study has confirmed the commercial viability of this c. 30MW project comprising a solar and wind plant to generate Green Hydrogen for OT and it offers an attractive internal rate of return of c. 15%. Intensive discussion with OT continues and meanwhile SRE is preparing for the construction of the first 4.8MW phase of the project and has engaged with leading Chinese and international contractors with proven expertise in Green Hydrogen facilities for the execution of phase 1 and of the entire project. In line with the Japanese government grant timing, project construction is set to commence within 2025. Discussions with OT on an offtake agreement to include Hydrogen and power are set to start and once this agreement is finalised, SRE will look to introduce investors and debt providers. Interest for equity and debt participation has already been expressed by potential partners.

2.    Choir 50MW Battery Energy Storage System: The original timescale for this project has slipped pending land allocation for the facilities but suitable land within 3 km of the substation tie-in point is expected to be offered by the authorities shortly following last week’s Cabinet approval of Mongolia’s countrywide 2025 land plan. Once land is secured, this will allow completion of environmental permitting and the application for the license to construct. This will be followed by negotiation of the Power Purchase and Sale Agreement. SRE plans to bring in investors on equity and debt once this agreement is in place.

3.    1,500MW export to China: SRE has an exclusive cooperation agreement with leading Chinese utility, State Power Investment Corporation (SPIC), for a large export to China project. It is hoped that the vigorous government-to-government discussions now underway to get such export projects moving will allow SRE’s project to advance more quickly than was originally envisaged. SRE is keen to retain up to a 30% interest in this mega-project in the construction phase, in order to attract interest from some of the major international investors with whom SRE is in discussion. SPIC so far seems open to SRE’s aspiration.

4.    200MW Hybrid project: SRE has signed an exclusive agreement with Mongolia’s Bodi Group which is developing a 600MW energy project. So far one 150MW coal fired power station has been commissioned with another 150MW phase under construction. Bodi and SRE are partnering to develop renewable energy capacity alongside the power plant. This project is particularly attractive as it has an approved Power Purchase Agreement (PPA) with the Mongolian government at a very attractive sales price of 8.9 US cents per kWh for 600MW and the parties are keen to replace at least 200MW of this with renewable power supplied from a hybrid solar, wind and battery storage plant. SRE is responsible for feasibility studies and securing regulatory approvals. SRE has already identified a suitable solar project site within 30 km of the tie-in point. Bodi will assist in securing land approvals. This renewable energy/decarbonisation project has attracted early interest from multilateral financial institutions and international investors.

Mike Buck, CEO of Petro Matad, said:

“As we prepare for the 2025 operational season, our priority is securing revenue from the sale of Block XX oil. We were pleased to be informed today that the oil sales agreement negotiated with our neighbouring operator in Block XIX is approved and being prepared for sign off. We are looking at the potential to sell cargoes ourselves in case of further delay but the oil sales agreement remains our preference.

When the operating season starts in Q2, we have plans to conduct some relatively low-cost activities to reduce the Heron 1 operating expense as well as to enhance production and so increase revenue. With the completion of ongoing evaluations, these activities will focus on some or all of the Heron, Gazelle and Gobi Bear wells.

Our efforts at Heron coupled with the new government’s efforts to improve the investment climate, create good conditions for us to step up efforts to find a partner for Block XX that can inject capital, and possibly expertise, to accelerate production ramp up and increase project and shareholder value.

We are very encouraged by the performance of SRE. The portfolio continues to grow with additional opportunities currently under evaluation for inclusion. Exclusive agreements are in place on four sizeable projects offering double digit rates of return which are already attracting interest from well-financed prospective partners. We are targeting the finalisation of PPAs on these projects which is the point at which commercial details of partnerships can be negotiated.”

Selling the 200 b/d of production remains a problem but assuming that the sales agreement does eventually get signed then the company can get on and start selling. With 25/- barrels in storage at Block XIX it looks like revenue is just around the corner. 

SRE does look interesting, indeed ‘encouraging’ and with four decent projects on the books their appears to be potentially substantial, ‘double digit’ rates of return the outlook is good.

And finally… 

Last night in the Champions League both the Gooners and Villa went through, after Liverpool went out to PSG on pens on Tuesday.

Tonight in the Boropa Cup the Red Devils play Real Sociedad, Rangers play Fenerbahce and Spurs take on AZ. There is also the Boropa Plate…

And Cheltenham is seeing big falls in attendances, at 8 quid for a Guinness I’m not surprised and a mate was down there and tells me that two double whiskymacs was £38!!! No wonder they are going to Benidorm to watch the races…