WTI (June) $83.85 +28c, Brent (June) $89.50 +49c, Diff -$5.65 +21c
USNG (June)* $1.92 -4c, UKNG (May) 71.88p -5.12p, TTF (May) €28.3 -€1.815
*USNG May contract expiry

Oil price 

In the end oil was up last week but WTI only by 74 cents, Brent was up $2.21 and the two should even each other out after the latter June contract expires tomorrow. Elsewhere things are quiet and it appears that there are peacekeeping operations going on everywhere. 

Arrow Exploration Corp

Arrow has announced the filing of its Annual Audited Financial Statements and Management’s Discussion and Analysis for the quarter and year ended December 31, 2023 and the filing of its 2023 year-end reserves report, which are available on SEDAR (www.sedar.com) and will also shortly be available on Arrow’s website at www.arrowexploration.ca.

Full Year 2023 Highlights:

• Significant 79% growth in total oil and gas revenue to $44.7 million, net of royalties (FY 2022: $25.0 million).
• Net loss of $1.1 million inclusive of an impairment loss of $11.8 million (FY: 2022: net income of $0.3 million)
• Adjusted EBITDA more than doubled to $27 million (FY 2022: $12.5 million), with Q4 2023 EBITDA of $7.1 million compared to $4.5 million in Q4 2022.
• Cash position of $12 million at the end of 2023.
• Annual average corporate production up 61% to 2,167 boe/d (FY 2022: 1,345 boe/d) with Q4 2023 average corporate production of 2,335 boe/d compared to Q4 2022 1,736 boe/d.
• Realized corporate operating netbacks of $45.17/boe, and $40.49/boe in Q4 2023, due to increased production and better prices of crude oil.
• Funds flow from operations of $19.9 million (FY 2022: $9.5 million) with Q4 2023 funds flow from operations of $3.8 million (FY 2022: $2.0 million)
• Proved and probable reserves at year-end 2023 increased 54% to 11.8 MMboe; representing a reserve replacement ratio of 621%.
• Successfully drilled an exploration well at Carrizales Norte (CN), which added significant reserves to the Company, followed by drilling of two more CN wells
• Drilled six Rio Cravo Este (RCE) wells resulting in material production and reserves increases. Successfully completed two workovers in the RCE-1 and RCS-1 wells at Rio Cravo.
• Drilled two Oso Pardo (OP) wells in the Santa Isabel block, resulting in additional production.
• All operations delivered safely, with no accidents or environmental incidents.

Post Period End Highlights:

• So far in 2024, the Company has drilled six development wells on the Carrizales Norte field in the Tapir Block, which are all currently producing at restricted rates. Ramping production up slowly prevents early water breakthrough in each well.
• Currently mobilizing the drilling rig to the Carrizales Norte B (CNB) pad to start drilling the first horizontal well.

Outlook

• Arrow has a fully funded 2024 work program totaling $45 million targeting up to 16 wells mainly in the Tapir block.
• Most development wells will be drilled in Carrizales Norte, including the Company’s first horizontal wells and recently identified prospects in Baquiano and Mateguafa Attic. 

Marshall Abbott, CEO of Arrow Exploration Corp., commented: 
“2023 was a great year for the Company on all fronts.  We saw substantial growth in production, revenue and EBITDA and our healthy balance sheet supports the aggressive capital program planned for 2024. 

So far in 2024, Arrow has completed drilling of CN-4 through CN-8 and all wells are currently on production. CN-8 was a long reach well targeting the C7 formation. The well was successful in an area that before was not considered prospective and supports the stratigraphic play thesis as well as additional reserves additions.  Arrow is considering a 2024 mid-year reserve report to give investors an indication of the reserves additions discovered by the CN-5 and CN-8 wells.    

Arrow is now moving the drilling rig to the Carrizales Norte B (CNB) pad where the first horizontal well is expected to be spud in May and on production in June. Arrow then plans to drill up to three or four additional horizontal wells at the CNB pad and one water disposal well.  Additionally, Arrow plans to convert one of the Carrizales Norte wells into a water disposal well.

Following work at the CNB pad, Arrow plans to move the drilling rig to the Baquiano pad to drill the first exploration well at Baquiano. With success, two additional Baquiano wells are planned to be drilled. Arrow expects the first horizontal well at Carrizales Norte to have a significant impact on the Company’s production and the Baquiano exploration well to have further significant impact to both the Company’s production and reserves. The Arrow team continues to strive towards operational excellence and increasing shareholder value.”  

The usual rules about FY results apply, nothing new in the numbers but last year was a real cracker for Arrow as seen in this detailed release. Looking at the post period end achievements Arrow has continued to make strong progress, production is increasing and the rig is being mobilised to the CN B pad in order to start drilling the company’s first horizontal well.

This is one of the 16 fully funded wells in the programme for this year and the wells include the potentially exciting horizontals as well as Baquiano and Mateguafa Attic prospects. I am writing a background piece having visited Bogota recently which shows just what an excellent set up Arrow has in Colombia. Finally on technical market terms it was good to see the Canacol stake placed last week and into friendly hands. 

Jadestone Energy

Jadestone has reported its consolidated financial statements, as at and for the financial year ended 31 December 2023.  

The Company will host a webcast at 9:00 a.m. UK time today, details of which can be found in the announcement below.

Key updates:

• Proven and Probable (“2P”) reserves at 31 December 2023 of 68.0 mmboe (31 December 2022: 64.8 mmboe), representing 164% 2P reserves replacement during the year. 2C contingent resources increased slightly to 105.6 mmboe (31 December 2022: 104.3 mmboe).
• Commercial gas sales from the Akatara gas field expected to commence before the end of the second quarter of 2024, consistent with previous guidance.
• March 2024 reserve-based lending (“RBL”) facility redetermination has set a borrowing base of US$200.0 million for the six- month period ending 30 September 2024.
• The 2024 production guidance range is narrowed from 20-23,000 boe/d to 20-22,000 boe/d. The change to the upper end of guidance reflects first quarter Group production performance, which was impacted by both planned and unplanned downtime across the portfolio. Current internal forecasts point to an outcome at the lower end of the updated guidance range, based on first commercial gas sales from Akatara in June 2024, albeit there remains a wide range of possible outcomes, principally based on the timing and nature of Akatara’s ramp up, as well as initiatives underway to optimise production at the Group’s current producing assets.
• 2024 operating cost guidance is unchanged at US$240.0-290.0 million (excluding forecast royalties and carbon taxes totalling c.US$30.0 million).
• 2024 capital expenditure guidance is unchanged at US$80.0 – 110.0 million.
• US$91.3 million loss after tax for 2023 (2022: US$9.2 million profit), principally driven by lower oil prices year-on-year, downtime at Montara for FPSO tank repairs, asset impairments and higher finance costs.
• Net debt of US$78.2 million at 31 March 2024 (31 December 2023: US$3.6 million) reflects c.US$121.8 million of consolidated Group cash balances and US$200.0 million of debt drawn under the Group’s RBL facility.  The end March 2024 net debt figure excludes an estimated US$110.5 million of proceeds for March 2024 liftings which were received in April 2024.

Paul Blakeley, President and CEO commented:
“2023 was a pivotal year for Jadestone, as we continued the deliberate move away from our older legacy assets in Australia towards newer and higher-value, higher-margin assets across the Asia-Pacific region.  During the year we achieved a number of operational and strategic milestones, including significant progress toward first gas at Akatara, a very successful infill drilling campaign offshore Malaysia and 164% replacement of 2P reserves.  Closing the Sinphuhorm acquisition and doubling our interest in the CWLH fields offshore Australia were also key steps in the ongoing diversification strategy. Commercial progress on Nam Du/U Minh in early 2024 provides greater confidence in our medium-term outlook. We also delivered a strong HSE performance during the year, with no lost time injuries, and bolstered our pledge to deliver Net Zero Scope 1 and 2 GHGs from our operated assets by 2040 through establishing interim GHG reduction milestones.

While these positive developments were somewhat overshadowed by a disappointing performance at Montara in the first half of 2023, we have since seen steady progress in the asset’s reliability as the ongoing work to the FPSO has helped support improving uptime.  

Partly as a result of the challenges at Montara and lower realised oil prices the business made a loss of US$91 million in 2023 (2022: US$9 million profit). With stronger oil prices so far this year and our production growing, we expect 2024 to deliver a much better outcome, with the recent March 2024 RBL redetermination setting a borrowing base of US$200 million for the next two quarters, more than double the predicted lending capacity for this period only a year ago and underpinning near-term liquidity. Akatara cashflows and the recent increase in our CWLH stake will further diversify and increase the robustness of our cash generation. 

In recent months, the construction activity at the Akatara gas processing facility (“AGPF”) has been coming to a conclusion in preparation for first gas. The sales gas pipeline has been completed and successfully tested, with four out of the five planned production wells successfully worked over and the first three tested at a combined rate in excess of 30 mmcfd, well above the 25 mmcfd required to meet deliveries under the gas sales agreement.  We currently anticipate that commissioning gas will be introduced into the AGPF followed by commercial gas sales before the end of the second quarter, consistent with our long-standing guidance.  There is still significant activity to complete, but we are on the threshold of a significant milestone for Jadestone. 

Average production for the Group in the first quarter of 2024 was 17,200 boe/d, which primarily reflects the impact on our Australian assets of a very active cyclone season at the start of this year. Accordingly, production guidance for 2024 has been narrowed to 20-22,000 boe/d. Both the 2024 opex and capex guidance ranges are reiterated today.

While the sale process for Woodside’s interests in the Pyrenees/Macedon fields did not proceed, bringing the related share trading suspension to an end, we had provided a competitive and fully funded proposal without any recourse to equity. The learnings from this process provide us with the financial framework to continue assessing the exciting set of inorganic opportunities across the Asia-Pacific region, through which we are well placed to create value from our operating platform and capability. Finally, I would like to take this opportunity to thank my colleagues at Jadestone for their hard work in 2023, and our shareholders for their patience and continued support.”

Again, historic results with nothing new to report, the figures were nothing to write home about as expected with impairments to boot. Also, guidance for this year was trimmed due to the weather which clearly took the sting out of the share price.

But the webcast was understandably positive, there is much to be positive about with Akatara imminent and the numbers from there can only go one way. So I think that they will beat the guidance and as Paul Blakeley said, Jadestone is moving back onto the front foot but for now it’s all about delivery. For those who didn’t see it my recent interview with Mr Blakeley is below.

Core Finance CEO Interview: Paul Blakeley of Jadestone Energy 

Beacon Energy

Beacon has announced that the drilling rig for the SCHB2 sidetrack has been released by the previous operator and will shortly commence mobilisation to the Erfelden site.

Sidetrack operations are expected to commence on or around 8 May 2024. The sidetrack operation itself is expected to take approximately 14 days. Once the rig has been demobilised from the Erfelden site, production is expected to re-commence during the last week of May 2024.

A further update will be provided following completion of sidetrack operation and once a stabilised and sustained flowrate has been achieved.

Larry Bottomley, CEO of the Company, said:
“We look forward to the commencement of the sidetrack operation and remain fully focussed on establishing the optimal production capacity of the SCHB-2 well. Once a sustained flow rate is achieved, the Company aims to move swiftly to optimise and update the Erfelden Field Development Plan, a Competent Persons Report and debt funding workstreams required to accelerate further development drilling to realise the full potential of the Erfelden field. We look forward to the results of this operation and providing an update to shareholders in due course.”

A crucial time coming up for Beacon, they seem pretty positive about a ‘sustainable flow rate’ and assuming it works then the new CEO will have to work on the Erfelden FDP but let’s not run before we can walk eh?

i3 Energy

i3 Energy has announced the audited results for the year ended 31 December 2023.  A copy of the Company’s financial statements will be made available shortly on the Company’s website at https://i3/energy as well as filed under the Company’s profile on SEDAR+ at www.sedarplus.ca and will be posted to those shareholders who make or have made a request to receive a paper copy.  

(1) Non-IFRS measure. Refer to Appendix B

ACHIEVEMENTS IN 2023

Record Annual Production

• Record annual production of 20,711 barrels of oil equivalent per day (“boepd”), at the high end of the Company’s 2023 guidance range of 20,000 to 21,000 boepd and 2% above 2022 production.
• Record production achieved despite loss of approximately 3,100 boepd in Q2 due to restrictions associated with the Alberta wildfires, unanticipated apportionment issues associated with the Pembina Peace Pipeline liquids line, debottlenecking projects and twenty scheduled operated turnarounds.

Shareholder Return

• Total dividends of £13.298 million declared and £15.338 million paid in 2023.

Capital Programme

• £23.2 million capital expenditure in 2023 delivered 12 gross (8.0 net) wells, which were completed on budget in a high inflationary environment.

Debt Re-financing

• Successfully completed a CAD 100 million, 3-year, first lien Debt Facility with Trafigura Canada Ltd. (a subsidiary of Trafigura Pte Ltd.) and redeemed the H1 2019 Loan Notes in full.

Reserves Replacement

• Managed to maintain Proven (“1P”) and Proven plus Probable (“2P”) reserves essentially flat, despite a significantly lower capital programme in 2023 relative to the prior year, with a very healthy 2P reserves life index of 23.0 years.
• The Group now has over 390 gross booked drilling locations in its audited reserves and over 950 including un-booked locations.
• Extensive Planned Maintenance Programme Executed
• Scheduled turnaround programmes successfully completed on 20 operated facilities, on-time and on-budget.

ESG Performance

• Completed the electrification of 25 pumpjacks in Carmangay and Retlaw to reduce use of diesel and propane for power generation, with a further two electrifications underway, which will eliminate 4,268 tonnes of CO2 (“tCO2”) emissions annually.
• Completed electrification of two natural gas generators, resulting in an annual emission reduction of 907 tCO2 equivalent (“tCO2e”).
• In 2023, we replaced 295 gas driven pneumatic pumps with solar powered pumps, which is expected to eliminate 8,971 tCO2 emissions annually.
• Launched an alternative Fugitive Emissions Management Programme, utilising airborne methane imaging technology which is expected to reduce fugitive methane emissions by 50% relative to 2022.
• Converted high-pressure natural gas driven pneumatics to compressed instrument air at three of i3’s locations to reduce methane emissions equal to over 660 tCO2e annually.
• Ongoing annual abandonment and reclamation programme abandoned 46 wells, 26 pipelines and decommissioned 16 well sites, representing approximately 12% of operated non-producing wells.

OUTLOOK

A summary of key events which occurred after the reporting period are presented in note 24 to the financial statements. The Company’s focus for the remainder of 2024 will be on three key areas:

1. The growth of i3’s Canadian business through the deployment of capital into its large proven undeveloped reserves base, operational excellence to improve uptime and field performance, and strategic upsizing and/or repositioning of its core areas through M&A;
2. Maintaining flexibility to adapt to economic developments while maximizing total shareholder return; and
3. Conducting its operations safely and in an environmentally secure manner.

The Company continuously evaluates opportunities to strengthen its balance sheet whilst maintaining tight control of its costs and working capital position.

Majid Shafiq, CEO of i3 Energy plc, commented:
“i3 entered 2023 with strong momentum following a very successful Q4 drilling campaign in 2022, proceeding to drill and tie-in 8 wells in our Wapiti, Central Alberta and Clearwater acreage before the Spring break up period last March. However, as became common for 2023, the market was hit by volatile commodity prices, and, alongside natural disasters like the Alberta wildfires, and planned turnarounds and debottlenecking projects, i3 moved quickly to revaluate its capital programme and protect its balance sheet. We proceeded to focus on low-risk wells in our core production assets and appraisal wells in the Clearwater and are very pleased with the results, which were delivered on budget even in an inflationary cost environment.  Despite these challenges and due to our ability to adapt our portfolio and investment and drilling strategy quickly, i3 achieved record annual average production of 20,711 boepd. This is a testament to the quality of our low decline production base, our low-risk drilling inventory and the skills and dedication of our employees.

As reported post-period end, i3’s 2023 audited reserves report showed little change in 1P and 2P reserves, reflecting successful operational management and the quality of the Company’s portfolio, and was achieved despite the mid-year change in capital budget and programme. With more than 390 booked (gross) drilling locations, i3’s reserves report exhibits a strong and diverse asset base which can support growth through the business and commodity cycles, and we look forward to advancing our growth initiatives in the near term.

Financially, i3 was well funded in 2023, supported by the negotiation of a new CAD 100 million facility with Trafigura early in the year, and the settlement of our outstanding £22 million Loan Notes. Post-period, the Company has since established a CAD 75 million non-amortising credit facility with the National Bank of Canada, which allowed the Company to repay the Trafigura loan facility. i3 has benefitted greatly from building a strong relationship with Trafigura, a sophisticated oil and gas trader, but with the Company’s focus on Canadian growth, recognised the significance of having a Canadian bank support us in country. Also post-period, the Company sold its non-core royalty production for circa USD 25mm at a cashflow multiple far in excess of the Company’s trading value, which combined with the new credit facility has significantly strengthened our balance sheet and provides financial flexibility to manage fluctuating market conditions.

i3 was pleased to return £15.338 million in dividends to investors in 2023 and remains committed to delivering shareholder value via cash returns and growth. Management continuously weighs the expected returns generated through organic portfolio development against potential acquisition opportunities, which we continue to actively evaluate. 

The Company looks forward to 2024 and beyond in a much-strengthened financial position, with a strong balance sheet, and growing relationships with providers of debt capital for growth. Our core asset base continues to perform consistently well and will underpin the development of the significant undeveloped reserve and resource potential in our portfolio. We look forward to executing a successful drilling programme in Canada in 2024, in what we believe will be a more positive pricing environment, growing production and continuing to return cash to shareholders to deliver on our total shareholder return model.”

Again nothing at all new here, indeed the RNS from last Thursday with its guidance and dividend was more informative, but at least the detailed results here have all the detail and between them they ensure we know that i3 is in good shape.

SDX Energy

MOROCCO KSR-21 WELL UPDATE

Further to the Company’s announcement on 9 January 2024, SDX confirms that the KSR-21 well has received the necessary government approvals and production of gas has commenced.

After the complaints about extra long announcements up comes this, so beware of what you wish for…

Petrofac

Petrofac today announces a delay to its audited full year 2023 results which it now expects to publish by 31 May 2024. The Company also reports the progress made with creditors on its financial restructuring and issues a trading update.

Delay of full year 2023 results and temporary suspension of shares

The Company expects a short delay in issuing its audited full year 2023 results, which it now expects to publish by 31 May 2024. Although the audit is substantially progressed, the Company and its auditor require additional time to complete the annual report.

As a result, in accordance with the Financial Conduct Authority’s (FCA) Disclosure and Transparency Rules and Listing Rules for the publication of audited financial statements, the Company has engaged with the FCA, and trading in the Company’s shares will be temporarily suspended from 7.30 a.m. on 1 May 2024 until its full year 2023 results are published.

Update on Strategic and Financial Options

As part of the Group’s ongoing financial restructuring, an ad-hoc group of senior secured noteholders have made a proposal to provide further credit to the business of up to US$300 million, comprising US$200 million of new funds and US$100 million of credit support to help secure performance guarantees for certain of its existing contracts. This non-binding proposal is dependent upon, amongst other things, the Company securing these performance guarantees, and would require the conversion of a significant proportion of the Group’s existing debt to equity.

The Company is in active discussions with credit providers to obtain the required guarantees, which would also release over US$200 million of collateral and retentions, and will provide an update on the outcome of those discussions as appropriate.

This development comes as the Company continues to manage its payment obligations to preserve liquidity whilst progressing the other components of the restructuring with other stakeholders.

The Group’s upcoming payment obligations include amortisation payments due on the Company’s bank facilities and the coupon payment due on its senior secured notes on 15 May 2024.

The Company’s lending banks have agreed to a number of rolling short term deferrals of contractual amortisation payments while the Company progresses the financial restructuring. The Company continues to engage with its lending banks on extending these deferrals as required.

The Company does not expect to make the payment of the bond coupon on the due date of 15 May. The payment has a 30-day grace period. The ad-hoc group of noteholders, representing approximately 41% of the outstanding notes, has entered into a forbearance agreement with the Company, which provides an assurance that those noteholders will not take any action in respect of the non-payment of the coupon until at least 30 June 2024, in order to provide time for the Group’s financial restructuring to be progressed. The Company will seek to engage with other noteholders in the coming weeks.

Managing these payment obligations is of critical importance to the Company’s ability to maintain sufficient liquidity in the short-term while it is working to implement the financial restructuring.

Good progress is also being made with non-core asset disposals, with non-binding offers received for the Group’s share in the PM304 Production Sharing Contract (PSC) in Malaysia, the process for which could be completed in Q3 2024. Offers are in line with the value of anticipated cash flows (subject to oil price and oil premium assumptions) over the remaining term of the PSC which expires in September 2026.

Trading Update

In its Trading Update of 20 December 2023, the Company highlighted a risk in relation to the timing of the negotiations on the Thai Oil Clean Fuels project. Petrofac and its joint venture partners remain engaged with its client in relation to the reimbursement of additional project costs. At the time of reporting the full year 2023 results, management does not expect to have progressed discussions sufficiently to recognise the expected outcome of the negotiations in its accounts. As a result, the Company expects to recognise an incremental loss in its E&C division of approximately US$130 million for 2023.

Net debt at 31 December 2023 was US$583 million, which was lower than guided on 20 December 2023 and in line with the interim results, reflecting the continued efforts of the Group to manage its payment obligations.

Asset Solutions has incurred additional costs on one of its Engineering, Procurement, Construction, and Commissioning (EPCC) contracts, and expects to report an EBIT for 2023 which could be up to US$15 million to US$20 million lower than previously guided, pending the outcome of negotiations.

The Group’s financial performance for the year ended 31 December 2023 is otherwise expected to be broadly in line with the Trading Update of 20 December 2023.

René Médori, Chairman, said:
“The Board and management are focused on arriving at a comprehensive refinancing solution as quickly as possible. We are encouraged by the engagement with the ad-hoc group of noteholders, which we hope demonstrates momentum in this complex process. We remain grateful to all our stakeholders for their patience and continued support of Petrofac.”

Tareq Kawash, Group Chief Executive, said:
“Operational activity continues as expected and our teams are delivering well in the initial phases of the contracts awarded in 2023. On the Thai Oil Clean Fuels contract, we are working closely with our client and partners to accelerate delivery of this complex project and conclude negotiations on the reimbursement of costs. While the commercial negotiations will only conclude after our full year reporting cycle, we are making progress.

“Petrofac has a large order book of high-quality projects, strong market positions and compelling future opportunities which are evident from the recently announced awards. We are working to put the performance guarantees and the right capital structure in place, in order to deliver on this potential.”

Things are not looking good at Petrofac and I have to admit that I didn’t see it coming. The company are in discussions with their lenders, never a good phrase to hear and there is a profit warning in this as well. Spending some time with our auditors also sounds grim and one has to wonder if the ‘large order book of high quality projects’, strong market positions and compelling future opportunities’ is a figment of the imagination. This one could go either way…

KeyFacts Energy Industry Directory: Malcy's Blog