WTI (June) $99.93 +$3.56, Brent (June) $111.26 +$3.03, Diff -$11.33 -53c
USNG (June)* $2.69 -3c, UKNG (June)* 108.78p -2.82p, TTF (June)* €43.55 -€1.65
*Denotes expiry of May contracts

Oil price

News on Iran is that an impasse appears to mean that the Strait of Hormuz might remain shut for a while, oil is up sharply this afternoon, WTI is $104.79, up $4.86 and Brent is $116.88 up $5.62.

The announcement that the UAE is to leave OPEC seems to have caught some on the hop, they have only been talking about it for ten years and as a result I am perhaps more circumspect than other commentators. But the current production clearly ain’t going to change anytime soon and the chance to increase their production from 3.4m b/d to the 5m target is a way away. 

The API stats showed a draw of 1.79m barrels of crude, 8.47m in gasoline and 2.6m in distillates, although not bad we shall see when the EIA data comes out later.

But the EIA have also reported US retail gasoline prices for last week, they rose again and over the nation was $4.123 a gallon, up 7.9c week on week. For California it was $5.65 a gallon which will get worse as recent refinery closures will mean that the state will become more dependent on imported products. No surprise that this is all down to compliance demands of California’s green policies that limit refinery output, ironically the West coast is quite isolated from refiners in the south and east. 

Serica Energy

Serica has announced the successful completion of a placement of $300 million of new five-year senior unsecured bonds with a coupon rate of 7.875% per annum. The bond placement met strong investor demand across international markets and was significantly oversubscribed by a wide range of high-quality investors across the Nordics, UK, and other geographies.

Settlement of the bond issue is expected to occur on or about 12 May 2026, subject to customary conditions precedent. An application will be made for the bonds to be listed on the Euronext ABM market in Oslo. Net proceeds from the bond issue will be used towards repayment in full of the outstanding Reserve Based Lending (‘RBL’) drawn debt and enhanced liquidity for the Company. The RBL, which will be refinanced later this year, will remain in place to provide Serica with the flexibility to take advantage of value accretive investment opportunities as they arise – both within the portfolio and via M&A. Pro forma for the bond, the Company’s current liquidity is around $675 million.

Chris Cox, Serica’s CEO, stated:
“We are delighted that demand from investors for the bond was so strong, allowing us to price on attractive terms and reflecting the compelling fundamentals of our credit and equity story and financial prospects. With our balance sheet now further strengthened, and our sources of financing diversified, we have optimised our ability to take full advantage of the material opportunities ahead. We look forward to our Capital Markets Day on 2 June, when we will be briefing investors on those opportunities within our expanding portfolio.”

This is without doubt a great result for Serica, I understand that the issue was four times oversubscribed which in itself is a tribute to the company and also that the coupon, at 7.875% pa is both lower than the cost of their current RBL and materially lower than many recent E&P bonds and indicates significant confidence going forward.

So, the $300m will pay down the RBL and provide working capital and obviously gives a boost to the M&A war-chest or as the company say ‘enhanced liquidity and will provide the flexibility to take advantage of value accretive investment opportunities as they arise – both within the portfolio and via M&A’. 

The net result is the company has current pro forma liquidity of around $675m and once the RBL is refinanced, expected to be later this year, those opportunities will surely be taken. On this point Serica will emerge in better financial shape, will have increased scope for investments and will have fewer restrictions such as the need to hedge its production as it does now. 

Serica stock, whilst fairly quiet in recent weeks, has risen by 42% over six months and by 121% year on year, with my target price of 400p this recent pause must give a strong opportunity to invest at these levels. Serica is firing on all cylinders, it now has the potential to take the next steps in what is already exceptional progress. 

Arrow Exploration

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, 2025 and the filing of its 2025 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 2025 Highlights:

• Net income of $1.4 million inclusive of an impairment loss of $7.6 million (FY: 2024: $13.1 million).
• Total oil and gas revenue of $70.5 million, net of royalties (2024: $73.7 million).
• Cash position of $11 million at the end of 2025 (2024: $18 million). No outstanding debt.
• Adjusted EBITDA of $35 million (FY 2024: $48 million), with Q4 2025 EBITDA of $6.3 million (Q4 2024: $13.3 million).
• Funds flow from operations of $32 million (FY 2024: $36 million) with Q4 2025 funds flow from operations of $9 million (Q4 2024: $12 million).
• 13% increase in annual average production to 4,012 boe/d (2024: 3,542 boe/d).
• Successfully drilled 14 development wells at its different fields in the Tapir block, including Rio Cravo Este (RCE), Carrizales Norte(CN) and Alberta Llanos (AB), which contributed to maintain Company production levels.
• ·    Drilled a successful exploratory well on the Mateguafa Attic (M) field in the Tapir block, followed by drilling of three development wells, including one horizontal well (M-HZ7). One well was drilled in Canada.
• All operations delivered safely, with no accidents or environmental incidents. 

Post Period End Highlights:

So far in 2026, the Company has drilled four development wells on the Mateguafa Attic field in the Tapir Block, including the Mateguafa 12 (M-HZ12) horizontal well.

• Mateguafa HZ12 (M-HZ12) is on production and cleaning up.
• Currently mobilizing the drilling rig to the Icaco pad to start drilling the Icaco-1 exploration well.
• Received authorization from the Agencia Nacional de Hidrocarburos (ANH) to terminate the COR-39 exploration and production contract, which included  release of a $12 million commitment.

Outlook

• Arrow has a fully funded 2026 work program totaling $24 million targeting up to nine new wells in the Tapir block.
• Continue discussions with its partner and authorities on the contract extension for the Tapir block. To date the dialog has been very constructive.  Arrow believes that all conditions required for the extension to be granted have been met and management remains very confident that the extension will be granted.
• 2026 capital operations to be funded by cash flow and cash on hand. 

Marshall Abbott, CEO of Arrow Exploration Corp., commented:
“Arrow’s continued drilling success in 2025 has solidified the production and cashflow base which enables the Company to maintain a constructive low risk drilling pace. The Company sustained increased production, revenue and EBITDA that, along with a robust balance sheet, supports the capital program planned for 2026. Core strategy remains maintaining a disciplined approach to capital allocation. This allows Arrow to grow production while maintaining positive cash flow and a growing cash position. Today’s strong results show clear success in our operating strategy.  Arrow is confident in continuing to successfully pursue the scope and repeatability that the Colombian Tapir Block offers. The Company focus remains on growing production and cash flow that will strengthen valuation and afford greater optionality in pursuing additional opportunities.”

“Arrow continues to have a strong balance sheet with no debt.  The funds for the 2026 capital operations are expected to come from operating cash flow and cash reserves.”

The Arrow team continues to strive towards growth, operational excellence and increasing shareholder value.”

Arrow is in a very strong position at the moment and whilst these figures are very much as expected, the real strength right now has been proved by the excellent drilling programme this year. 

The success at the Mateguafa Attic field on the Tapir Block has been little short of exceptional and the M-HZ12 horizontal well is now on production and cleaning up. Following this the rig is now mobilising to the Icaco pad where it will shortly drill the Icaco-1 exploration well. 

This year Arrow has a fully funded work program totalling $24 million targeting up to nine new wells in the Tapir block. With more drilling scheduled and hopefully production numbers from M-HZ12 expected shortly the prospects for Arrow are excellent. 

My target price of 40p is secure and so I expect continued share price appreciation as production increases and with current realisations, revenue and EBITDA will follow suit. My interview with Marshall Abbott is below, a while ago but for anyone who requires a reminder of how well Arrow is placed is well worth watching…

Core Finance CEO interview: Marshall Abbott of Arrow ExplorationCore Finance CEO interview: Marshall Abbott of Arrow Exploration

Star Energy

Star has announced full year results for the year ended 31 December 2025

Commenting today, Ross Glover, Chief Executive Officer, said:
“2025 was a year in which we remained firmly focused on balance sheet strength, disciplined capital allocation and cash generation. In a volatile market, our diversified portfolio, active hedging programme and tighter cost control helped underpin our financial resilience and reinforce the cash-generative nature of the business.

We have entered 2026 in a more uncertain geopolitical and commodity price environment, but our priorities remain clear: improve operational reliability, protect returns and invest selectively where the risk-adjusted economics are compelling. We believe our combination of domestic production, strong operational control and disciplined financial management differentiates Star Energy from many small-cap peers and underpins our ability to build a leaner, more resilient business focused on value creation for shareholders.

The sale of the Croatian geothermal business releases capital, removes future funding demands and allows us to sharpen our focus on our home market in the UK, where we have an outstanding operational track record and see the clearest opportunity to create value. We will continue to work to maximise cash flow from our oil and gas business, maintain a low-cost geothermal platform in the UK while awaiting a more investable policy framework and actively pursue value-accretive oil and gas acquisition opportunities that can bring value to our substantial tax losses. Together, these actions leave Star Energy well placed to seize opportunities and will drive sustainable shareholder value.

Full year results for Star are in-line with expectations and obviously, while an important financial record, in my view mainly reflect the hard work that the new-ish CEO has been up to in refocusing the company back on its core strengths. 

Ross Glover states that it was a year ‘in which we remained firmly focused on balance sheet strength, disciplined capital allocation and cash generation’ whilst at the same time in what has been a volatile market, used the diversified portfolio, its active hedging programme and tighter cost control which ‘helped underpin our financial resilience and reinforce the cash-generative nature of the business’.

So, although those uncertain market remain, Star is looking very well placed to continue to benefit from those management actions. The CEO is determined to continue the important restructuring such as the recently announced deal in Croatia which has released capital, removed future funding demands and ‘allows us to sharpen our focus on our home market in the UK’. 

Put very clearly he makes his priorities very clear, to ‘improve operational reliability, protect returns and invest selectively where the risk-adjusted economics are compelling. We believe our combination of domestic production, strong operational control and disciplined financial management differentiates Star Energy from many small-cap peers and underpins our ability to build a leaner, more resilient business focused on value creation for shareholders’.

Going forward I think that all these attributes will be behind Star’s momentum but I’m sure that there will be other factors. I am expecting some M&A in the future, they have serious ambitions and with a big pool of tax losses pretty much any deal should be highly efficient. 

This is the key to my confidence in Star since Ross Glover took over, I have been very impressed with his actions in what was a somewhat tricky situation and shareholders are now reaping the benefits. Indeed Peter Gyllenhammar today announced that he has increased his stake from 8.038% to 9.061% showing continued confidence in the company despite the strong share price performance. 

These figures, but perhaps more likely the confirmation that the aggressive management actions have really started to bite, are now paying off and I remain confident that the future is very bright. I have now published a target price which I have initially set at 30p, I feel that should the company manage its high expectations that it may look conservative.

Financial Performance                                                                                                                                         

(1) Adjusted EBITDA and Net Debt (borrowings less cash and cash equivalents excluding capitalised fees) are used by the Group, alongside IFRS measures for both internal performance analysis and to help shareholders, lenders and other users of the Annual Report to better understand the Group’s performance in the year in comparison to previous years and to industry peers.

Corporate & Financial Highlights

• Cash at 31 December 2025 was £7.6 million, excluding restricted cash, and Star Energy had drawn £11.9 million under its loan facility. In addition, the Company held restricted cash of £4.5 million which relates to the cash backing of performance bonds for licence commitments of the Company’s Croatian subsidiary (IGeoPen d.o.o), relating to the Sječe and Pčelić exploration licences. The cash will be released on the completion of the recently announced sale of IGeoPen d.o.o
• Completed the sale of non-core land for £6.3 million with proceeds received in April 2025
• Delivered more than £2.0 million of G&A savings compared to 2024
• Active hedging policy which generated a commodity hedging gain of £1.5 million in 2025. Hedges are in place for 2026 which satisfy the requirements under our finance facility and protect cashflow whilst allowing exposure to price increases. We have hedged 14% of production with swaps at an average price of $68/bbl and 40% with collars with an average ceiling price of $71/bbl
• Energy Profits Levy of £2.85 million paid in 2025 based on the taxable profits for the years ended 31 December 2023 and 31 December 2024

 Operational Highlights

• Net production averaged 1,886 boepd in 2025 (2024: 1,989 boe/d), with downtime driven by a number of discrete events, including a National Grid upgrade, which have now been resolved
• Continued to optimise oil production from our existing wells through selective investment in short cycle developments which deliver quick payback
• Singleton gas-to-wire project is well underway with delivery of incremental production of c.74 boe/d, significantly reducing flaring, monetising produced gas, increasing electricity generation and further decarbonising our operations
• Savings achieved in operating costs to offset inflationary increases

Croatian geothermal

• Agreement signed for the disposal of our three Croatian geothermal licences, releasing €5.2 million of restricted cash and enhancing financial flexibility. The consideration includes €1.5 million payable on completion (€1.3 million net to Star Energy in accordance with the A14 Energy Limited shareholder agreements), with a financial earn out of €0.5 million per licence on commencement of operations. The transaction delivers a clear strategic refocus of the Group’s portfolio, allowing management to concentrate on its core UK oil and gas and geothermal assets. Completion is expected in H2 2026

Outlook

• We anticipate net production of c.2,000 boepd and operating costs of c.$44/boe (assuming an average exchange rate of £1:$1.33) in 2026
• 2026 forecast capital expenditure is c.£6.6 million. This includes £2.6 million to complete the Singleton gas-to-wire project which is forecast to come online in H1 2026 with production of 74 boe/d. Star Energy also plans to invest £1.0 million on quick returning incremental projects and the balance on regulatory improvements, site resilience and projects to reduce operating costs going forward
• G&A reductions carried into 2026 and targeting further savings
• Low cost development platform maintained to advance our UK geothermal pipeline

Original article   l   KeyFacts Energy Industry Directory: Malcy's Blog