Oilman Jim's Letter - 30 May 2024

Arrow Exploration (AXL.V AXL.L CSTPF) announced interim results for the three months ended March 31, 2024. The company recorded $14.4 million of total oil and natural gas revenue, net of royalties, more than double compared to the same period in Q1 2023. Net income was $3.2 million, against $3.0 million in Q1 2023, while EBITDA more than doubled to $10 million. Average corporate production was up 139% to 2,730 barrels of oil equivalent per day. The cash position was $11.6 million at the end of Q1 2024 and the company generated operating cashflows of $8.6 million, compared to $2.4 million in Q1 2023. During the quarter, Arrow successfully drilled four development Carrizales Norte wells, resulting in additional production and reserves additions and post period end, two additional Carrizales Norte development wells were drilled. The company spud the first Carrizales Norte horizontal well (CNB HZ-1) from the Carrizales Norte B pad and expects to be able to provide an update on the production figures in the coming weeks. Subject to successful completion, CNB HZ-1, in conjunction with the other three planned CNB horizontal wells, are expected to result in a positive increase in Arrow's production rates. Moving forward, Arrow will complete stimulation efforts at the Oso Pardo-3 and 4 wells in the Middle Magdalena Basin and continue with the balance of the 2024 capital program, the majority of which will be focused on the Carrizales Norte field and will include three horizontal wells. Low risk step-out and exploration wells are also planned at the Mateguafa Attic and Baquiano prospects. The 2024 capital program will be self-funded by a combination of cash flow from operations and cash reserves.

Afentra (AET.L STGAF) announced its unaudited annual results for the year ended 31 December 2023. During 2023 and post period, the company successfully completed three acquisitions in Angola to acquire 30% non-operated interest in the producing Block 3/05 and a 21.33% non-operated interest in the adjacent development Block 3/05A. Cash resources at year end 2023 were $19.6 million against $30.6 million in 2022. The reserve based lending facility at year end was $31.7 million, resulting in year end net debt of $12.3 million. A first cargo of 300,000 barrels of crude oil was sold in August 2023, at a sales price inclusive of the Brent premium of $88 per barrel, generating pre-tax sales of $26.4 million net to Afentra. Crude oil stock at year end was approximately 300,000 barrels. Combined 2023 gross production on Block 3/05 and Block 3/05A was 20,180 barrels of oil per day, up from 18,700 barrels of oil per day in 2022. Light well intervention campaigns were successfully executed, leading to December 2023 gross production exceeding 23,000 barrels of oil per day, while water injection upgrades doubled injection rates, with December rates of around 42,000 barrels of water per day. Post year end, the company was selected as the preferred bidder for 45% non-operating equity in both KON15 and KON19 located in the Kwanza Basin onshore Angola, a PSA for the onshore Block KON19 was negotiated with Agência Nacional de Petróleo, Gás e Biocombustíveis and now awaits the formal Government approval. Afentra completed the Azule acquisition resulting in the company holding non-operated interests of 30% in Block 3/05 and 21.33% in Block 3/05A and the Government of Angola declared the Punja Development Area in Block 3/05A a marginal discovery with improved fiscal terms now applicable for the remainder of its term. The company sold cargo of 450,000 barrels of crude oil in February 2024. The sales price inclusive of the Brent premium was $85 per barrel, generating pre-tax sales of $38.2 million to Afentra. Net debt at the Azule completion was around $46.2 million with crude oil stock of around 840,000 barrels.

EnQuest (ENQ.L ENQUF) announced an operations update. The company has continued to deliver strong operational performance across its operated portfolio, with production to the end of April averaging 43,600 barrels of oil per day, above the mid-point of guidance. Net debt was around $344 million at 30 April, representing a reduction of around $137 million since 31 December 2023. There was around $534 million liquidity at 30 April, which provides a platform for transformational transactional growth, enhanced by EnQuest's advantaged UK tax position. The $15 million share buy back programme commenced on 29 April 2024. Production guidance for 2024 is 41,000 barrels of oil equivalent per day to 45,000 barrels of oil equivalent per day. Cash capital expenditure is expected to total around $200 million, operating expenditure to total around $415 million and decommissioning expenditure to total around $70 million.

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