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I believe the next deal is most likely to be a further chunk or outright operatorship of the CWLH assets - what I like about the CWLH assets is the remarkably low OPEX of the fields considering their age and production profile.

The Catcher field in the North Sea has a BW FPSO on charter at a cost of circa $210m a year for the initial 10 year fixed charter period - which at circa production of 26k bopd in 2020, indicates an operating cost JUST for the FPSO of $26.7/bbl. At a production level similar to the circa 14k bopd for the assets JSE has just acquired, it would increase to $41.2/bbl, just for the FPSO.

Initial production at the CWLH fields were circa twice that of the Catcher Field, averaging circa 72,000 bopd over the first 15 years of its life to 2010, and 27,600 bopd since. With a large STOIIP of around 890 mmstb - the management believe there is considerable potential to add incremental reserves through infill drilling, targeting unswept oil across all four fields, and an opportunity to extend asset life well beyond 2031 (the initial design life of the high specification double hulled FPSO Okha).

The North West Fields have a current OPEX of $21-22/bbl INCLUSIVE of the operating and finance cost of the new FPSO deployed in the field in 2011 with a minimum 20 year operating life.

Although a total of 13 wells have collectively been drilled on the four fields, currently each field has only one producing well.....and so, offers huge infill well and workover potential.

As previously alluded to, I believe Jadestone's BP/CWLH asset deal is the blueprint for the industry to provide Governments/Regulatory Authorities with the comfort to enable the future transfer of large company mid/late life O&G assets to smaller, cash rich players.

And so, the acquisition of more of the asset should be relatively straightforward.

AIMHO/DYOR

Many late life, large O&G fields can often can have commercial potential in the hands of a second phase specialist like Paul Blakley and his team, way beyond the seller's projections, since they are no longer material to them. By way of example, when Blakeley's Talisman Energy bought the ageing Beatrice oil field, seller BP considered the field has 18 months commercial life left. Through efficiency gains and mostly infill well drilling, Talisman were still operating the field some 20 years later, and eventually sold it on to Ithaca Energy, who themselves squeezed another 5 years commercial life out of it.

What ALL investors in the O&G sector should be doing is spending most of their investment research time identifying CEO's like Paul Blakeley, who have a long track record of delivering exceptional shareholder returns using growth models at or lowest end of the investment risk scale.

AIMHO/DYOR

The most important lesson two old friends(Shell and BP veterans) and I have learned from small cap O&G investing over the last 20 odd years, is to place an EXTREMELY high investment case weighting on the previous track record of the management.

Such a management team, running the lowest possible investment risk O&G company MO is the holy grail.

The lowest possible risk MO is to identify and acquire at attractive prices, mid/late life, strong cash flow producing assets with re-investment potential(ie infill well potential) from large independents, NOC's and the Majors.

Paul Blakeley, CEO of Jadestone Energy has built two O&G companies from scratch, which were subsequently sold for $6bn and $8bn respectively. He was brought out of retirement by two very high performing activist US hedge funds to carry out the same MO, that he'd now perfected into an art form, at microcap explorer Jadestone, which they had taken over.

The first thing Paul did was to stop ALL O&G exploration, and immediately implement his tried and tested, highly successful MO above. Paul's s first acquisition for a net $6m was the heavily loss making late life Stag heavy sweet oil field off NW Australia, from Aussie O&G giant Santos. Some five years later, Stag is now producing more cash flow per MONTH than the net price paid for the asset.

Paul and his team are now well on the way to building their third multi billion dollar O&G company. The secret of his success is to follow the ultra low risk route of identifying and acquiring at attractive prices, mid/late life producing assets with re-investment potential(ie infill well potential). He famously said: "You will never see me drill an exploration well, because long history shows that 9 out of 10 are not successful".

Paul has repeatedly demonstrated over nearly 30 years that its so much easier to build huge shareholder value by buying high quality producing assets with strong, reliable cash flows cheaply, and then to extend the production life through infill development drilling where the CoS is close to 100%.

As these types of assets are no longer material to large companies they can often be acquired remarkably cheaply. Paul last year bought Petronas' Malaysian assets for a headline price of $9m. By the time the deal completed, from the effective date 6 months earlier, the financial benefit Jadestone received under the terms of the deal was such that, instead of Petronas getting a cheque for $9m for the asset, Petronas at the closing ceremony, had to hand over assets producing 6,500 boepd to Jadestone along with a $9.2m cheque!

Continued

Lol - this is a management team that started from scratch TWO businesses that went on to be sold for $6bn and $8bn respectively! They're in a league of their own with daylight second at generating shareholder value.
That's why two high performing US hedge funds who hold a third of the shareholding headhunted CEO Paul Blakeley and his team to bring their ultra successful MO to Jadestone - with a $460m market cap at 78p they're well on their way to building their third billion dollar company.

'nothing is agreed until the legitimate ministers stamp is on a bit of paper.'
Legitimate? The President and Government is ruling by decree !
' Nomad can't be too comfortable with what's going on.' Lol !
If you assume that a NOMAD gets paid very well to act more like the Company its 'representing' Defence Counsel NOT its Shareholders best interests, you wont go far wrong !

Open question to AK - When I warned in a question to you on a live retail call this summer that I was concerned that Parenco were using underhand tactics(something they have reputation for across Africa according to my industry friends), in an attempt to scupper Savannah's Exxon and Petronas C&C deals......... you replied by laughing and then saying: "That's not going to happen these deals are solid and are going to complete"

I suspect you're not laughing now !

You seem to have forgotten(or never really understood) that the first rule of doing business in Africa is to never underestimate the greed of your 'Africa Seasoned' competitors and, the brazen willingness of many to shamelessly "grease the wheels of commerce" to get what they want!

Brent averaged $60.1 for the 42 month period to 30th June 2021. From 1/1/2021 to date Brent has averaged $84.1.
Even without the increase in Doba premium to Brent - that is an average of $24/bbl more cash flow during the qualifying period to end Oct 2022, than achieved by Exxon and Petronas during the 42 month period.
Food for thought.

H9 - in Canadian Dollar terms the price would have to rise by 18% from today for the investors who took part in the placing to get back to break even !

The US Gulf Coast - the new capital of the World's LNG Export Industry - and its development is still in its infancy!

To say Southern Energy's high quality nat gas assets are optimally located to benefit from the premium pricing of the rapidly growing, globally important US and Global LNG export industry, is an understatement.

Southern Energy's assets are located adjacent to where over 85% of the current 11.5 Bcf/d - 86.2m metric tonnes/yr, US LNG export industry operates on the US Gulf Coast in the Gulf of Mexico.

Yet, despite the development of LNG export operating capacity on the Gulf Coast overtaking the capacity output of the world's number 2 and 3 largest exporters(Australian and Qatar) from a standing start in 6 years, the level of development of LNG export terminal capacity in this region is still in its infancy - when taking into consideration the capacity of new terminals under construction and those approved but yet to start construction.

US LNG Export Capacity
Jan 2016 - Zero
Nov 2021 - 9.5 Bcf/d
Dec 2022 - 13.9 Bcf/d(estimated from terminals under construction)
Jun 2024 - 16.3 Bcf/d (estimated from terminals under construction)

World's next largest LNG Export Nations
Dec 2022 - 11.4 Bcf/d - Australia
Dec 2022 - 10.4 Bcf/d - Qatar

The US has delivered a totally unprecedented level of LNG export capacity growth over the last 7 years(56% CAGR) and nearly all of it has occurred adjacent to SOUC's assets.

Such is the attraction of this region of the US to the LNG export industry, and despite now being the World's largest, it has the following astonishing level of export terminal growth plans for the Gulf Coast area:

3.7 Bcf/d - Export Terminals Under Construction
27.1 Bcf/d - Export Terminals Recently Approved - Not yet Under Construction
6.1 Bcf/d - Proposed Export Terminals with applications submitted for Approval
3.4 Bcf/d - Proposed Export Terminals - at Pre Filing Stage.

North American LNG Export Terminals – Existing, Approved not Yet Built, and Proposed
https://www.ferc.gov/media/north-american-lng-export-terminals-existing-approved-not-yet-built-and-proposed-7

AIMHO/DYOR

Declaration - increased the holding to 750,000 over the last week

With a little over 4 months left in 2022, Brent is averaging $103.2/bbl YTD - the operating cash flow generated by PTAL will have been spectacular at this oil price .

For Brent to average $100/bbl in 2022, Brent will need to average $93.5/bbl from today through to year end.

When researching companies, long experience led to placing a very high investment weighting on the previous track record of the management.

In the O&G small cap sector the AXL management are peerless in this respect, and without doubt the primary reason why the shareholder's register(and that of previous quoted companies they ran), contains a very large number of HNW individuals(many with positions 'braver' than me) who specialise in investment in the sector.

Where shareholder returns are concerned, research and long experience has shown that top quality management with a long track record of success behind them, given decent quality assets to work with, seem to invariably outperform average management with high quality assets.

The holy grail is to find a top quality management with very high quality assets...ie, containing low risk/high potential prospects, that are quick and cheap to drill and develop into production. The initial infill well drilling results from AXL's Tapir Block materially exceeded the management's expectation, strongly validating the prospectivity of the acreage and quality of their technical analysis/modelling

Though still early days, the highly encouraging initial drilling results have led to the creation of a new FDP for the Rio Cravo asset and an updated reserves report, adding weight to the management's and market's growing view these could well be very high quality assets.

AIMHO/DYOR

And that is where their hands are very likely to stay for some considerable time, since the management believe the existing assets, primely located in a well established, very high performing O&G basin, have the potential for the company to organically get to 10,000 boepd within 3 years. Such is the recent interest in this area of the Llanos basin, Canadian mid Cap Parex(45,000 boepd in-country production), purchased every block to entirely surround Arrow's block during a recent Government auction, despite NONE of these blocks actually being included in the auction, so keen where they to acquire the assets.

AXL shareholder's investments are in very capable hands going by the outstanding track record of the senior management in creating repeatedly from scratch over the last 30 years, exceptional shareholder returns wherever they plied their trade. It's why the shareholder register has an exceptionally high level of investment from HNW individuals, as many follow the management from company to company, as a result of building from scratch or either buying 8 small companies over the last 30 years, that were all subsequently grown substantially and sold on to release shareholder's profits. With Parex now surrounding Arrow's high potential, high performing, primely located asset, even Stevie Wonder could see the likely future trade sale route in 2-3 years.

IMO at the current valuation Arrow has the asset potential and management to be the best performing investment in the portfolio over the next few years. Continue to add on pullbacks since I've been unable to find better value and growth prospects elsewhere.

Posted an extended version with links to the Crux Interview/Q&A of the following on my Advfn MTB blog and a few other selected investment sites today:

For a still early stage opportunity in the O&G sector(current m/c only £34m), it's likely to be a big few weeks for news at Arrow Exploration (AXL).

An operations update and new reserves report is imminent, following the outstanding early success of its 2022 Rio Cravo field infill well drilling campaign, where the first two wells of a five well programme have both significantly exceeded expectations, by finding a number of new producing sands(one very high performing) in addition to the expected targets.

The primary target C7A reservoir is producing at over 40% ahead of expectation in the RCE-2 well, while the new discovery C7B sand(which materially increases the aerial size of the field) in the RCS-1 well is currently producing some 3 times ahead of the well's primary target, the C7A's net 360 bopd management expectation, that was also found along with four other reservoirs ...... such is the strength of the aquifer support, the management are currently struggling to reduce the C7B production down to the circa 650 bopd net they would ideally like to operate the RCS-1 well at.

These wells typically have a circa 20% annual decline rate - but such is the amazing cleanliness of the water produced in wells drilled in the the Llanos Basin(its rainwater straight off the Andes), AXL are currently giving it straight from the first well drilled on the field in 2019 - the RCE-1 - for free to delighted local farmers to irrigate their fields.

The production development results since the London IPO have placed high growth Arrow comfortably on course to achieve the management's then stated target of delivering 3,000 boepd by March 2023 - which will represent a five fold increase in production in the 18 months from shortly before the IPO in late 2021.

However, where Arrow stands out from virtually every other small cap in the sector is that ALL their production growth through to 3,000 boepd will be ORGANIC. With likely lifting costs on the Rio Cravo production in the $7-9/bbl range by year end.

The management, despite having a peerless industry reputation as a second phase acquirer, operator and developer of highly accretive assets; such has been the high expectation and stunning success of the infill well drilling campaign on their Llanos Basin asset(100sq miles - and the only block in the basin to have 6 separate faults running North to South through it - next highest is 2-3), the cash rich, debt free Arrow management is yet to put their hands in their pockets for other assets.

Continued:

The following slowed down average rate of cargo and ballast tank corrosion:

* Crude oil cargoes in long term storage cause a waxy or other protective layer to form on the cargo tank steel structures and this layer will help inhibit corrosion.

As a consequence of the above, since FPSO's are stationary over the field throughout their commercial lives, the classification Societies expect these ships to generally sustain a lower rate of cargo and ballast tank corrosion, and so permit their use with rolling five year Inspection and Maintenance Programs in lieu of dry dockings.

Reading between the lines, it sounds like Paul Blakeley, with an eye on further acquisition aspirations at major second phase opportunities like the North West Shelf Project and elsewhere, has elected to carry out the remaining FPSO inspection and remediation work scheduled for this year in parallel with the tank repairs, in order to put this matter to bed in its entirety by/during September.

Its the behaviour of not just a savvy commercial and political mind but that of a highly professional operator, since it goes beyond the minimum requirements of the rolling Inspection & Maintenance Programme in Lieu of dry-docking under which the Classification Societies control, manage and monitor the commercial use of FPSO's and FSO's.

Some industry information on the management of cargo and ballast tank corrosion in Oil Tankers - kindly provided by a friend and fellow Jadestone investor, a Shell veteran of 45 years, with responsibility for managing their Ship Risk Management and Quality Assurance Programme.

Ongoing in-service cargo and ballast tank inspection and steel thickness monitoring for selected structural members in selected cargo tanks at 30-month intervals, is part of the corrosion control program, required by the Classification Societies to provide an adequate database for developing the mitigation strategy and maintenance methodology, to keep corrosion within accepted limits.

Of main interest are the results for deck and bottom plating. For VLCC's the Classification Societies found that in light of experience, previously used 0.1 mm / year corrosion rates were a little optimistic, and increased the upper bound estimate to 0.2 mm / year for deck plating and 0.15 mm / year for tank bottom. VLCC deck and bottom plating is a minimum thickness of 17mm.

Particular attention is given to known 'hotspots' like the tank bottom plating close to where cargo pump suction is situated, as this can experience a higher corrosion rate.

The following has been found to accelerate the rate of corrosion in VLCC with uncoated cargo and ballast tanks:

* Double Hull ships - they raise the cargo tank temperature

* Crude oil cargo containing high concentrations of sulphur created higher levels of general and pitting corrosion, since sulphur is cathodic by nature

* Frequency of cargo tank cleaning

* Ship structural behavior itself is a factor in the corrosion rates - when steaming at normal service speed in moderate/heavy sea conditions the ship's structure will naturally flex during the alternate compression and tension cycle of riding over each sea/swell wave. Surface rust or scale on internal tank structures can become dislodged, exposing further new bare steel. As the material thickness diminishes, the stress on the component is incrementally raised. These effects can contribute to localized increases in corrosion.

The following slowed down average rate of cargo and ballast tank corrosion:

* Crude oil cargoes in long term shortag

Thank you - You've highlighted it.

Phil now works for JSE, so I would expect JSE management to have told him to politely decline to answer enquires and correspondence related to his previous employment, and if this fails, to pass the matter over to the Company's General Council - as it's not what Phil is now paid to do .

Long experience suggests the way forward is to take personal responsibility for your investment mistakes - having a personnel vendetta against an individual that had no responsibility for decisions made by the Board of his previous employer is not a productive use of time - carrying out better research before making a new investment and especially after making it is.

NW Shelf Oil Project - is the second largest Oil Field Development in the history of the Australian O&G Sector - "Big fields get Bigger"

The primary characteristic Jadestone looks for in a potential acquisition is the re-investment potential. In this respect, at the mid life stage of the NW Shelf Oil Fields, what is material to Jadestone is very unlikely to now even move the needle for their heavyweight field partners.

What the early operation of the NW Shelf Oil Fields had shown is that its light oils were reservoired in turbidite sands whose high permeabilities allowed for individual well performances of up to 40,000 bbl/d.

In 2001, after 6 years of production and still little or no water cut and minimal decline.....an upward revision in reserves was indicted so an intensive subsurface study was undertaken including new 3D seismic .....the result: recovery factors of 50%-80% were indicted, far higher than previous estimates.

The “Cossack Pioneer” Oil Fields: New Subsurface Insights after Eleven Years on Production
hTTps://www.searchanddiscovery.com/abstracts/pdf/2006/intl_perth/abstracts/ndx_thomas.pdf

“This acquisition is another example of our strategy in action, acquiring low-cost barrels at less than US$3/bbl, while establishing an entry position into a very high-quality long-life asset with very low decline rates. We believe that over time we can exercise increasing influence and deploy our skills in mid-life oil field management. In particular we see material upside potential through INFILL DRILLING INTO RESERVOIRS with VERY SIGNIFICANT oil-in-place...." Paul Blakeley announcing the Acquisition.

Jadestone's research must strongly indicate to them that a second phase of 'Infill' drilling across these very large, high performing oil fields is likely to deliver highly material production volumes.....'with significant original oil in place, which Jadestone estimates at approximately 890 mmbbls, and which provides the opportunity for further investment to increase recovery factors.'.....when individual wells have produced up to 40,000 bopd, and the total number of wells drilled across all the fields to date is just 13, and with each of the fours fields currently producing from just a single well.

AIMHO/DYOR

Clearly, high quality research is not your strong point !

Has the look of a low volume small pullback to jettison the nickel and dime traders that have scalped a lunch to move on.

In my dealings with him at JSE he could not have been more helpful and professional !