Malcy’s Blog: Oil price, Union Jack, Pharos, Deltic, B&S, Petro Matad.

WTI (Nov) $63.41 +$1.13, Brent (Nov) $67.63 +$1.06, Diff -$4.22 -7c.

USNG (Oct) $2.85 +4c, UKNG (Oct) 80.6p +0.81p, TTF (Oct) €32.165 +€0.165.

Oil price

Oil rose yesterday, influenced primarily around Russia where fighters ‘drifted’ into Estonia’s airspace and Trump suggested that they should have been shot down. Also Ukraine are still attacking Russian refineries leading to them threatening to stop distillate exports. Finally the API stats showed a draw in crude of 3.821m barrels with gasoline being down by 1.046m and distillates up by 518/- b’s.

Union Jack Oil

Union Jack Oil plc (AIM: UJO, OTCQB: UJOGF), a UK and USA focused onshore hydrocarbon, production, development, exploration and investment company, announces that, further to the Company’s announcement of 15 August 2025, it is pleased to provide an update on the Sark well (“Sark”), located in Central Oklahoma, USA. Union Jack currently hold a 60% interest in Sark.

·    Sark was drilled to a Total Depth of 5,391 feet

·    The Prue interval was highlighted on electric logs as hydrocarbon bearing following evaluation

·    The Prue interval was perforated from 4,586 to 4,600 feet

·    During swabbing oil was recovered

·    Temporary production facilities are being installed and Sark will undergo a 30-day test programme, commencing early October 2025

Results from the test programme will be reported on completion.

An early sight of the Sark well in Oklahoma which looks pretty early doors as I can’t tell at this early stage in the process quite how successful it will be. I suspect that the management cannot make that call either as they have not made a call yet. Probably appropriate to wait and see after further data has been recovered. 

Union Jack remains a feature in the Bucket List and I’m convinced that my published TP of 30p is very achievable given the UJO portfolio. The company’s brokers carry Sark as 1.0p risked and 2.2p unrisked as part of their 40p total risked NAV which is very fair.

Pharos Energy

Pharos has announced its interim results for the six months ended 30 June 2025. A conference call for analysts will take place at 09.00 BST today. 

Katherine Roe, Chief Executive Officer, commented:

“We have continued to make strong strategic and operational progress during the first half of the year. The global stage remains challenging but our focus on operational excellence and financial discipline has delivered stable production averaging 5,642 boepd net, and continued strong cash generation, in line with our guidance.

“In Vietnam, we will begin an important and material six-well drilling campaign in the fourth quarter, with results expected in the first half of 2026. Preparations for drilling the TGT appraisal well 18X to unlock future upside are progressing well and, together with the planned CNV 5X-L1 appraisal and infill drilling campaign, are expected to de-risk additional development opportunities and drive production growth from 2026 onwards. On our exploration blocks 125 & 126, we have engaged with an independent third party adviser to conduct a formal process to identify farm-in partners. This process, together with the ordering of long lead items, provides optionality to pursue the long-term potential of these important exploration assets. The recent approval of a two-year PSC extension in June further supports this optionality.

“In Egypt, we continue to ensure we make economic investment decisions to maximise the value of these self-funding assets. We were pleased to have announced on Tuesday the approval from EGPC of a consolidated Concession Agreement, which brings an immediate uplift in the value of our Egyptian portfolio and a 25% increase from year-end 2024 2P reserves. The improved fiscal terms provide an attractive investment framework for both Pharos and our partner IPR. We will continue our cautious approach to capital allocation whilst we seek to continue the recovery of our outstanding receivables.

“Underpinning our progress is our strong cash flow generation and debt-free balance sheet. This financial strength allows us to announce today an interim dividend of 0.3993 pence per share for the 2025 financial year, an increase of 10% from last year. As we restart investment into our core assets, we will continue to be careful to maintain a strong financial position to support our commitment to shareholder returns.

“Looking ahead, we recognise scale is essential to delivering long-term growth and we have the financial flexibility to pursue both organic and inorganic opportunities. We remain committed to delivering value for shareholders through disciplined execution with strategic focus.”

This has been a good interim from Pharos which culminated in post period news yesterday that the consolidation of the Egyptian PSC’s into a single one with enhanced fiscal terms had been achieved. 

These terms make the economics of the country significantly better and if the receivables were to materially reduce then this consolidation will have been a real success. This is especially the case as $6.5m was received after the period end.

In Vietnam, looking ahead there is much to get excited about, primarily about the six well campaign which includes a mix-up of one complex appraisal well, not without risk, infill wells at TGT and CNV which should become future development wells.

With plenty of opportunities here to add production the company has formally started the farm-out process for Blocks 125 and 126 and long lead items are being ordered ahead of  the process and of course the 2 year extension of the block has made a difference.

With production in line with expectations and current range narrowed the outlook is good for Pharos, it has excellent shareholder returns with the interim dividend increased by some 10%, a sustainable rate and they completed the buy back earlier in the year. 

Pharos remains in the Bucket List and I am confident that my TP of 50p is attainable with a great deal of upside particularly in the Vietnamese portfolio which is gearing up for an exciting year or two

1H Operational Highlights

·      Group working interest production was 5,642 boepd net (1H 2024: 5,851 boepd net), in line with full year guidance:

o  Vietnam 4,183 boepd (1H 2024: 4,456 boepd)

o  Egypt 1,459 bopd (1H 2024: 1,395 bopd)

·      In Vietnam:

o  TGT: Rig contracts secured for the drilling of three infill wells and the 18X appraisal well in 4Q, targeting the block’s untapped western area

o  CNV: Planning continues for the drilling of one infill well and the 5X-LI appraisal well in 4Q, intended to unlock the northern part of the field

o  Rig contracts also incorporate flexibility to drill optional appraisal wells on TGT and CNV

o  Blocks 125 & 126: Approval received from the Vietnamese Government for the two-year extension of the PSC Exploration Period (from 9 November 2025 to 8 November 2027); appointment of independent third party adviser to support formal process to identify a potential farm-in partner

·      In Egypt:

o  El Fayum: East Saad-1X well on production from 1 July following commercial discovery in February

o  North Beni Suef (NBS): 3D seismic data processing ongoing

1H Financial and Corporate Highlights

·      Group revenue $65.6m¹ (1H 2024: $65.0m)

·      Net loss $2.2m after adjusting for re-measurements of $0.6m (1H 2024: $2.7m net profit after adjusting for restructuring expenses, re-measurements and impairment reversals totalling $12.6m credit) ²

·      Cash generated from operations $31.9m (1H 2024: $44.3m including $10m one off payment from EGPC in USD)

·      Operating cash flow $16.1m³ (1H 2024: $27.9m including $10m one off payment from EGPC in USD)³

·      Cash operating costs $17.04/bbl⁴ (1H 2024: $17.09/bbl)⁴ 

·      Net cash as at 30 June 2025 of $22.6m (31 Dec 2024: $16.5m)

·      Egypt receivable balance at 30 June 2025 of $33.5m (31 Dec 2024: $29.5m), having received $5.5m in the six months to 30 June. Post our balance sheet date, we received an additional $5.6m as at 23 September 2025

·      Interim dividend in respect of 2024 of 0.363 pence per share was paid on 22 January 2025. The final dividend of 0.847 pence per share, amounting to $4.7m, was paid on 18 July 2025. The full year 2024 dividend was 1.210 pence per share, amounting to $6.5m in total

·      Appointment of João Saraiva e Silva as Non-Executive Chair on 26 June 2025

¹ No realised hedge gains or losses in the period (1H 2024: realised hedge losses of $0.1m)

² Refer to page 9 for a reconciliation to (Loss)/Profit after tax

³ Operating cash flow = Net cash from operating activities, as set out in the Cash Flow Statement

⁴  See Non-IFRS measures on page 30

Outlook

·      2025 production guidance range narrowed to 5,200-6,000 boepd (from 5,000 – 6,200 boepd), reflecting consistent production in Vietnam and lower than expected production in Egypt

·      Six-well drilling campaign in Vietnam about to commence and expected to deliver incremental production volumes in 2026 and beyond

·      Exploration farm-out of blocks 125 & 126 in Vietnam to continue with encouraging engagement from potential partners

·      Improved fiscal terms in Egypt now agreed; preparations for the committed work programme to commence imminently

·      Forecast cash capex for the full year expected to be c. $35m, of which $8.2m incurred in the first half. A further $22m relating to the 2025 drilling campaign is expected to fall into 1H 2026

·      Strategic focus on maximising value from existing portfolio whilst evaluating opportunities to build scale

Deltic Energy

Deltic Energy Plc (“Deltic” or the “Company”), the AIM-quoted natural resources investing company with a high impact exploration and appraisal portfolio focused on the Southern North Sea (“SNS”) is pleased to announce its unaudited interim results for the six months ended 30 June 2025, which are summarised below.

Chairman’s Statement

This is clearly a time for reflection on our company and our industry.

Cluff Natural Resources, then Deltic, formed a very simple business plan that was not able to be followed previously:

Build a small team of capable and experienced people; sieve the publicly available data; seismic data, well data and relinquishment reports; identify overlooked attractive prospects and acquire licences with minimal commitments; mature prospects and present them to operators who will find them attractive and ‘buy’ an interest through covering costs.

Then, do it again.

This led to drilling two exploration prospects and having two discoveries; two out of two, an impressive record in the North Sea.

We saw government figures showing a decline in demand for oil and gas but production decline outpacing this and an increased reliance on imports. We aimed to be part of the transition maximising domestic production and minimising imports.

Unfortunately, while assessing subsurface risk in our prospect work, we underestimated the impact of the risk that undermined our business plan. Hostile policy across several governments reduced investor confidence and cut off the supply of licences and capital.

On 30 June 2025, the boards of Rockrose Energy Limited (“Viaro Bidco”) a wholly owned subsidiary of Viaro Energy Limited (“Viaro Energy”) and Deltic announced that they had reached agreement on the terms of a recommended cash offer for the entire issued share capital of Deltic (the “Acquisition”). Recommending the sale of the Company to an organisation with a different business model and greater financial capacity was the obvious solution and that’s where we stand today.

We are very proud of our achievements to date and will watch closely as the Selene and Pensacola discoveries are matured and hopefully taken into production, producing much needed natural gas for the benefit of the UK.

Mark Lappin

Chairman

24 September 2025

CEO Statement

The uncertainty surrounding the UK Government’s policy position continues to damage the UK’s domestic E&P industry and undermine investor confidence in the sector as we continue to wait on the outcome of ongoing consultations in relation to the future of licensing on the UK Continental Shelf and the fiscal regime.

During the first half of 2025, it became clear that Deltic’s exploration focussed strategy, which relied on access to further equity capital to drive the progression of assets up the value chain through farm-out, discovery and ultimately development, was no longer sustainable in the current business environment.  

It was against this backdrop that the Deltic Board welcomed the proposed Acquisition of Deltic by Viaro Bidco, a wholly owned subsidiary of Viaro Energy.  The Acquisition provides a way forward for the Selene asset, giving our licence partners and regulators some certainty around the future of that asset and the rest of the Deltic portfolio.

At the Court Meeting held on 28 August 2025, Deltic shareholders voted overwhelmingly to approve the acquisition of Deltic by Viaro Bidco.  Transaction completion, which is still subject to certain regulatory consents, is currently expected in early Q4 of 2025, after which the shares of Deltic Energy Plc will be cancelled from trading on AIM.

Deltic has consistently punched above its weight and has achieved more than any other small explorer over the same period as evidenced by the farm-outs to Shell, and others, and a 100% drilling success rate which delivered two major gas discoveries in the Southern North Sea.  I’m immensely proud of what we’ve managed to achieve at Deltic, and Cluff Natural Resources before that, and would like to thank all those that have supported the business over the years as well of course as the Deltic team which has worked so hard to progress our strategy.

Andrew Nunn

Chief Executive Officer

24 September 2025

These two statements come from executives with long experience in the UKCS and their comments should be read, marked learned and inwardly digested. If a company like Deltic can’t survive then we have much to answer for.

Operating Review 

During the period the team has continued to support Shell UK Ltd, in its role as Operator of Licence P2437, containing the Selene discovery.  Work during the period has had a particular focus on the analysis of core samples collected during drilling operations and preparation for re-processing of the legacy 3D seismic data over the area.  The Deltic team remains fully integrated into these processes and will be critical in ensuring a smooth handover of the Selene project to Viaro Energy, upon completion of the Acquisition.  

Similarly on the Blackadder area, Licence P2672, the team has been laying the groundwork for the re-processing of a complex collection of legacy 3D surveys to further de-risk the Blackadder opportunity. 

The Dewar licence, P2646, has remained in care and maintenance mode, and will likely remain so, until clarification on issuing new development consents is provided by the UK government.

Borders & Southern Petroleum

Borders & Southern has announced its unaudited half year financial statements for the six months to 30 June 2025. The accounts contained within this report represent the consolidation of Borders & Southern Petroleum plc and its subsidiary Borders & Southern Falkland Islands Limited. 

Nothing much to add here, the most important part is about the Darwin farm-out which is most important and establishing a decent partner crucial. The rest of the call is down to the situation up north where Sea Lion is the prize and very close to getting final approvals. 

Highlights

·   Operating loss for the period was $441,000 (2024: $578,000)

·   Cash balance on 30 June 2025 was $3.2 million (31 December 2024: $2.09 million)

·   Successfully raised £2.2 million to continue to advance the Darwin discovery towards appraisal

·   Darwin farm out progressing, aided by improved industry sentiment towards upstream assets and the progress of the Sea Lion field in the North Falklands

Petro Matad

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

Key updates

·    Block XX acidisation operations completed at Heron-2. Well clean up continuing.

·    Workover rig mobilising to Gazelle-1 for well testing programme.

Well Testing Operations

As previously reported, activities to acidise and re-test the Heron-2 well commenced on 25 August. The well was re-entered and cleaned out by means of a swabbing operation which uses a tool run on wireline to lift fluid out of the well bore. During the pre-acid clean up gas and oil were observed in greater concentrations than those seen in the original well testing programme conducted in October 2024.

The acid wash programme was then completed successfully with the planned volume of acid injected into the reservoir. After a 20 hour soak the swabbing string was re-run to recover the injected fluid, clean out the hole and begin recovery of reservoir fluid. However, with 640 barrels of injected fluid still remaining to be recovered, the Company has now determined that the quickest and most cost-effective way to get a definitive result from the re-test of Heron-2 is to run a completion string, install a surface pump and conduct a pumped test.

Work has now started to complete the well and install temporary surface production equipment. PetroChina has provided us with a suitable second-hand beam pump and our construction contractor has mobilised to site. We expect to be ready to start pumping operations by month’s end to recover the remainder of the injected fluids and then determine the flowing reservoir fluid and the well’s productive capacity. Should a commercial oil rate be achieved the temporary facilities can continue to operate whilst a permanent storage tank is installed. PetroChina has identified a second-hand tank that we can use if required.

The workover rig is now moving to the Gazelle-1 well. All permits and approvals are in place to commence the well test programme which we anticipate will start before the end of September and complete by the end of October after which the rig will move to Gobi Bear-1.

Mike Buck, CEO of Petro Matad, said:

“The Heron-2 acid job went according to plan but taking into account the significant volume of unrecovered injected fluid in the well, completion and pumping offer a timely and cost-effective way to get a definitive result in this re-test. We are grateful to our neighbours PetroChina for providing equipment to enable us to adapt the Heron-2 programme expeditiously. We look forward to a smooth rig up at Gazelle-1 and to testing the well during October.”

This doesn’t make very good reading as the acidisation job of Heron-2 has not been a success although there is still much work to be done down hole. With action yet to come at Gazelle and Gobi Bear all is not lost and there is still plenty of upside at MATD.