TIDMAXL
RNS Number : 2137N
Arrow Exploration Corp.
30 May 2022
NOT FOR RELEASE, DISTRIBUTION, PUBLICATION, DIRECTLY OR
INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM THE UNITED
STATES, AUSTRALIA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER
JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.
ARROW ANNOUNCES RCE-2 WELL ON STREAM, RCS-1 SPUD AND FIRST
QUARTER RESULTS
Next well in exploitation plan spud as production increases
CALGARY, May 30, 2022 - Arrow Exploration Corp. (AIM: AXL; TSXV:
AXL) ("Arrow" or the "Company") announces that the Rio Cravo Este-2
("RCE-2") well was brought on production on May 23, 2022. The
Company has also successfully spud the next well, RCS-1 (Rio Cravo
Sur-1) on May 23(rd) in the Tapir Block of its Rio Cravo Este 2
area, located in the Llanos Basin of Colombia. In addition, Arrow
announces the filing of its unaudited interim Financial Statements
and Management ' s Discussion and Analysis (" MD&A ") for the
quarter ended March 31, 2022, which are available on SEDAR (
www.sedar.com ). All dollar figures are in U.S. dollars, except as
otherwise noted.
OPERATIONS UPDATE
The second well on the Tapir Block, the RCE-2, well was brought
on stream slowly on May 23(rd) . The well initially produced clean
oil at high rates but has developed a water cut. The well is
currently being managed at reduced rates of 1000 BOPD (500 net).
This exceeds forecast pre-drill rates of 360 BOPD net and the water
cut has stabilized at less than 20%. Consistent with good
production practice, oil flow rates will be adjusted in a timely
manner. The Company will produce oil rates around the current level
over the intermediate term. The well is expected to payout in less
than six months.
The RCS-1 well, was successfully spud on May 23(rd) and is
currently drilling ahead at 1500 feet. RCS-1 is expected to reach
Total Depth of 8700 feet on or about June 7th.The well is targeting
6 separate hydrocarbon bearing reservoirs. The Company expects the
RCS-1 well to come in 20 feet higher at the Carbonera Formation C-7
level, the primary objective, than was experienced in the RCE-2
well. Drilling and casing of the well will be followed by
completion and testing. Total testing time is dependent on the
number of zones encountered but is expected to take approximately
five days per zone.
The Company is proceeding with a full field development plan to
be submitted to Colombian Regulators for approval. The development
plan includes additional wells targeting the Carbonera C-7, the
Middle Gacheta and the Lower Gacheta, all of which tested
commercial rates in the RCE-2 Well. Existing 3-D seismic has been
successfully reprocessed and interpreted and is supportive of an
expeditious development program. The Company anticipates full field
development will be internally funded by cash flow.
Marshall Abbott, CEO of Arrow, commented: "We are encouraged
with the results of the RCE-2 well, which add materially to our
production, reserves and cashflow. Building on this momentum, we
have successfully spud the RCS-1 well, and look forward to
providing the results of the zone testing once drilling is
complete. We expect that this new well will further increase our
production rates, producing additional positive cashflow and
reserves for Arrow during an ongoing high commodity price
environment."
Continued strong production rates from existing tied-in wells
combined with additional and expected production from the RCE-2
well and RCS-1 wells support the Company's objective of achieving a
production rate of 3,000 boe/d within 18 months of its AIM listing
(October 2021).
2022 FIRST QUARTER INTERIM RESULTS
FINANCIAL AND OPERATING HIGHLIGHTS
Three months Three months
ended March ended March
(in United States dollars, except as otherwise 31, 2022 31, 2021
noted)
-------------------------------------------------- ---------------------------- -------------
Financial Highlights:
Total natural gas and crude oil revenues,
net of royalties 3,402,962 847,432
Funds flow from (used in) operations (1) 312,951 (371,107)
Funds flow from (used in) operations per share
(1)
Basic 0.00 (0.01)
Diluted 0.00 (0.01)
Net income (loss) (5,431,865) (510,405)
Net income (loss) per share
Basic (0.03) (0.01)
Diluted (0.02) (0.01)
Adjusted EBITDA (1) 562,284 (172,417)
-------------------------------------------------- ---------------------------- -------------
Weighted average shares outstanding
Basic 213,577,686 68,674,602
Diluted 250,941,120 68,674,602
Common shares end of period 213,814,643 68,674,602
Capital expenditures 725,665 97,330
-------------------------------------------------- ---------------------------- -------------
Cash and cash equivalents 8,967,197 6,427,994
Current assets 11,538,944 10,145,687
Current liabilities 3,881,006 12,805,377
Working capital (deficit) (1) 7,657,938 (2,659,690)
Long-term portion of restricted cash (2) 742,733 490,760
Total assets 39,914,240 27,684,920
Operational Highlights:
Natural gas and crude oil production, before
royalties
Natural gas (Mcf/d) 4,221 383
Natural gas liquids (bbl/d) 6 4
Crude oil (bbl/d) 434 174
Total (boe/d) 1,144 242
Operating netbacks ($/boe) (1)
Natural gas ($/Mcf) $0.73 $1.02
Crude oil ($/bbl) $48.94 $35.33
Total ($/boe) $20.16 $27.77
-------------------------------------------------- ---------------------------- -------------
(1) Non-IFRS measures - see "Non-IFRS Measures" section within
the first quarter 2022 MD&A
(2) Long term restricted cash not included in working
capital
Discussion of Operating Results
The Company's first quarter 2022 average corporate production
increased by 61% to 1,144 boe/d, compared to the fourth quarter
2021 average production of 712 boe/d. This increase was largely
attributable to the Canadian operation's tie-in of the West Pepper
well in Alberta, Canada, which was brought on production in
December 2021. Arrow's production on a quarterly basis is
summarized below.
Average Production Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021
(boe/d)
------------------------ -------- -------- -------- -------- --------
Oso Pardo 121 123 137 20 -
Ombu (Capella) 177 190 193 97 -
Rio Cravo Este (Tapir) 136 142 151 147 174
------------------------ -------- -------- -------- -------- --------
Total Colombia 434 455 481 264 174
Fir, Alberta 73 82 94 67 68
Pepper, Alberta 636 181 - - -
------------------------ -------- -------- -------- -------- --------
TOTAL 1,144 719 575 331 242
------------------------ -------- -------- -------- -------- --------
For the three months ended March 31, 2022, the Company's average
production mix consisted of crude oil and natural gas production in
Colombia of 434 bbl/d (2021: 174 bbl/d) and 4,221 Mcf/d (2021: 383
Mcf/d) , along with minor amounts of natural gas liquids from the
Arrow's Canadian properties.
Subsequent to quarter end, the Company successfully drilled the
RCE-2 well, which was spud on April 2, 2022 and targeted a large,
three-way fault bounded structure with multiple high-quality
reservoir objectives on the Tapir Block in the Llanos Basin of
Colombia. The well was drilled to a total measured depth of 9,600
feet and encountered six hydrocarbon bearing intervals totaling 90
net feet of oil pay.
Discussion of Financial Results
During Q1 2022 the Company continued to realize good oil and gas
prices, as summarized below.
Three months ended
March 31
---------------------------------------------
Average Benchmark and Realized Prices 2022 2021 Change
--------------------------------------------- ------- ------- -------
Benchmark Prices
AECO ($/Mcf) $3.68 $2.30 60%
Brent ($/bbl) $97.90 $61.32 60%
West Texas Intermediate ($/bbl) $94.94 $58.13 63%
--------------------------------------------- ------- ------- -------
Realized Prices
Natural gas, net of transportation ($/Mcf) $3.65 $3.02 21%
Natural gas liquids ($/bbl) $76.89 $49.62 55%
Crude oil, net of transportation ($/bbl) $73.87 $55.25 34%
Corporate average, net of transport ($/boe) $40.13 $45.36 -12%
--------------------------------------------- ------- ------- -------
(1) Non-IFRS measures - see "Non-IFRS Measures" section within
the MD&A
The Company also continued to realize good operating netbacks,
as summarized below.
Operating Netbacks
Three months ended
March 31
2022 2021
---------------------------------------- ---------- ---------
Natural Gas ($/Mcf)
Revenue, net of transportation expense $3.65 $3.02
Royalties (0.79) (0.32)
Operating expenses (2.13) (1.68)
---------------------------------------- ---------- ---------
Natural gas operating netback(1) $0.73 $1.02
---------------------------------------- ---------- ---------
Crude oil ($/bbl)
Revenue, net of transportation expense $73.87 $55.25
Royalties (6.24) (8.19)
Operating expenses (18.69) (11.73)
---------------------------------------- ---------- ---------
Crude oil operating netback(1) $48.94 $35.33
---------------------------------------- ---------- ---------
Corporate ($/boe)
Revenue, net of transportation expense $40.13 $45.36
Royalties (5.22) (6.49)
Operating expenses (14.76) (11.11)
---------------------------------------- ---------- ---------
Corporate operating netback (1) $20.16 $27.77
---------------------------------------- ---------- ---------
(1) Non-IFRS measure
Arrow experienced lower operating netbacks quarter-over-quarter,
decreasing to $20.16/boe in the first quarter of 2022 from
$27.35/boe in the fourth quarter of 2021. This decrease is due to
higher natural gas production but lower netbacks from natural gas,
which resulted in lower revenues per boe of production sold.
The Company incurred in some capital expenditures during the
first quarter of 2022 in connection with the drilling of the RCE-2
well. At the end of the quarter, Arrow had a positive working
capital position of $7.6 million and a cash position of $8.9
million, which are expected to fund the Company's expenditure plan
for the foreseeable future.
For further Information, contact:
Arrow Exploration
Marshall Abbott, CEO +1 403 651 5995
Joe McFarlane, CFO +1 403 818 1033
Brookline Public Relations,
Inc.
Shauna MacDonald +1 403 538 5645
Canaccord Genuity (Nominated
Advisor and Joint Broker)
Henry Fitzgerald-O'Connor
James Asensio
Gordon Hamilton +44 (0)20 7523 8000
Auctus Advisors (Joint Broker)
Jonathan Wright (Corporate) +44 (0)7711 627449
Rupert Holdsworth Hunt (Broking)
Camarco (Financial PR)
James Crothers +44 (0)20 3781 8331
Rebecca Waterworth
Billy Clegg
About Arrow Exploration Corp.
Arrow Exploration Corp. (operating in Colombia via a branch of
its 100% owned subsidiary Carrao Energy S.A.) is a publicly traded
company with a portfolio of premier Colombian oil assets that are
underexploited, under-explored and offer high potential growth. The
Company's business plan is to expand oil production from some of
Colombia's most active basins, including the Llanos, Middle
Magdalena Valley (MMV) and Putumayo Basin. The asset base is
predominantly operated with high working interests, and the
Brent-linked light oil pricing exposure combines with low royalties
to yield attractive potential operating margins. Arrow's 50%
interest in the Tapir Block is contingent on the assignment by
Ecopetrol SA of such interest to Arrow. Arrow's seasoned team is
led by a hands-on executive team supported by an experienced board.
Arrow is listed on the AIM market of the London Stock Exchange and
on TSX Venture Exchange under the symbol "AXL".
Forward-looking Statements
This news release contains certain statements or disclosures
relating to Arrow that are based on the expectations of its
management as well as assumptions made by and information currently
available to Arrow which may constitute forward-looking statements
or information ("forward-looking statements") under applicable
securities laws. All such statements and disclosures, other than
those of historical fact, which address activities, events,
outcomes, results or developments that Arrow anticipates or expects
may, could or will occur in the future (in whole or in part) should
be considered forward-looking statements. In some cases,
forward-looking statements can be identified by the use of the
words "continue", "expect", "opportunity", "plan", "potential" and
"will" and similar expressions. The forward-looking statements
contained in this news release reflect several material factors and
expectations and assumptions of Arrow, including without
limitation, Arrow's evaluation of the impacts of COVID-19, the
potential of Arrow's Colombian and/or Canadian assets (or any of
them individually), the prices of oil and/or natural gas, and
Arrow's business plan to expand oil and gas production and achieve
attractive potential operating margins. Arrow believes the
expectations and assumptions reflected in the forward-looking
statements are reasonable at this time, but no assurance can be
given that these factors, expectations, and assumptions will prove
to be correct.
The forward-looking statements included in this news release are
not guarantees of future performance and should not be unduly
relied upon. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause
actual results or events to differ materially from those
anticipated in such forward-looking statements. The forward-looking
statements contained in this news release are made as of the date
hereof and the Company undertakes no obligations to update publicly
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, unless so required by
applicable securities laws.
Glossary
Bbl/d: Barrels per day
$/Bbl: Dollars per barrel
Mcf/d: Thousand cubic feet of gas per day
$/Mcf: Dollars per thousand cubic feet of gas
Boe/d: Barrels of oil equivalent per day
$/Boe: Dollars per barrel of oil equivalent
Qualified Person's Statement
The technical information contained in this announcement has
been reviewed and approved by Grant Carnie, senior non-executive
director of Arrow Exploration Corp. Mr. Carnie is a member of the
Canadian Society of Petroleum Engineers, holds a B.Sc. in Geology
from the University of Alberta and has over 35 years' experience in
the oil and gas industry.
This announcement contains inside information for the purposes
of the UK version of the market abuse regulation (EU No. 596/2014)
as it forms part of United Kingdom domestic law by virtue of the
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