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Arrow Exploration Corp CSTPF


Primary Symbol: V.AXL

Arrow Exploration Corp. is a Canada-based junior oil and gas company. The Company is engaged in the acquisition, exploration and development of oil and gas properties in Colombia and in Western Canada. The Company operates through two segments: Colombia and Canada. In the Llanos Basin, the Company is engaged in the exploration, development, and production of oil within the Tapir block. Its assets include Tapir Block, Santa Isabel (Oso Pardo), and Capella Field. The Company owns a 50% interest in Tapir Block with approximately 65,154 gross acres (32,577 acres net). Its Oso Pardo Field is located in the Santa Isabel Block in the Middle Magdalena Valley (MMV) Basin. The Company also owns approximately 10% interest in the Ombu Block, which contains the Capella discovery. The Capella Field produces approximately 2,250 billion barrels per day (bbl)/d (225 bbl/d net).


TSXV:AXL - Post by User

Post by bveilleuon May 30, 2022 4:42am
161 Views
Post# 34716201

RCE-2 Well on Stream, RCS-1 Spud and First Quarter Results

RCE-2 Well on Stream, RCS-1 Spud and First Quarter Results

Calgary, Alberta--(Newsfile Corp. - 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 23rd 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 23rd. 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 23rd 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

(in United States dollars, except as otherwise noted)   Three months ended March
31, 2022
    Three months ended March
31, 2021
 
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 (boe/d) Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021
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.

Average Benchmark and Realized Prices   Three months ended March 31  
  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)
Rupert Holdsworth Hunt (Broking)
+44 (0)7711 627449

Camarco (Financial PR)
James Crothers
Rebecca Waterworth
Billy Clegg
+44 (0)20 3781 8331

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".

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