50% increase in Target Price!Auctus Advisors is now increasing its TP from 30 pences to 45! ($0.76 Cdn!)
Production and reserves growth in Colombia
• We are increasing our target price from £0.30 per share to £0.45 per share on our new higher oil price assumptions.
• Arrow has started an extensive drilling programme in Colombia with the RCE-2 well to grow oil production at the Rio Cravo Este field and to explore for oil at Carizales Norte. The RCE-2 development well will be followed by the RCS-1 development well (which is expected to spud in early May). Assuming success at RCE2 and RCS-1, the Company will evaluate the potential fora fourth development well in 3Q22.
• All the wells are quick to drill and we forecast will add 400-800 bbl/d per well net to Arrow. • The RCE-1 producing well could also be recompleted in 3Q22.
• Given the favorable fiscal terms and low costs, the production from these fields is highly cash generative and applying our latest oil price forecast has a significant impact on our cashflow forecasts. Overall, we forecast Arrow could produce ~1,500 bbl/d of oil in 4Q22.
• Given the strength of natural gas prices in Canada, Arrow is also considering tying-in another gas well in Canada (East Pepper).
• Securing a licence expansion at Oso Pardo in the Middle Magdalena Velley could add 14 mmbbl of oil reserves to Arrow (unrisked NAV of ~£0.90 per share).