Arrow Exploration (AIM:AXL) 2024 Year-End Reserves Update

RESERVES GROWTH IN ALL CATEGORIES. 2024 pdp RESERVES INCREASE 92% FROM 2023

1P and 2P reserveS replacement ratio OF 134% AND 231% respectively

Arrow Exploration Corp. (AIM: AXL; TSXV: AXL) is pleased to announce the results of its 2024 year-end reserves evaluation by Boury Global Energy Consultants Ltd. (“BouryGEC”).

All reserves volume figures stated below are on a Working Interest Gross Reserve basis. Currency amounts are in United States dollars (unless otherwise indicated) and comparisons refer to December 31, 2023.

Arrow’s reserves growth in all categories demonstrates the high resource density of our Tapir block.  Further, moving forward, the Company is confident that it can continue to grow through the drill bit at Tapir.

Highlights

–      Proved Developed Producing (“PDP”) reserves:

o  Increased by 92% to 2.38 million barrels of oil equivalent (“MMboe”), driven principally through the successful horizontal drilling campaign in Carrizales Norte, on the Tapir Block, Colombia; and

o  Net present value before tax, discounted at 10% (“NPV-10”) is $71.3 million ($29.89/boe) for PDP reserves.

–      Proved (“1P”) reserves:

o  Increased by 10% to 5.80 million barrels of oil equivalent (“MMboe”), driven principally through the discovery of the Alberta Llanos field and the successful horizontal drilling campaign in Carrizales Norte, both on the Tapir Block, Colombia; and

o  Net present value before tax, discounted at 10% (“NPV-10”) is $114.57 million ($19.75/boe) for 1P reserves.

–      Proved plus Probable (“2P”) reserves:

o  Increased by 15% to 13.62 MMboe; 

o  Before tax NPV-10 is $284.9 million ($20.92/boe) for 2P reserves.

–      Proved plus Probable plus Possible (“3P”) reserves:

o  Increased by 25% to 22.28 MMboe;

o  Before tax NPV-10 is $524.1 million ($23.52/boe) for 3P reserves.

–     Strong well performance that translated into a higher reserves volumes in comparison with the year-end 2023

–     Despite using a lower forecast price deck than 2023, before tax NPV10 values have increased in the PDP, 2P and 3P categories;

–   Before tax NPV-10 per share of US$0.40/share, US$1.00/share, and US$1.83/share for 1P, 2P, and 3P reserve categories, respectively;

–      Excellent Reserves Recycle Ratios of 2.7 for 1P, 4.6 for 2P and 8.7 for 3P; and

–      Reserves Replacement Ratios of 1.34 for 1P, 2.31 for 2P and 4.39 for 3P

CEO Commentary

Marshall Abbott, CEO of Arrow, commented: “Our exciting growth story continues and we are pleased to be able to report further material reserves increases from our extensive acreage in Colombia. Arrow delivered significant increases in volumes of 1P, 2P and 3P reserves in 2024, due to the Alberta Llanos Carbonera, Guadalupe and Ubaque discoveries and successfully drilling horizontal wells at Carizales Norte. Reserves replacement ratios amounted to 134% 1P and 231% 2P, showing the sustainability of our business model to continue its growth trajectory into the future. We are pleased with the results of the BouryGEC reserves evaluation, which reinforces the significant value of our Colombian and Canadian assets.

“The BouryGEC 2024 report does not reflect the most recent drilling activity at Alberta Llanos or Carrizales Norte where particularly AB-3 (drilled and on production in Q1 2025) and CN HZ-9 (drilled in Q1 2025 and currently cleaning up) have not been incorporated into the report. The CN HZ-10 well has spud, as part of the further development of the Carrizales Norte field to the north of the existing development with results to be reported in due course.

“Arrow’s prospect inventory is multifaceted and demonstrates the hydrocarbon density of the Tapir block in the fertile Llanos Basin. Over the rest of 2025, we look forward to a successful drilling campaign on a fully funded $50MM capital budget that is balanced between development and low risk exploratory wells”.

2024 Year-End Reserves Summary

Management has presented below a summary of Arrow’s reserves as at December 31, 2024, on a working interest gross reserves basis, which have been estimated by BouryGEC, an independent qualified reserves evaluator, in a reserves report with an effective date of December 31, 2024.  The figures in the following tables have been prepared in accordance with the standards contained in the most recent publication of the Canadian Oil and Gas Evaluation Handbook (the “COGEH”) and the reserves definitions contained in National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”). In addition to the summary information disclosed in this announcement, more detailed information will be included in Arrow’s annual reserves evaluation for the year ended December 31, 2024 to be filed on SEDAR (www.sedar.com) and posted on Arrow’s website (www.arrowexploration.ca).

After tax values have been calculated without taking into account the tax shelter created by capital spending on projects that do not have reserve values associated with them, such as the Tapir 3D seismic project, drilling at Carrizales Norte and annual G&A. Spending on these projects will provide a tax shelter and result in a reduction in future income tax payments.

Brent Crude Oil Price and AECO Gas Price Forecasts in BouryGEC Reserves Evaluation

Year-End Working Interest Gross Reserves – Breakdown by Category and Country (Mboe)

(1)      “Core” assets include Arrow’s share of reserves in the Tapir Block, the Santa Isabel Block (Oso Pardo), and Mateguafa. Arrow’s 50% interest in the Tapir Block is contingent on the assignment by Ecopetrol SA of such interest to Arrow.

(2)      “Non-core” assets include the Ombu Block (which includes the Capella Field)

(3)      “Canada” assets include Fir and Pepper

Year-End Net Present Value at 10% – Before Tax ($ Thousands)

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

Year-End Net Present Value at 10% – After Tax ($ Thousands)

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

Forecast Revenues and Costs – Undiscounted ($ millions)

(1)      BT = Before Taxes and AT = After Taxes

(2)      Operating Cost less processing and other income

(3)      Revenue includes Petrolco Income

2024 Year-End Working Interest Gross Reserves Reconciliation (Mboe)

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

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 former member of the Canadian Society of Petroleum Geologists, holds a B.Sc. in Geology from the University of Alberta and has over 35 years’ experience in the oil and gas industry.             

Cautionary Statement

The recovery, reserve estimates and future net revenue provided in this news release are estimates only, and there is no guarantee that the estimated reserves will be recovered nor represent fair market value.  Actual reserves may eventually prove to be greater than, or less than, the estimates provided herein.  In certain of the tables set forth above, the columns may not add due to rounding.        

This press release contains various references to the abbreviation “BOE” which means barrels of oil equivalent. Where amounts are expressed on a BOE basis, natural gas volumes have been converted to oil equivalence at six thousand cubic feet (Mcf) per barrel (bbl). The term BOE may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet per barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

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 European Union (Withdrawal) Act 2018 (“UK MAR”).

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