Arrow Exploration Corp. (AIM: AXL; TSXV: AXL) (“Arrow” or the “Company”), the high-growth operator with a portfolio of assets across key Colombian hydrocarbon basins, announces the filing of its Interim Condensed (unaudited) Consolidated Financial Statements and Management’s Discussion and Analysis (“MD&A”) for the three and six months ended June 30, 2023 which are available on SEDAR (www.sedar.com) and will also be available shortly on Arrow’s website at www.arrowexploration.ca.
Q2 2023 Highlights:
· Recorded $10.3 million of total oil and natural gas revenue, net of royalties, more than double compared to the same period in 2022 (Q2 2022: $5 million).
· Adjusted EBITDA of $5.8 million, more than double compared to 2022 (Q2 2022: $2.8 million).
· Average corporate production up 120% to 2,169 boe/d (Q2 2022: 980 boe/d).
· Realized corporate oil operating netbacks of $44.21/bbl due to increased production allowing operating cost to be spread over more barrels.
· Cash position of $10.8 million at the end of Q2 2023.
· Generated positive operating cashflows of $4.9 million (Q2 2022: negative $0.1 million).
· Successfully drilled the Carrizales Norte-1 (CN-1) exploratory well at the Tapir block resulting in material production and reserves additions.
Post Period End Highlights:
· The Carrizales Norte-2 (CN-2) well has been successfully drilled encountering multiple hydrocarbon-bearing intervals and is currently on production. The Ubaque zone in CN-2 has produced at initial rates exceeding 600 BOPD (net) at low water cuts. Reservoir stewardship is in execution in voluntarily reducing high initial rates with the well currently producing at a managed rate of 500 BOPD net. Forecasted rates were 320 BOPD (net) per Ubaque well which is well below flow capability.
· The Carrizales Norte-3 (CN-3) well has been drilled and is currently undergoing production testing in the Upper Ubaque. Stabilized flow rates are expected to be reported in first week of September.
Outlook:
· The preliminary development plan at CN consists of 21 wells, the majority focusing on the Ubaque formation, to fully exploit the thick reservoir. The reservoir pay zone is consistently thick (100 feet) across the fault bounded structure. Gacheta targeted wells will also be part of the overall development plan at CN.
· Arrow anticipates drilling two additional wells at Rio Cravo Este (RCE) by year-end to target the Gacheta formation which was successfully tested at commercial rates in RCE-2.
· Arrow plans to drill two development wells at the Oso Pardo Block in the Middle Magdalena Basin. Existing wells at Osso Pardo demonstrated initial rates exceeding 400 BOPD of 23 API gravity crude. This is expected to be initiated prior to year-end utilizing a second rig.
Marshall Abbott, CEO of Arrow Exploration Corp., commented:
“Arrow continues to gain momentum with strong Q2 2023 results. Our exciting drilling program, including the drilling of three RCE wells and three CN wells, is adding significant production and reserves, as well as establishing a new core area. The 3D seismic West Tapir project is currently being processed and is expected to further evaluate the 2D recognized fault prospects. The Board remains confident in the Company’s opportunity rich portfolio and the capability of the Arrow team to increase shareholder value.”
FINANCIAL AND OPERATING HIGHLIGHTS
|
(in United States dollars, except as otherwise noted) |
Three months ended June 30, 2023 |
Six months ended June 30, 2023 |
Three months ended June 30, 2022 |
|
Total natural gas and crude oil revenues, net of royalties |
10,280,280 |
17,273,140 |
5,024,604 |
|
|
|
|
|
|
Funds flow from operations (1) |
3,278,041 |
7,518,644 |
2,613,843 |
|
Funds flow from operations (1) per share – |
|
|
|
|
Basic($) |
0.01 |
0.03 |
0.01 |
|
Diluted ($) |
0.01 |
0.03 |
0.00 |
|
Net income (loss) |
(757,416) |
2,232,319 |
768,318 |
|
Net income (loss) per share – |
|
|
|
|
Basic ($) |
(0.00) |
0.01 |
0.00 |
|
Diluted ($) |
(0.00) |
0.01 |
0.00 |
|
Adjusted EBITDA (1) |
5,839,960 |
10,197,751 |
2,809,713 |
|
Weighted average shares outstanding – |
|
|
|
|
Basic ($) |
230,808,547 |
226,785,547 |
214,367,388 |
|
Diluted ($) |
295,446,047 |
294,694,399 |
288,231,900 |
|
Common shares end of period |
234,274,893 |
234,274,893 |
214,667,143 |
|
Capital expenditures |
6,870,258 |
11,141,951 |
2,777,611 |
|
Cash and cash equivalents |
10,801,494 |
10,801,494 |
7,368,252 |
|
Current Assets |
15,159,323 |
15,159,323 |
12,190,063 |
|
Current liabilities |
17,522,710 |
17,522,710 |
6,596,035 |
|
Adjusted working capital(1) |
6,341,935 |
6,341,935 |
5,594,028 |
|
Long-term portion of restricted cash(2) |
703,683 |
703,683 |
867,047 |
|
Total assets |
56,305,530 |
56,305,530 |
42,670,153 |
|
Operating |
|
|
|
|
|
|
|
|
|
Natural gas and crude oil production, before royalties |
|
|
|
|
Natural gas (Mcf/d) |
2,318 |
2,388 |
2,398 |
|
Natural gas liquids (bbl/d) |
3 |
4 |
5 |
|
Crude oil (bbl/d) |
1,779 |
1,502 |
575 |
|
Total (boe/d) |
2,169 |
1,904 |
980 |
|
Operating netbacks ($/boe) (1) |
|
|
|
|
Natural gas ($/Mcf) |
($0.05) |
($0.24) |
$2.18 |
|
Crude oil ($/bbl) |
$53.64 |
$55.42 |
$80.04 |
|
Total ($/boe) |
$44.21 |
$43.40 |
$49.18 |
(1)Non-IFRS measures
(2)Long term restricted cash not included in working capital
DISCUSSION OF OPERATING RESULTS
The Company increased its production from new wells at RCE-3, RCE-4 and RCE-5 and CN-1. These have allowed the Company to continue to improve its operating results and EBITDA. There has been a decrease in the Company’s natural gas production in Canada due to natural declines.
Average Production by Property
|
Average Production Boe/d |
Q2 2023 |
Q1 2023 |
Q4 2022 |
Q3 2022 |
Q2 2022 |
Q1 2022 |
|
Oso Pardo |
130 |
138 |
115 |
104 |
112 |
121 |
|
Ombu (Capella) |
– |
80 |
238 |
215 |
97 |
177 |
|
Rio Cravo Este (Tapir) |
1,592 |
1,004 |
832 |
860 |
366 |
136 |
|
Carrizales Norte (Tapir) |
57 |
– |
– |
– |
– |
– |
|
Total Colombia |
1,779 |
1,222 |
1,185 |
1,179 |
575 |
434 |
|
Fir, Alberta |
77 |
74 |
79 |
82 |
86 |
73 |
|
Pepper, Alberta |
313 |
340 |
472 |
242 |
319 |
636 |
|
TOTAL (Boe/d) |
2,169 |
1,635 |
1,736 |
1,503 |
980 |
1,144 |
For the three months ended June 30, 2023, the Company’s average production was 2,169 boe/d, which consisted of crude oil production in Colombia of 1,779 bbl/d, natural gas production of 2,318 Mcf/d and minor amounts of natural gas liquids from the Company’s Canadian properties. The Company’s Q2 2023 total production was 121% higher than in the same period in 2022.
DISCUSSION OF FINANCIAL RESULTS
During Q2 2023 the Company continued to realize strong oil prices, offset by decreased gas prices, as summarized below:
|
Three months ended June 30 |
|||
|
2023 |
2022 |
Change |
|
|
Benchmark Prices |
|
||
|
AECO (C$/Mcf) |
$2.46 |
$5.42 |
(55%) |
|
Brent ($/bbl) |
$74.98 |
$111.98 |
(33%) |
|
West Texas Intermediate ($/bbl) |
$73.75 |
$108.40 |
(32%) |
|
Realized Prices |
|
||
|
Natural gas, net of transportation ($/Mcf) |
$1.96 |
$5.35 |
(63%) |
|
Natural gas liquids ($/bbl) |
$55.33 |
$90.94 |
(39%) |
|
Crude oil, net of transportation ($/bbl) |
$67.69 |
$104.66 |
(35%) |
|
Corporate average, net of transport ($/boe)(1) |
$57.89 |
$71.06 |
(19%) |
(1)Non-IFRS measure
OPERATING NETBACKS
The Company also continued to realize positive operating netbacks, as summarized below:
|
|
Three months ended June 30 |
Six months ended June 30 |
||
|
|
2023 |
2022 |
2023 |
2022 |
|
Natural Gas ($/Mcf) |
|
|
|
|
|
Revenue, net of transportation expense |
$1.96 |
$5.45 |
$2.03 |
$4.32 |
|
Royalties |
$0.20 |
(0.62) |
($0.00) |
(0.72) |
|
Operating expenses |
($2.21) |
(2.65) |
($2.27) |
(2.33) |
|
Natural Gas operating netback(1) |
($0.05) |
$2.18 |
($0.24) |
$1.26 |
|
Crude oil ($/bbl) |
|
|
|
|
|
Revenue, net of transportation expense |
$67.69 |
$104.66 |
$69.83 |
$91.12 |
|
Royalties |
($8.46) |
(13.31) |
($8.70) |
(10.20) |
|
Operating expenses |
($5.59) |
(11.31) |
($5.71) |
(14.55) |
|
Crude Oil operating netback(1) |
$53.64 |
$80.04 |
$55.42 |
$66.37 |
|
Corporate ($/boe) |
|
|
|
|
|
Revenue, net of transportation expense |
$57.89 |
$71.35 |
$57.62 |
$54.23 |
|
Royalties |
($6.76) |
(8.80) |
($6.85) |
(6.83) |
|
Operating expenses |
($6.92) |
(13.38) |
($7.37) |
(14.13) |
|
Corporate Operating netback(1) |
$44.21 |
$49.18 |
$43.40 |
$33.27 |
(1)Non-IFRS measure
The operating netbacks of the Company continued to improve in 2023 due to several factors, principally the increased production from its Colombian assets, even with decreased crude oil prices.
During 2023, the Company has incurred in $11 million of capital expenditures, primarily in connection with the drilling of the three RCE and CN wells, civil works completed in Rio Cravo and shooting 125 km2 of 3D seismic in the Tapir block to highlight existing leads and prospects for drilling. This acceleration in operational tempo is expected to continue during the remainder of 2023, funded by cash on hand and cashflow.
For further Information, contact:
|
Arrow Exploration |
|
|
Marshall Abbott, CEO |
+1 403 651 5995 |
|
Joe McFarlane, CFO |
+1 403 818 1033 |
