Arrow Exploration (AIM:AXL) Exploration 2022 Year-End Reserves

BEFORE TAX NPV-10 VALUES INCREASED 97% FOR 1P AND 51% FOR 2P RESERVES,

1P AND 2P RESERVE REPLACEMENT RATIO WAS 165% AND 164% RESPECTIVELY

CALGARY, March 29, 2023 – Arrow Exploration Corp. (AIM: AXL; TSXV: AXL) is pleased to announce the results of its 2022 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, 2021.

Highlights

–  Proved (“1P”) reserves:

o  Increased by 11% to 3.37 million barrels of oil equivalent (“MMboe “), driven principally through uplift at Tapir (Rio Cravo), Colombia; 

o  Net present value before tax, discounted at 10% (“NPV-10”) is $57.9 million ($17.15/boe) for 1P reserves.

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

o  Increased by 4% to 7.69 MMboe; 

o  NPV-10 is $127.3 million ($16.56/boe) for 2P reserves.

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

o  Increased by 1% to 11.68 MMboe;

o  NPV-10 is $205.8 million ($17.57/boe) for 3P reserves.

–  Before tax NPV-10 values have increased 97% for 1P and 51% for 2P, over year-end 2021, due to reserves growth and an increase in the oil price forecast used by BouryGEC at year-end 2022; 2022 Proved Developed Producing (“PDP”) reserves increased 27% to 1.31 MMboe supported by the improved performance of the new drilling in the Rio Cravo Field; PDP reserves represent 39% of 1P reserves, reflecting an attractive ratio of base production to low-risk drilling targets; and

–  Before tax NPV-10 per share of US$0.14/share, US$0.39/share, and US$0.63/share for 1P, 2P, and 3P reserve categories, respectively;

–  BouryGEC post tax NPVs impacted by changes in Colombian tax regime in the year but pre other corporate tax shelters (further detail below).

CEO Commentary

Marshall Abbott, CEO of Arrow, commented: “Arrow delivered an increase in volumes and pre-tax values across 1P, 2P and 3P reserves in 2022. We are pleased with the results of the BouryGEC reserves evaluation, which reinforces the significant value of our Colombian and Canadian assets.

The BouryGEC 2022 report of course does not account for the current drilling campaign at Rio Cravo Este, where, given the encouraging results to date, we might expect further reclassifications and increase in reserves.  Additionally, with the imminent drilling of the Carrizales Norte wells, we would expect to continue growing reserves in the near future.

2022 Year-End Reserves Summary

Management has presented below a summary of Arrow’s reserves as at December 31, 2022, on a working interest gross reserves basis, which have been taken from and reconcile directly to the reserves report prepared by BouryGEC, an independent qualified reserves evaluator.  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 reserve 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, 2022 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 Carazales Norte and annual G&A. Spending on these projects will provide tax shelter and result in a reduction of tax for future.

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)

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.

(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.

 Year-End Net Present Value at 10% – After Tax ($ millions) – Sensitivity Cases

In the context of the Brent crude oil and AECO gas prices prevailing at the time of the publication of this press release, when compared generally to the Brent crude oil and AECO gas price forecasts used in the BouryGEC Reserves Evaluation for the year ended December 31, 2022, Arrow is also providing readers with the following sensitivity analysis as to the net present value of its reserves.

 Readers are cautioned that there is no certainty that the forecast price of crude oil or natural gas will increase as calculated by changes to the Dec. 31, 2022 BouryGEC price deck used in the Reserves Evaluation report.

Forecast Revenues and Costs – Undiscounted ($ millions)

 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.

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

(2)  Operating Cost less processing and other income

(3)  Revenue includes Petrolco Income

 2021 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 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.  

The recovery and reserve estimates provided in this news release are estimates only, and there is no guarantee that the estimated reserves will be recovered.  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. 

Cautionary Statement

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”).

 For further Information, contact: