REG - Arrow Exploration - 2022 Year-End Reserves
29/03/2023 07:00
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RNS Number : 5449U Arrow Exploration Corp. 29 March 2023
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JURISDICTION.
Arrow Exploration Corp.
("Arrow" or the "Company")
Arrow Announces 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 (http://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 Forecast: 2023 2024 2025 2026 2027 2028 2029
Brent (US$/bbl) - Dec. 31, 2022 $85.00 $82.80 $80.50 $82.00 $84.20 $85.88 $87.60
AECO-C Spot (C$/MMbtu) C$4.83 C$4.50 C$4.31 C$4.42 C$4.53 C$4.64 C$4.61
Year-End Working Interest Gross Reserves - Breakdown by Category and Country
(Mboe)
2022 2021 Change % Change
Proved developed producing 1,319 1037 282 27%
- Colombia assets (core) 664 287
- Colombia assets (non-core) 178 117
- Canada assets 475 633
Proved developed non-producing 26 362 (336) (93%)
- Colombia assets (core) 0 63
- Colombia assets (non-core) 26 42
- Canada assets 0 258
Proved undeveloped 2,032 1,649 383 23%
- Colombia assets (core) 453 88
- Colombia assets (non-core) 1,579 1,561
- Canada assets 0 0
Total Proved 3,376 3,048 329 11%
Probable 4,314 4,373 (59) (1%)
- Colombia assets (core) 1,003 1,232
- Colombia assets (non-core) 2,765 2,446
- Canada assets 546 694
Total Proved plus Probable 7,691 7,421 270 4%
Possible 3,989 4,119 (130) (3%)
- Colombia assets (core) 2,224 1,933
- Colombia assets (non-core) 1,513 1,828
- Canada assets 252 359
Total Proved plus Probable & Possible 11,679 11,540 140 1%
Possible reserves are those additional reserves that are less certain to be
recovered than probable reserves. There is a 10% probability that the
quantities actually recovered will equal or exceed the sum of proved plus
probable plus possible reserves.
(1) "Core" assets include Arrow's share of reserves in the Tapir
Block, the Santa Isabel Block (Oso Pardo), and Mateguafa. Arrow's 50% interest
in the Tapir Block is contingent on the assignment by Ecopetrol SA of such
interest to Arrow.
(2) "Non-core" assets include the Ombu Block (which includes the
Capella Field)
(3) "Canada" assets include Fir and Pepper
Year-End Net Present Value at 10% - Before Tax ($ Thousands)
Category 2022 2021 % Change
Proved
Developed Producing 32,092 11,406 181%
Non-Producing 357 2,112 (83%)
Undeveloped 25,458 15,889 60%
Total Proved 57,906 29,407 97%
Probable 69,440 54,738 27%
Total Proved plus Probable 127,346 84,146 51%
Possible 78,471 49,842 57%
Total Proved plus Probable & Possible 205,817 133,987 54%
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)
Category 2022 2021 % Change
Proved
Developed Producing 19,509 11,170 75%
Non-Producing 269 2,112 (87%)
Undeveloped 9,092 11,705 (22%)
Total Proved 28,871 24,987 16%
Probable 28,618 33,886 (16%)
Total Proved plus Probable 57,489 58,873 (2%)
Possible 32,033 29,959 7%
Total Proved plus Probable & Possible 89,522 88,832 1%
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.
Type of Sensitivity Total Proved (US$MM) Total Proved plus Probable (US$MM) Total Proved plus Probable & Possible (US$MM)
BouryGEC Forecast Price Case 28.9 57.5 89.5
WTI Premium of US$10/bbl 36.5 72.7 111.2
AECO Premium of C$0.30/MMBtu 29.2 58.2 90.3
Readers are cautioned that there is no certainty that the forecast price of
crude oil or natural gas will increase as calculated by changes to the Dec.
31, 2022 BouryGEC price deck used in the Reserves Evaluation report.
Forecast Revenues and Costs - Undiscounted ($ millions)
Category Revenue (3) Royalties Operating Cost (2) DC Abandonment & Reclamation BT Future Net Revenue (1) Income Taxes AT Future Net Revenue (1)
Total Proved 159.5 15.3 34.2 32.4 4.3 73.3 34.7 38.6
Total Proved plus Probable 354.0 33.3 62.9 67.4 6.9 183.6 93.2 90.4
Total Proved plus Probable & Possible 591.2 63.2 105.7 82.1 8.2 332.0 174.3 157.7
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)
Total Proved Total Proved plus Probable Total Proved plus Probable & Possible
31-Dec-21 3,049 7,421 11,541
Technical Revisions 745 395 503
Economic Factors 58 352 112
Production (476) (476) (476)
31-Dec-22 3,376 7,692 11,680
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:
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 +44 (0)20 7523 8000
James Asensio
Gordon Hamilton
Auctus Advisors (Joint Broker)
Jonathan Wright +44 (0)7711 627449
Rupert Holdsworth Hunt
Camarco (Financial PR)
Georgia Edmonds +44 (0)20 3781 8331
Rebecca Waterworth
Billy Clegg
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 under-exploited, 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".
Reserves Categories
Reserves are estimated remaining quantities of oil and natural gas and related
substances anticipated to be recoverable from known accumulations, from a
given date forward, based on analysis of drilling, geological, geophysical and
engineering data; the use of established technology; and specified economic
conditions which are generally accepted as being reasonable and shall be
disclosed.
"Proved Developed Producing Reserves" are those reserves that are expected to
be recovered from completion intervals open at the time of the estimate. These
reserves may be currently producing or, if shut-in, they must have previously
been on production, and the date of resumption of production must be known
with reasonable certainty.
"Proved Developed Non-Producing Reserves" are those reserves that either have
not been on production or have previously been on production but are shut-in
and the date of resumption of production is unknown.
"Proved Undeveloped Reserves" are those reserves expected to be recovered from
known accumulations where a significant expenditure (e.g., when compared to
the cost of drilling a well) is required to render them capable of production.
They must fully meet the requirements of the reserves category (proved,
probable, possible) to which they are assigned.
"Proved" reserves are those reserves that can be estimated with a high degree
of certainty to be recoverable.
"Probable" reserves are those additional reserves that are less certain to be
recovered than Proved reserves but more certain to be recovered than Possible
reserves.
"Possible" reserves are those additional reserves that are less likely to be
recoverable than Probable reserves.
Forward-looking Statements
This news release contains certain statements or disclosures relating to Arrow
that are based on the expectations of its management as well as assumptions
made by and information currently available to Arrow which may constitute
forward-looking statements or information ("forward-looking statements") under
applicable securities laws. All such statements and disclosures, other than
those of historical fact, which address activities, events, outcomes, results
or developments that Arrow anticipates or expects may, could or will occur in
the future (in whole or in part) should be considered forward-looking
statements. In some cases, forward-looking statements can be identified by the
use of the words "continue", "expect", "opportunity", "plan", "potential" and
"will" and similar expressions. The forward-looking statements contained in
this news release reflect several material factors and expectations and
assumptions of Arrow, including without limitation, Arrow's evaluation of the
impacts of COVID-19, the potential of Arrow's Colombian and/or Canadian assets
(or any of them individually), the prices of oil and/or natural gas, and
Arrow's business plan to expand oil and gas production and achieve attractive
potential operating margins. Arrow believes the expectations and assumptions
reflected in the forward-looking statements are reasonable at this time but no
assurance can be given that these factors, expectations and assumptions will
prove to be correct.
The forward-looking statements included in this news release are not
guarantees of future performance and should not be unduly relied upon. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause actual results or events to differ materially
from those anticipated in such forward-looking statements. The forward-looking
statements contained in this news release are made as of the date hereof and
the Company undertakes no obligations to update publicly or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, unless so required by applicable securities laws.
"Neither TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release"
Glossary
Bbl/d: Barrels per day
$/Bbl: Dollars per barrel
Mcf/d: Thousand cubic feet of gas per day
$/Mcf: Dollars per thousand cubic feet of gas
Boe/d: Barrels of oil equivalent per day
$/Boe: Dollars per barrel of oil equivalent
PDP: Proved Developed Producing
1P: Proved Reserves
2P: Proved plus Probable Reserves
3P: Proved plus Probable plus Possible Reserves
MMbtu: Millions btu
MMboe: Millions of barrels of oil equivalent
Mbtu: Thousands btu
Mboe: Thousands of barrels of oil equivalent
Working Interest Gross Reserves: The reserves attributable to the Company's
license working interest pre-taxes and royalties
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