REG - Arrow Exploration - 2023 Year-End Reserves and Operations Update
28/03/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240328:nRSb6040Ia&default-theme=true
RNS Number : 6040I Arrow Exploration Corp. 28 March 2024
NOT FOR RELEASE, DISTRIBUTION, PUBLICATION, DIRECTLY OR INDIRECTLY, IN WHOLE
OR IN PART, IN OR INTO OR FROM THE UNITED STATES, AUSTRALIA, JAPAN, THE
REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO MIGHT
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH
JURISDICTION.
Arrow Exploration Corp.
("Arrow" or the "Company")
2023 Year-end reserves and operations update
Before Tax NPV-10 values increased 133 % for 1P and 120 % for 2P RESERVES,
1P and 2P reserve replacement ratio was 340 % AND 621 % respectively
CALGARY, March 28, 2024 - Arrow Exploration Corp. (AIM: AXL; TSXV: AXL) is
pleased to announce the results of its 2023 year-end reserves evaluation by
Boury Global Energy Consultants Ltd. ("BouryGEC") and an operations update.
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, 2022.
Highlights
- Proved ("1P") reserves:
o Increased by 57% to 5.29 million barrels of oil equivalent ("MMboe"),
driven principally through the discovery of the Carrizales Norte field and
successfully drilling the Rio Cravo Este field, both on the Tapir Block,
Colombia; and
o Net present value before tax, discounted at 10% ("NPV-10") is $134.88
million ($25.51/boe) for 1P reserves.
- Proved plus Probable ("2P") reserves:
o Increased by 54% to 11.8 MMboe;
o Before tax NPV-10 is $280.22 million ($23.66/boe) for 2P reserves.
- Proved plus Probable plus Possible ("3P") reserves:
o Increased by 53% to 17.8 MMboe;
o Before tax NPV-10 is $445.02 million ($24.98/boe) for 3P reserves.
- Before tax NPV-10 values have increased 133% for 1P and 120% for 2P,
over year-end 2022, due to reserves growth and notwithstanding decreases in
the oil price forecast used by BouryGEC at year-end 2023.
- 2023 Proved Developed Producing ("PDP") reserves decreased by 5.9% to
1.23 MMboe from 1.31 MMboe in 2022. This is mainly due to the Capella field
being temporarily shut down. Nonetheless, PDP reserves represent 23% of 1P
reserves, reflecting an attractive ratio of base production to low-risk
drilling targets;
- Before tax NPV-10 per share of US$0.47/share, US$0.98/share, and
US$1.56/share for 1P, 2P, and 3P reserve categories, respectively;
- Find and Develop cost of US$5.41/boe, US$2.42/boe, and US$1.61/boe for 1P,
2P, and 3P reserve categories, respectively;
- Reserves recycle ratio is at good levels of 5.1 for 1P, 9.2 for 2P
and 12.9 for 3P; and
- The post tax NPVs set out in the BouryGEC report reflect changes in
the Colombian tax regime during the year but not certain corporate tax
shelters resulting from capital expenditures which do not have reserves
implications, such as the Tapir 3D seismic project.
CEO Commentary
Marshall Abbott, CEO of Arrow, commented: "Our exciting growth story
continues, backed by strong demand we are pleased to bring forward further
material reserve increases from our extensive acreage in Colombia. Arrow
delivered significant increases in volumes and pre-tax values of 1P, 2P and 3P
reserves in 2023, due to the Carbonera and Ubaque discoveries at Carrizales
Norte and successfully drilling at Rio Cravo Este, which exceeded
expectations. Reserves replacement ratios amounted to 343% 1P and 624% 2P. We
are pleased with the results of the BouryGEC reserves evaluation, which
reinforces the significant value of our Colombian and Canadian assets.
The BouryGEC 2023 report does not take into account the current drilling
campaign at Carrizales Norte where CN-5, CN-6 and CN-7, drilled in Q1 2024,
are in various phases of development. CN-8 will spud within the next few weeks
to test a material extension to the north of the existing Carrizales Norte
development. Given the encouraging results to date, we expect further
reclassifications and increases in reserves.
Furthermore, the imminent drilling of the Carrizales Norte horizontal wells
into the thick Ubaque reservoir, if successful, is expected to result in a
step change in production and lead to booking of substantial additional
reserves.
Arrow's prospect inventory is multifaceted and supports the hydrocarbon
density of the Tapir block in the fertile Llanos Basin. We look forward to a
successful drilling campaign on a fully funded $45MM capital budget that is
weighted towards infill and development wells".
2023 Year-End Reserves Summary
Management has presented below a summary of Arrow's reserves as at December
31, 2023, on a working interest gross reserves basis, which have been
estimated by BouryGEC, an independent qualified reserves evaluator, in a
reserves report with an effective date of December 31, 2023. The figures in
the following tables have been prepared in accordance with the standards
contained in the most recent publication of the Canadian Oil and Gas
Evaluation Handbook (the "COGEH") and the reserves definitions contained in
National Instrument 51-101 - Standards of Disclosure for Oil and Gas
Activities ("NI 51-101"). In addition to the summary information disclosed in
this announcement, more detailed information will be included in Arrow's
annual reserves evaluation for the year ended December 31, 2023 to be filed on
SEDAR (www.sedar.com) and posted on Arrow's website (www.arrowexploration.ca
(http://www.arrowexploration.ca) ).
After tax values have been calculated without taking into account the tax
shelter created by capital spending on projects that do not have reserve
values associated with them, such as the Tapir 3D seismic project, drilling at
Carrizales Norte and annual G&A. Spending on these projects will provide a
tax shelter and result in a reduction in future income tax payments.
Brent Crude Oil Price and AECO Gas Price Forecasts in BouryGEC Reserves
Evaluation
Year-End Forecast: 2024 2025 2026 2027 2028 2029 2030
Brent (US$/bbl) - Dec. 31, 2023 $78.00 $80.00 $81.00 $82.50 $84.50 $85.50 $87.21
AECO-C Spot (C$/MMbtu) C$2.08 C$3.30 C$4.27 C$4.34 C$4.30 C$4.42 C$4.53
Year-End Working Interest Gross Reserves - Breakdown by Category and Country
(Mboe)
2023 2022 Change % Change
Proved developed producing 1,239 1,318 (80) -6%
- Colombia assets (core) 1011 665
- Colombia assets (non-core) 0 178
- Canada assets 228 475
Proved developed non-producing 714 26 688 2646%
- Colombia assets (core) 503 0
- Colombia assets (non-core) 211 26
- Canada assets 0 0
Proved undeveloped 3,339 2,032 1307 64%
- Colombia assets (core) 1,757 453
- Colombia assets (non-core) 1,582 1,579
- Canada assets 0 0
Total Proved 5,292 3,376 1915 57%
Probable 6,555 4,315 2241 52%
- Colombia assets (core) 3,292 1,003
- Colombia assets (non-core) 2,762 2,765
- Canada assets 501 546
Total Proved plus Probable 11,847 7,692 4156 54%
Possible 5,972 3,989 1983 50%
- Colombia assets (core) 4,349 2,224
- Colombia assets (non-core) 1,435 1,513
- Canada assets 174 252
Total Proved plus Probable & Possible 17,805 11,680 6139 53%
Possible reserves are those additional reserves that are less certain to be
recovered than probable reserves. There is a 10% probability that the
quantities actually recovered will equal or exceed the sum of proved plus
probable plus possible reserves.
(1) "Core" assets include Arrow's share of reserves in the Tapir
Block (including Mateguafa) and the Santa Isabel Block (Oso Pardo). Arrow's
50% interest in the Tapir Block is contingent on the assignment by Ecopetrol
SA of such interest to Arrow. 1P Reserves relate to the Tapir license to 2028,
2P reserves relate to the Tapir license to 2033 and 3P reserves relates to the
Tapier license to 2038.
(2) "Non-core" assets include the Ombu Block (which includes the
Capella Field)
(3) "Canada" assets include Fir and Pepper
Year-End Net Present Value at 10% - Before Tax ($ Thousands)
Category 2023 2022 % Change
Proved
Developed Producing 46,021 32,092 43%
Non-Producing 16,544 357 4537%
Undeveloped 72,310 25,458 184%
Total Proved 134,875 57,906 133%
Probable 145,348 69,440 109%
Total Proved plus Probable 280,223 127,346 120%
Possible 164,793 78,471 110%
Total Proved plus Probable & Possible 445,016 205,817 116%
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 2023 2022 % Change
Proved
Developed Producing 34,255 19,509 76%
Non-Producing 11,137 269 4040%
Undeveloped 33,270 9,092 266%
Total Proved 78,662 28,871 172%
Probable 73,113 28,618 155%
Total Proved plus Probable 151,775 57,489 164%
Possible 85,323 32,033 75%
Total Proved plus Probable & Possible 237,098 89,522 132%
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)
Category Revenue (3) Royalties Operating Cost (2) DC Abandonment & Reclamation BT Future Net Revenue (1) Income Taxes AT Future Net Revenue (1)
Total Proved 295.9 30.2 51.0 46.0 6.4 162.3 65.7 96.6
Total Proved plus Probable 657.4 68.7 110.2 91.0 9.6 378.0 166.2 211.7
Total Proved plus Probable & Possible 1,052.8 116.8 173.2 104.8 11.5 646.5 290.4 356.0
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
2023 Year-End Working Interest Gross Reserves Reconciliation (Mboe)
Total Proved Total Proved plus Probable Total Proved plus Probable & Possible
31-Dec-22 3,376 7,692 11,680
Technical Revisions 2805 4877 7115
Economic Factors -97 71 -198
Production -792 -792 -792
31-Dec-23 5,292 11,847 17,805
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.
Operations Update
CN-5
The CN-5 well was spud on February 8, 2024, and reached target depth on
February 14, 2024. CN-5 was the first well drilled into the west Carrizales
Norte field and results from this well have confirmed the productive potential
of the multi-pool field. The well was drilled to a total measured depth of
9,205 feet (8,715 feet true vertical depth) and encountered a thick
hydrocarbon-bearing interval in the Ubaque formation.
Arrow completed the final test on the CN-5 well in the Ubaque formation which
has approximately 45 feet of net oil pay. The pay zone is a clean sandstone
exhibiting consistent 25% porosity (permeability of 5 to 6 Darcies) and high
resistivities. An electric submersible pump (ESP) has been inserted in the
well after perforating.
The well was perforated in the top 12 feet of the Ubaque formation and initial
flow rates were very encouraging.
The oil from the CN-5 well has an API gravity of 13.6°. The ESP is being
restricted at the lowest setting of 30Hz with a choke size of 48/128 to
properly evaluate the water cut. Currently, the well is being produced at an
average rate of 350 BOPD gross (175 BOPD net) with a water cut of 8%.
The testing results indicate the well is capable of higher rates and the
longer term flow rate will be determined in the first weeks of production.
Gradual production ramp up is intended to prevent premature water breakthrough
and adds to ultimate oil recovery.
Initial production results are not necessarily indicative of long-term
performance or ultimate recovery.
CN-6
The Company spud the CN-6 well on February 26, completed it in the Carbonera
C7 formation, and has been put into production. The well penetrated a 16 ft
pay zone in a high quality upper Carbonera C7 sand, with a porosity of 27%.
The well is currently flowing, with an ESP, at 220 BOPD gross (110 BOPD net)
of 33.2° API gravity. Water cut for the CN-6 well tested at 71%. As
reservoir stewards, the Company will conservatively produce at rates that
allow for maximum oil recoveries and optimal production rates.
Initial production results are not necessarily indicative of long-term
performance or ultimate recovery.
The Ubaque and Gacheta formation were not tested in the CN-6 well.
CN-7 and Pads Construction
CN-7 was spud on March 19 and has reached total depth of 9,847 feet. Well logs
are very encouraging and confirm pay zones in the Carbonera, Gacheta and
Ubaque formations. The well will be put on-stream in the next few weeks. The
rig will then be skidded 25 meters to the CN-8 location which is targeting a
material extension northward in the Carbonera C-7, Gacheta and Ubaque
reservoirs.
Construction continues on the CN B Pad (horizontal pad) and the Baquiano
pad. The CN B pad is now ready to receive a drilling rig. Arrow expects
the Baquiano pad will be ready in April with the expectation that it will spud
in Q3 2024.
Arrow expects to spud the first horizontal well from the CN B Pad in Q2 2024
to further develop the Ubaque reservoir in the Carrizales Norte field.
Current projections are that horizontal wells will take approximately one
month to drill and put on production.
Oso Pardo
The Company has decided to defer its stimulation plans in the Oso Pardo wells
to prioritize time and resources in the Tapir drilling program. Further
updates will be provided when available.
Production and Cash Balance
The Company's current production is approximately 2,900 boe/d. The company
has experienced some minor production disruptions caused by drilling
operations at the CN field development and water disposal requirements at the
RCE field. These minor disruptions are expected to be resolved quickly.
The Capella field, where Arrow has a non-operated 10% interest producing net
approximately 280 BOPD, continues to be offline. After discussions with the
Operator, the Company hopes that partial production will resume in Q3, 2024.
Arrow currently has approximately $12 million cash in the bank and no debt.
The Company expects that the remainder of the 2024 capital program will be
funded by cash on hand and operating cash flow.
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
Engineers, 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").
For further Information, contact:
Arrow Exploration
Marshall Abbott, CEO +1 403 651 5995
Joe McFarlane, CFO +1 403 818 1033
Brookline Public Relations, Inc. +1 403 538 5645
Shauna MacDonald
Canaccord Genuity (Nominated Advisor and Joint Broker)
Henry Fitzgerald-O'Connor +44 (0)20 7523 8000
James Asensio
George Grainger
Auctus Advisors (Joint Broker)
Jonathan Wright +44 (0)7711 627449
Rupert Holdsworth Hunt
Camarco (Financial PR)
Andrew Turner +44 (0)20 3781 8331
Rebecca Waterworth
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
Mboe: Thousands of barrel of oil equivalent
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
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END UPDUBRARSBUOUURRecent news on Arrow Exploration
See all newsREG - Arrow Exploration - TR-1: Notification of major holdings
AnnouncementREG - Arrow Exploration - Grant of Stock Options
AnnouncementREG - Arrow Exploration - TR-1: Notification of major holdings
AnnouncementREG - Arrow Exploration - PDMR Exercise of Options
AnnouncementREG - Arrow Exploration - 2023 Year-End Reserves and Operations Update
Announcement