Arrow Exploration - Arrow Announces Q2 2026 Interim Results
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 ANNOUNCES Q2 2026 INTERIM RESULTS
CALGARY, August 27, 2026 - Arrow Exploration Corp. (AIM: AXL; TSXV: AXL) ("Arrow" or the "Company"), the high-growth operator with a portfolio of assets across key Colombian and Canadian hydrocarbon basins, is pleased to announce the filing of its Interim Condensed (unaudited) Consolidated Financial Statements and Management's Discussion and Analysis ("MD&A") for the three months ended June 30, 2026, which are available on SEDAR (www.sedar.com) and will also be available shortly on Arrow's website at www.arrowexploration.ca.
Q2 2026 Highlights:
· Recorded $34.2 million of total oil and natural gas revenue, net of royalties, representing a 116% increase when compared to the same period in 2025 (Q2 2025: $15.9 million).
· Average corporate production of 4,902 boe/d representing a 30% increase when compared to the same period in 2025 (Q2 2025: 3,768 boe/d).
· Adjusted EBITDA(1) of $25.1 million, a 300% increase when compared to the same period in 2025 (Q2 2025: $6.3 million).
· Realized corporate operating netbacks(1) of $63.42/boe.
· Cash position of $28.5 million at the end of Q2 2026 and no debt.
· Q2 2026 operating cashflows of $15.7 million.
· Drilled one successful exploration well and two additional development wells in the Icaco field (IC) and one horizontal development well in the Mateguafa Attic field in the Tapir block
· Net income of $10.4 million (Q2 2025: loss of 0.9 million)
(1)Non-IFRS measures - see "Non-IFRS Measures" section below
Post Period End Highlights:
· Drilled two development wells, and spudded a third, at the Icaco field
· Completed the acquisition of the Thorsby field in Alberta, Canada adding production, proved reserves and additional upside opportunities for development drilling (please refer to press release dated August 13, 2026 for more details).
· Recompleted two Carrizales Norte wells to increase production
Tapir Extension
The Company continues constructive engagement with authorities regarding the Tapir block extension and believes it is well positioned to secure the extension based on satisfaction all of the relevant requirements. Arrow will keep the market updated on progress with its license extension discussions in future releases.
Marshall Abbott, CEO of Arrow Exploration Corp., commented:
"The second quarter of 2026 has been very productive for Arrow, our best quarter yet. The discovery of the Icaco field has resulted in the beginning of a large development plan. The multi-formation discovery will result in additional reserves and drilling inventory for Arrow. We are excited by the Icaco discovery; it has become a major production platform with a material impact on the Company."
"Arrow significantly increased revenue and EBITDA while sustaining increased production, which, along with a robust balance sheet, supports the ongoing capital program. The focus for the remainder of 2026 will be to drill additional wells at the Icaco pad, and numerous well recompletions to improve productivity in our currently most prolific fields."
FINANCIAL AND OPERATING HIGHLIGHTS
(in United States dollars, except as otherwise noted)
Three months ended June 30, 2026
Six months
ended June 30, 2026
Three months ended June 30, 2025
Total natural gas and crude oil revenues, net of royalties
34,219,743
57,718,059
15,868,938
Funds flow from operations (1)
18,904,806
30,462,029
3,994,525
Funds flow from operations (1) per share -
Basic($)
0.07
0.11
0.01
Diluted ($)
0.07
0.11
0.01
Net income (loss)
10,357,179
15,578,650
(934,735)
Net income (loss) per share -
Basic ($)
0.04
0.05
(0.00)
Diluted ($)
0.04
0.06
(0.00)
Adjusted EBITDA (1)
25,164,710
39,225,167
6,269,979
Weighted average shares outstanding -
Basic
285,864,348
285,864,348
285,864,348
Diluted
289,523,559
288,231,181
295,209,883
Common shares end of period
285,864,348
285,864,348
285,864,348
Capital expenditures
9,361,608
17,243,943
14,771,206
Cash and cash equivalents
28,495,045
28,495,045
13,212,417
Current Assets
49,536,264
49,536,264
20,213,917
Current liabilities
35,021,378
35,021,378
19,820,706
Adjusted working capital(1)
14,514,886
14,514,886
393,211
Long-term portion of restricted cash
274,377
274,377
154,849
Total assets
126,194,668
126,194,668
92,729,950
Operating
Natural gas and crude oil production, before royalties
Natural gas (Mcf/d)
574
824
1,587
Natural gas liquids (bbl/d)
5
5
10
Crude oil (bbl/d)
4,801
4,666
3,493
Total (boe/d)
4,902
4,808
3,767
Operating netbacks ($/boe) (1)
Natural gas ($/Mcf)
($1.71)
($1.07)
($1.45)
Crude oil ($/bbl)
$64.90
$54.17
$30.08
Total ($/boe)
$63.42
$52.44
$27.36
(1)Non-IFRS measures
Discussion of Operating Results
During Q2 2026, the Company's production continued to increase due to additional volumes of oil crude production from the Mateguafa Attic and the new Icaco field in the Tapir block, offset by decreased production in other fields due to natural declines. This has allowed the Company to continue its healthy level of operating results and EBITDA.
Average Production by Property
Average Production Boe/d
YTD 2026
Q2 2026
Q1 2026
YTD 2025
Q4 2025
Q3 2025
Q2 2025
Oso Pardo
101
104
98
114
95
103
131
Rio Cravo Este (Tapir)
817
753
881
1,043
996
1,065
996
Carrizales Norte (Tapir)
1,338
1,253
1,424
1,991
1,702
1,879
2,070
Alberta Llanos (Tapir)
284
275
294
474
446
943
296
Mateguafa (Tapir)
2,031
2,228
1,833
127
500
-
-
Icaco (Tapir)
95
188
-
-
-
-
-
Total Colombia
4,666
4,801
4,530
3,749
3,739
3,990
3,493
Fir, Alberta
79
90
67
100
107
29
100
Pepper, Alberta
64
11
118
162
129
47
170
KEHO, Alberta
-
-
-
1
-
-
5
TOTAL (Boe/d)
4,809
4,902
4,715
4,012
3,975
4,065
3,768
The Company's average production for the three months ended June 30, 2026 was 4,902 boe/d, which consisted of crude oil production in Colombia of 4,801, natural gas production of 574 Mcf/d, and minor amounts of natural gas liquids. The Company's Q2 2026 production was 30% higher than its Q2 2025 production and 4% higher than Q1 2026, due to the Mateguafa Attic and Icaco fields additional volumes, offset by declines in other fields.
Discussion of Financial Results
The Company realized prices of $89.65 and $76.95 per boe during the three months ended June 30, 2026 (2025: $53.33) due to overall increase in crude oil and natural gas prices during the first half of 2026, offset by decreases in natural gas prices.
Three months ended June 30
2026
2025
Change
Benchmark Prices
AECO (C$/Mcf)
$1.55
$1.72
(10%)
Brent ($/bbl)
$96.87
$69.80
39%
West Texas Intermediate ($/bbl)
$92.85
$63.70
46%
Realized Prices
Natural gas, net of transportation ($/Mcf)
$1.24
$1.27
(2%)
Natural gas liquids ($/bbl)
$47.85
$51.76
(8%)
Crude oil, net of transportation ($/bbl)
$91.34
$56.87
61%
Corporate average, net of transport ($/boe)(1)
$89.65
$53.33
68%
(1)Non-IFRS measure
Operating Netbacks
The Company also continued to realize good oil operating netbacks, as summarized below:
Three months ended June 30
2026
2025
Natural Gas ($/Mcf)
Revenue, net of transportation expense
$1.24
$1.27
Royalties
($0.27)
($0.10)
Operating expenses
($2.68)
($2.61)
Natural Gas operating netback(1)
($1.71)
($1.45)
Crude oil ($/bbl)
Revenue, net of transportation expense
$91.34
$56.87
Royalties
($11.39)
($6.63)
Operating expenses
($15.05)
($20.17)
Crude Oil operating netback(1)
$64.90
$30.08
Corporate ($/boe)
Revenue, net of transportation expense
$89.65
$53.33
Royalties
($11.18)
($6.18)
Operating expenses
($15.05)
($19.79)
Corporate Operating netback(1)
$63.42
$27.36
(1)Non-IFRS measure
The operating netbacks of the Company for the three and six months ended June 30, 2026 have improved due to the overall increase in crude oil prices, as well as increased production. The Company continues to develop alternatives to trucking water for disposal in order to improve operating costs. During Q2 2026, the Company incurred $7.6 million of capital expenditure, primarily in connection with the drilling of additional development wells in the Tapir block. This tempo is expected to continue during the remainder of 2026, 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
Canaccord Genuity (Nominated Advisor and Joint Broker)
Henry Fitzgerald-O'Connor
James Asensio
George Grainger
+44 (0)20 7523 8000
Auctus Advisors (Joint Broker)
Jonathan Wright
+44 (0)7711 627449
Rupert Holdsworth Hunt
Hannam & Partners (Joint Broker)
Leif Powis
+44 20 7907 8500
Samuel Merlin
Camarco (Financial PR)
Owen Roberts
+44 (0)20 3781 8331
Rebecca Waterworth
About Arrow Exploration Corp.
Arrow Exploration Corp. (operating in Colombia via a branches of its 100% owned subsidiary Arrow Exploration Switzerland GmbH) is a publicly traded company with a portfolio of premier Colombian oil assets that are underexploited, 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. Pursuant to certain private agreements entered between Arrow and its partner, Arrow is entitled to receive 50% of the production from the Tapir block and has the right to request approval to Ecopetrol S.A. for the assignment of 50% of all rights, interests and obligations under the Tapir Association Contract. Arrow is listed on the AIM market of the London Stock Exchange and on TSX Venture Exchange under the symbol "AXL".
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 global pandemics, 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 or bop/d: Barrels per day
$/Bbl: Dollars per barrel
Mcf/d: Thousand cubic feet of gas per day
Mmcf/d: Million cubic feet of gas per day
$/Mcf: Dollars per thousand cubic feet of gas
Mboe: Thousands of barrels of oil equivalent
Boe/d: Barrels of oil equivalent per day
$/Boe: Dollars per barrel of oil equivalent
MMbbls: Million of barrels
BOE's may be misleading particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 bblis 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").
Non‐IFRS Measures
The Company uses non-IFRS measures to evaluate its performance which are measures not defined in IFRS. Working capital, funds flow from operations, realized prices, operating netback, adjusted EBITDA, and net debt as presented do not have any standardized meaning prescribed by IFRS and therefore may not be comparable with the calculation of similar measures for other entities. The Company considers these measures as key measures to demonstrate its ability to generate the cash flow necessary to fund future growth through capital investment, and to repay its debt, as the case may be. These measures should not be considered as an alternative to, or more meaningful than net income (loss) or cash provided by operating activities or net loss and comprehensive loss as determined in accordance with IFRS as an indicator of the Company's performance. The Company's determination of these measures may not be comparable to that reported by other companies.
Arrow Exploration Corp.
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE AND SIX MONTHS ended JUNE 30, 2026 AND 2025
IN UNITED STATES DOLLARS
(UNAUDITED)
Notice of No Auditor Review of the Interim Condensed Consolidated Financial Statements
as at and for the three and six months ended June 30, 2026
Under National Instrument 51-102, Part 4, subsection 4.3 (3)(a), if an auditor has not performed a review of the interim condensed consolidated financial statements, they must be accompanied by a notice indicating that an auditor has not reviewed the financial statements.
The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared by and are the responsibility of the Company's management.
The Company's independent auditor has not performed a review of these financial statements in accordance with standards established by the Chartered Professional Accountants of Canada for a review of interim financial statements by an entity's auditor.
Arrow Exploration Corp.
Interim Consolidated Statements of Financial Position
In United States Dollars
(Unaudited)
As at
Notes
June 30, 2026
December 31, 2025
ASSETS
Current assets
Cash
$
28,495,045
$
11,208,824
Restricted cash and deposits
3
286,107
258,006
Trade and other receivables
4
11,679,631
14,533,377
Taxes receivable
5
8,545,014
7,637,342
Deposits and prepaid expenses
343,717
135,221
Inventory
186,750
108,533
49,536,264
33,881,303
Non-current assets
Restricted cash and deposits
3
274,377
273,257
Exploration and evaluation assets
6
490,378
3,437,965
Property and equipment
7
75,893,649
67,810,032
Total Assets
$
126,194,668
$
105,402,557
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities
$
34,005,856
$
31,494,615
Lease obligation
8
78,504
67,734
Stock based compensation liability
10
937,019
495,619
35,021,379
32,057,968
Non-current liabilities
Lease obligations
8
149,003
132,952
Stock based compensation liability
10
374,434
116,350
Other liabilities
796,547
855,363
Deferred income taxes
8,920,824
7,930,871
Decommissioning liability
9
11,468,441
9,863,781
Total liabilities
56,730,628
50,957,285
Shareholders' equity
Share capital
10
73,829,795
73,829,795
Contributed surplus
856,093
856,093
Deficit
(3,749,646)
(19,328,296)
Accumulated other comprehensive loss
(1,472,202)
(912,320)
Total shareholders' equity
69,464,040
54,445,272
Total liabilities and shareholders' equity
$
126,194,668
$
105,402,557
Commitments and contingencies (Note 11)
The accompanying notes are an integral part of these interim consolidated financial statements.
On behalf of the Board:
signed "Gage Jull" Director signed "Ian Langley" Director
Gage Jull Ian Langley
Arrow Exploration Corp.
Interim Condensed Consolidated Statements of Operations and Comprehensive Income
In United States Dollars
(Unaudited)
For the three months ended June 30
For the six months ended June 30
Notes
2026
2025
2026
2025
Revenue
Oil and natural gas
$ 39,095,723
$ 17,949,268
$ 65,915,355
$ 40,085,427
Royalties
(4,875,980)
(2,080,330)
(8,197,296)
(4,710,364)
34,219,743
15,868,938
57,718,059
35,375,063
Expenses
Operating
6,564,566
6,660,847
12,799,599
12,017,446
Administrative
3,220,976
3,771,368
6,470,459
6,653,358
Share based payments
10
352,396
857,840
1,275,192
(243,630)
Financing costs:
Accretion
9
94,707
72,769
183,136
141,046
Interest
8
6,536
7,368
12,174
14,535
Foreign exchange (gain) loss
(962,782)
(854,503)
(956,538)
(1,098,714)
Depletion and depreciation
7
7,382,643
3,179,694
13,558,931
9,700,662
Other expense, net
232,273
24,444
179,372
4,643
16,891,315
13,719,827
33,522,325
27,189,346
Income before taxes
17,328,428
2,149,111
24,195,734
8,185,717
Income taxes
Current
6,206,612
1,017,164
7,627,131
2,895,081
Deferred
764,667
2,066,682
989,953
3,561,607
6,971,249
3,083,846
8,617,084
6,456,688
Net income (loss) for the period
10,357,179
(934,735)
15,578,650
1,729,029
Other comprehensive income (loss)
Foreign exchange
142,868
(13,182)
(559,882)
(12,720)
Total other comprehensive loss
142,868
(13,182)
(559,882)
(12,720)
Total comprehensive income (loss) for the period
$ 10,500,047
$ (947,917)
$ 15,018,768
$ 1,716,309
Net income (loss) per share
- basic
$ 0.04
$ (0.00)
$ 0.05
$ 0.01
- Diluted
$ 0.04
$ (0.00)
$ 0.06
$ 0.01
Weighted average shares outstanding
- basic
285,864,348
285,864,348
285,864,348
285,864,348
- Diluted
289,523,559
295,209,883
288,231,181
294,655,197
The accompanying notes are an integral part of these interim consolidated financial statements.
Arrow Exploration Corp.
Interim Condensed Statements of Changes in Shareholders' Equity
In United States Dollars
(Unaudited)
Share Capital
Contributed Surplus
Accumulated other comprehensive loss
Deficit
Total Equity
Balance January 1, 2026
$
73,829,795
$
856,093
$
(912,320)
$
(19,328,296)
$
54,445,272
Net income for the period
-
-
-
15,578,650
15,578,650
Other comprehensive loss
-
-
(559,882)
-
(559,882)
Total comprehensive income
-
-
(559,882)
15,578,650
15,018,768
.
Balance June 30, 2026
$
73,829,795
$
856,093
$
(1,472,202)
$
(3,749,646)
$
69,464,040
Share Capital
Contributed Surplus
Accumulated other comprehensive loss
Deficit
Total Equity
Balance January 1, 2025
$
73,829,795
$
856,093
$
(898,001)
$
(20,770,894)
$
53,016,993
Net income for the period
-
-
-
1,729,029
1,729,029
Other comprehensive loss
-
-
(12,720)
-
(12,720)
Total comprehensive income
-
-
(12,720)
1,729,029
1,716,309
Balance June 30, 2025
$
73,829,795
856,093
(910,721)
(19,041,865)
54,733,302
The accompanying notes are an integral part of these interim consolidated financial statements.
Arrow Exploration Corp.
Interim Condensed Consolidated Statements of Cash Flows
In United States Dollars
(Unaudited)
For the six months ended June 30,
Notes
2026
2025
Cash flows provided by operating activities:
Net income
$ 15,578,650
$ 1,729,029
Items not involving cash:
Deferred taxes
989,953
3,561,607
Share-based compensation (recovery) expense
10
1,275,192
(243,630)
Depletion and depreciation
7
13,558,931
9,700,662
Interest on leases
8
12,174
14,535
Accretion
9
183,136
141,046
Unrealized foreign exchange (gain)
(544,140)
(77,714)
Payment of asset decommissioning obligations
9
(1,716)
-
Settlement of other liabilities
(58,816)
-
Payment of share based compensation
(531,333)
(1,085,457)
Changes in non‑cash working capital balances:
Restricted cash and deposits
(29,221)
(33,136)
Trade and other receivables
2,853,746
1,054,458
Taxes receivable
(907,671)
(898,229)
Deposits and prepaid expenses
(208,496)
40,477
Inventory
(78,217)
(16,962)
Income tax payable
-
(1,974,550)
Accounts payable and accrued liabilities
(2,702,372)
2,045,957
Cash provided by operating activities
29,389,800
13,958,094
Cash flows used in investing activities:
Additions to exploration and evaluation assets
6
(2,772,349)
(5,548,842)
Additions to property and equipment
7
(14,471,594)
(20,601,544)
Changes in non-cash working capital
5,213,612
6,699,005
Cash flows used in investing activities
(12,030,331)
(19,451,381)
Cash flows used in financing activities:
8
(48,076)
(30,945)
Cash flows used in financing activities
(48,076)
(30,945)
Effect of changes in the exchange rate on cash
(25,172)
(101,135)
Increase (decrease) in cash
17,286,221
(5,625,367)
Cash, beginning of period
11,208,824
18,837,784
Cash, end of period
28,495,045
13,212,417
Supplemental information
Interest paid
$ -
$ -
Taxes paid
$ 2,252,303
$ 3,905,567
The accompanying notes are an integral part of these interim consolidated financial statements.
1. Corporate Information
Arrow Exploration Corp. ("Arrow" or "the Company") is a public junior oil and gas company engaged in the acquisition, exploration and development of oil and gas properties in Colombia and in Western Canada. The Company's shares trade on the TSX Venture Exchange and the AIM Market of the London Stock Exchange plc under the symbol AXL. The head office of Arrow is located at 203, 2303 - 4th Street SW, Calgary, Alberta, Canada, T2S 2S7 and the registered office is located at 600, 815 8th Avenue SW, Calgary, Alberta, Canada, T2P 3P2.
2. Basis of Presentation
Statement of compliance
These interim condensed consolidated financial statements (the "Financial Statements") have been prepared in accordance with International Accounting Standard ("IAS") 34 Interim Financial Reporting. These Financial Statements were authorized for issue by the board of directors of the Company on August 26, 2026. They do not contain all disclosures required by International Financial Reporting Standards ("IFRS") for annual financial statements and, accordingly, should be read in conjunction with the audited consolidated financial statements as at December 31, 2025.
These Financial Statements have been prepared on the historical cost basis, except for derivative financial instruments (when applicable) that are measured at fair value and specifically noted within the notes to these Financial Statements, which have been prepared using the same accounting policies and methods as the consolidated financial statements for the year ended December 31, 2025, except as noted below. In preparing these condensed consolidated financial statements, the significant judgements made by management in applying the group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended December 31, 2025.
Adoption of amendments to accounts standards
On May 30, 2024, the IASB issued amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures that clarify the recognition and derecognition of certain financial assets and liabilities, including an exception for those settled via electronic cash transfer systems. New disclosure requirements are introduced for instruments with terms that can change cash flows and for equity instruments designated at fair value through other comprehensive income. The amendments are effective for reporting periods beginning on or after January 1, 2026 and had no material impact on the Company's Financial Statements.
3. Restricted Cash and deposits
June 30,
2026
December 31, 2025
Colombia (i)
$
430,978
$
399,174
Canada
129,506
132,089
Sub-total
560,484
531,263
Long-term portion
(274,377)
(273,257)
Current portion of restricted cash and deposits
$
286,107
$
258,006
(i) This balance is comprised of a deposit held as collateral to guarantee abandonment expenditures related to its Colombian blocks.
4. Trade and other receivables
June 30,
2026
December 31, 2025
Trade receivables, net of advances
$
348,885
$
190,485
Joint venture receivable
10,287,018
12,237,489
Other accounts receivable
1,043,728
2,105,403
$
11,679,631
$
14,533,377
As at June 30, 2026, other accounts receivable include $742,335 (December 31, 2025 - $733,990) receivable from on demand loans with executives and directors.
5. Taxes receivable
June 30,
2026
December 31, 2025
Value-added tax (VAT) credits recoverable
$
7,781,311
$
3,727,152
Income tax withholdings and advances, net
763,703
3,910,190
$
8,545,014
$
7,637,342
The VAT recoverable balance pertains to non-compensated value-added tax credits originated in Colombia as operational and capital expenditures are incurred. The Company is entitled to compensate or claim for the reimbursement of these VAT credits.
6. Exploration and Evaluation
June 30,
2026
December 31,
2025
Balance, beginning of the period
$
3,437,965
$
142,995
Additions, net
2,772,349
12,986,203
Reclassification to Property and Equipment (Note 7)
(5,719,936)
(6,775,054)
Exploration expense and abandonment costs
-
(2,916,179)
Balance, end of the period
$
490,378
$
3,437,965
During 2026, the Company incurred exploration and development costs associated with its Icaco prospect in the Tapir block. Technical feasibility and commercial viability was determined on the Icaco area, transferring $5,719,936 to its property and equipment. During 2025, the Company incurred exploration and development costs associated with its Mateguafa Oeste, Mateguafa Attic, Icaco, Ardea and Capullo prospects, including seismic studies for other prospects in the Tapir block.
7. Property and Equipment
Cost
Oil and Gas Properties
Right of Use and Other Assets
Total
Balance, December 31, 2024
$108,966,163
$ 497,582
$ 109,463,745
Additions
30,017,313
25,147
30,042,460
Decommissioning adjustment
4,112,985
-
4,112,985
Transfers from exploration and evaluation assets
6,775,054
-
6,775,054
Balance, December 31, 2025
$149,871,515
$ 522,729
$150,394,244
Additions
14,471,594
101,770
14,573,364
Dispositions
-
(117,090)
(117,090)
Transfer from exploration & evaluation
5,719,936
-
5,719,936
Decommissioning adjustment
1,450,277
-
1,450,277
Balance, June 30, 2026
$171,513,322
$ 507,409
$172,020,731
Accumulated depletion and depreciation and impairment
Oil and Gas Properties
Right of Use and Other Assets
Total
Balance, December 31, 2024
$ 53,860,447
$ 314,077
$ 54,174,524
Depletion and depreciation
20,549,872
63,278
20,613,150
Impairment
7,633,523
-
7,633,523
Balance, December 31, 2025
$ 82,043,842
$ 377,355
$ 82,421,197
Dispositions
-
(82,564)
(82,564)
Depletion and depreciation
13,527,993
30,938
13,558,931
Balance, June 30, 2026
$ 95,571,835
$ 325,729
$ 95,897,564
Foreign exchange
Oil and Gas Properties
Right of Use and Other Assets
Total
Balance, December 31, 2024
$ (283,569)
$ (20,654)
$ (304,223)
Effects of movements in foreign
exchange rates
134,573
6,635
141,208
Balance, December 31, 2025
$ (148,996)
$ (14,019)
$ (163,015)
Effects of movements in foreign
exchange rates
(61,788)
(4,715)
(66,503)
Balance, June 30, 2026
(210,784)
(18,734)
(229,518)
Net Book Value
Balance December 31, 2025
$ 67,678,677
$ 131,355
$ 67,810,032
Balance June 30, 2026
$ 75,730,703
$ 162,946
$ 75,893,649
As at June 30, 2026, no indicators of impairment were identified in the Company's property and equipment.
8. Lease Obligations
A reconciliation of the discounted lease obligation is set forth below:
June 30,
2026
December 31,
2025
Obligation, beginning of the period
$ 200,686
$ 219,406
Additions
101,770
17,484
Dispositions
(30,857)
-
Lease payments
(48,076)
(76,048)
Interest
12,174
28,676
Effects of movements in foreign exchange rates
(8,190)
11,168
Obligation, end of the period
227,507
200,686
Current portion
(78,504)
(67,734)
Long-term portion
$ 149,003
$ 132,952
In 2026, the Company entered into two additional vehicle leases for $101,770 as well as disposed of two leased vehicles for a reduction of $30,857 in its lease commitments. As at June 30, 2026, the Company has the following future lease obligations:
Less than one year
$ 98,647
2 - 5 years
164,768
Total lease payments
263,415
Amounts representing interest over the term
(35,908)
Present value of the net obligation
$ 227,507
9. Decommissioning Liability
The following table presents the reconciliation of the beginning and ending aggregate carrying amount of the obligation associated with the decommissioning of oil and gas properties:
June 30,
2026
December 31,
2025
Obligation, beginning of the period
$ 9,863,781
$ 6,307,659
Additions
1,450,277
1,999,904
Change in estimated cash flows
-
1,791,305
Payments or settlements
(1,716)
(536,919)
Accretion expense
183,136
274,423
Effects of movements in foreign exchange rates
(27,037)
27,409
Obligation, end of the period
$ 11,468,441
$ 9,863,781
The obligation was calculated using a risk-free discount rate range of 2.50% to 3.75% in Canada (2025: 2.50% to 3.75%) and between 4.43% and 4.60% in Colombia (2025: 4.43% and 4.60%) with an inflation rate of 2.0% and 1.90%, respectively (2025: 2.0% and 1.9%). The majority of costs are expected to occur between 2027 and 2038. The undiscounted amount of cash flows, required over the estimated reserve life of the underlying assets, to settle the obligation, adjusted for inflation, is estimated at $13,810,091 (2025: $12,033,788).
10. Share Capital
(a) Authorized: Unlimited number of common shares without par value
(b) Issued:
June 30, 2026
December 31, 2025
Common shares
Shares
Amounts
Shares
Amounts
Balance at beginning and end of the period
285,864,348
73,829,795
285,864,348
73,829,795
(c) Stock options:
The Company has a stock option plan that provides for the issuance to its directors, officers and employees options to purchase non-transferable common shares not exceeding 10% of the outstanding common shares. The exercise price is based on the closing price of the Company's common shares on the day prior to the day of the grant. A summary of the Company stock option plan as at June 30, 2026 and December 31, 2025 and changes during the periods ended on those dates is presented below:
June 30, 2026
December 31, 2025
Stock Options
Number of options
Weighted average
exercise price
(CAD $)
Number of options
Weighted average
exercise price
(CAD $)
Beginning of period
20,513,706
$0.32
24,795,002
$0.32
Granted
2,881,296
$0.35
6,198,334
$0.23
Expired/Forfeited
(1,284,819)
$0.48
(3,803,518)
-
Exercised
(2,550,000)
$0.12
(6,676,112)
$0.19
End of period
19,560,183
$0.34
20,513,706
$0.32
Exercisable, end of period
3,147,963
$0.43
5,866,486
$0.29
Date of Grant
Number Outstanding
Exercise Price
(CAD $)
Weighted
Average Remaining Contractual Life
Date of
Expiry
Number
Exercisable
June 30, 2026
October 22, 2018
250,000
$1.15
2.31
Oct. 22, 2028
250,000
May 3, 2019
100,000
$0.31
2.84
May 3, 2029
100,000
December 21, 2022
1,681,667
$0.28
0.00
Jun. 21, 2024, 2025 and 2026
-
January 23, 2023
50,000
$0.32
0.06
Jul. 23, 2024, 2025 and 2026
50,000
September 21, 2023
333,334
$0.33
0.72
Mar. 21, 2025, 2026 and 2027
-
April 29, 2024
5,495,926
$0.38
0.83
Oct.29 2025, 2026 and 2027
2,747,963
September 11, 2024
2,569,626
$0.48
1.19
Mar.11 2026, 2027 and 2028
,
October 8, 2025
6,198,334
$0.23
1.77
Apr. 8, 2027, 2028 and 2029
-
March 23, 2026
2,881,295
$0.38
2.23
Sept. 23, 2027, 2028 and 2029
-
Total
19,560,183
$0.34
1.34 years
3,147,963
For the six months ended June 30, 2026, the Company has recognized shared-based compensation expense of $1,275,192 (2025: recovery of $243,630) corresponding to the progressive vesting and fair market value of options.
11. Commitments and Contingencies
Exploration and Production Contracts
The Company has entered into a number of exploration contracts in Colombia which require the Company to fulfill work program commitments and issue financial guarantees related thereto (see Letters of Credit section below). During 2026, the Company received confirmation that its COR-39 exploration and production contract has been terminated by mutual agreement with the ANH and, therefore, its $12,000,000 exploration commitment related to this contract has been canceled at no additional costs to the Company. As a result, the Company has no outstanding exploration commitments.
Contingencies
From time to time, the Company may be involved in litigation or have claims sought against it in the normal course of business operations. Management of the Company is not currently aware of any claims or actions that would materially affect the Company's reported financial position or results from operations. Under the terms of certain agreements and the Company's by-laws the Company indemnifies individuals who have acted at the Company's request to be a director and/or officer of the Company, to the extent permitted by law, against any and all damages, liabilities, costs, charges or expenses suffered by or incurred by those individuals.
Letters of Credit
At June 30, 2026, the Company had obligations under Letters of Credit ("LC's") outstanding totaling $3.6 million to guarantee work commitments on exploration blocks and other contractual commitments. In the event the Company fails to secure the renewal of the letters of credit underlying the ANH guarantees, the ANH could decide to cancel the underlying exploration and production contract, as applicable.
Current Outstanding Letters of Credit
Contract
Beneficiary
Issuer
Type
Amount
(US $)
Renewal Date
SANTA ISABEL
ANH
AESC
Abandonment
685,297
April 14, 2027
ANH
AESC
Financial Capacity
1,672,162
December 30, 2026
COR - 39
ANH
AESC
Compliance
100,000
December 30, 2026
OMBU
ANH
AESC
Financial Capacity
436,300
October 14, 2026
ANH
AESC
Abandonment
708,119
August 28, 2026
Total
3,601,878
12. Risk Management
The Company holds various forms of financial instruments. The nature of these instruments and the Company's operations expose the Company to commodity price, credit and foreign exchange risks. The Company manages its exposure to these risks by operating in a manner that minimizes its exposure to the extent practical.
(a) Commodity price risk
The Company's principal operation is the production and sale of crude oil and natural gas. Fluctuations in prices of these commodities directly impact the Company's financial performance. Commodity price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of changes in commodity prices. Lower commodity prices can also impact the Company's ability to raise capital. Commodity prices for crude oil are impacted by world economic events that dictate the levels of supply and demand. There were no derivative contracts during 2026 or 2025.
(b) Credit Risk
Credit risk reflects the risk of financial loss to the Company if a customer or counterparty to a contract fails to fulfill their contractual obligations. It arises mostly from the Company's cash balances and accounts receivable. The Company's cash balances are held with five large reputable financial institutions, and management has therefore concluded that associated credit risk is low. The majority of the Company's trade accounts receivable balances relate to petroleum and natural gas sales, which are normally collected within 25 days (in Canada) and up to 15 days (in Colombia) after the month of production. The Company's policy is to enter into agreements with customers that are well established entities in the oil and gas industry such that the level of risk is mitigated. In Colombia, all of the Company's revenue (2025: 73%) is with a group of producing and trading companies, under existing agreements, with prepayment provisions and priced using the Brent benchmark. Other accounts receivable mainly relate to balances owed by the Company's partner in one of its blocks, and are mainly recoverable through joint billings. The Company has historically not experienced any significant collection issues with its customers and partners.
(c) Market Risk
Market risk is comprised of two components: foreign currency exchange risk and interest rate risk.
i) Foreign Currency Exchange Risk
The Company operates on an international basis and therefore foreign exchange risk exposures arise from transactions denominated in currencies other than the United States dollar. The Company is exposed to foreign currency fluctuations as it holds cash and incurs expenditures in exploration and evaluation and administrative costs in foreign currencies. The Company incurs expenditures in Canadian dollars, United States dollars, British Pounds and the Colombian peso and is exposed to fluctuations in exchange rates in these currencies. There were no exchange rate derivative contracts in place.
ii) Interest Rate Risk
Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Company is not currently exposed to interest rate risk on financial assets or liabilities.
(d) Liquidity Risk
Liquidity risk includes the risk that, as a result of the Company's operational liquidity requirements:
· The Company will not have sufficient funds to settle a transaction on the due date;
· The Company will be forced to sell financial assets at a value which is less than what they are worth; or
· The Company may be unable to settle or recover a financial asset.
The Company's approach to managing its liquidity risk is to ensure, within reasonable means, sufficient liquidity to meet its liabilities when due, under both normal and unusual conditions, without incurring unacceptable losses or jeopardizing the Company's business objectives. The Company prepares annual capital expenditure budgets which are monitored regularly and updated as considered necessary. Petroleum and natural gas production is monitored daily to provide current cash flow estimates and the Company utilizes authorizations for expenditures on projects to manage capital expenditures.
Any funding shortfall may be met in a number of ways, including, but not limited to, the issuance of new debt or equity instruments, further expenditure reductions and/or the introduction of joint venture partners. During 2025, the Company entered into a two-year crude oil prepayment agreement with an integrated energy major to market its oil production in Colombia. The agreement provides access to $20 million in a revolving line of credit until June 2026 and $15 million until June 2027.
The interest rate is SOFR + 4% for the first $10 million and SOFR + 5% for amounts exceeding $10 million. Effective July 1st, 2026, the Company has extended its access to the $20 million line of credit until June 30, 2027. As at June 30, 2026, no funds have been withdrawn from this line of credit.
(e) Capital Management
The Company's objective is to maintain a capital base sufficient to provide flexibility in the future development of the business and maintain investor, creditor and market confidence. The Company manages its capital structure and makes adjustments in response to changes in economic conditions and the risk characteristics of the underlying assets. The Company considers its capital structure to include share capital, bank debt (when available), and working capital, defined as current assets less current liabilities. From time to time the Company may issue common shares or other securities, sell assets or adjust its capital spending to manage current and projected debt levels. The Company adjusts its capital structure based on its net debt level. The Company prepares annual budgets, which are updated as necessary including current and forecast crude oil prices, changes in capital structure, execution of the Company's business plan and general industry conditions. The annual budget is approved by the Board of Directors. The Company's capital includes the following:
June 30, 2026
December 31, 2025
Working capital
14,514,885
1,823,335
Share capital
73,829,795
73,829,795
88,344,680
75,653,130
13. Segmented Information
The Company has two reportable operating segments: Colombia and Canada. The Canada segment is also considered the corporate segment. The following tables show information regarding the Company's segments for the three months ended as at June 30:
Three months ended June 30, 2026
Colombia
Canada
Total
Revenue from oil and natural gas
$
38,994,524
$
101,199
$
39,095,723
Royalties
(4,861,819)
(14,161)
(4,875,980)
Expenses
(13,890,477)
(3,000,838)
(16,891,315)
Income taxes
(6,971,249)
-
(6,971,249)
Net income
$
13,270,979
$
(2,913,800)
$
10,357,179
Six months ended June 30, 2026
Colombia
Canada
Total
Revenue from oil and natural gas
$
65,609,754
$
305,601
$
65,915,355
Royalties
(8,173,217)
(24,079)
(8,197,296)
Expenses
(32,493,148)
(1,029,177)
(33,522,325)
Income taxes
(8,617,084)
-
(8,617,084)
Net income (loss)
$
16,326,305
$
(747,655)
$
15,578,650
Capital expenditures for the period
$
17,238,158
$
5,785
$
17,243,943
Total Assets as at June 30, 2025
$
122,208,852
$
3,985,816
$
126,194,668
Total liabilities as at June 30, 2025
$
54,458,406
$
2,272,221
$
56,730,627
Three months ended June 30, 2025
Colombia
Canada
Total
Revenue from oil and natural gas
$
17,718,580
$
230,688
$
17,949,268
Royalties
(2,065,186)
(15,144)
(2,080,330)
Expenses
(9,123,780)
(4,596,047)
(13,719,827)
Income taxes
(3,083,846)
-
(3,083,846)
Net income (loss)
$
3,445,768
$
(4,380,503)
$
(934,735)
Six months ended June 30, 2025
Colombia
Canada
Total
Revenue:
Revenue from oil and natural gas
$
39,568,868
$
516,559
$
40,085,427
Royalties
(4,685,857)
(24,507)
(4,710,364)
Expenses
(21,034,908)
(6,154,438)
(27,189,346)
Income taxes
(6,456,688)
-
(6,456,688)
Net income (loss)
$
7,391,415
$
(5,662,386)
$
1,729,029
Capital expenditures for the period
$
24,425,024
$
1,725,362
$
26,150,386
Total Assets as at June 30, 2025
$
86,231,596
$
6,198,354
$
92,729,950
Total liabilities as at June 30, 2025
$
35,330,832
$
2,665,816
$
37,996,648
14. Subsequent Event
On August 13, 2026, the Company acquired a 100% working interest oil producing property in the Thorsby area of Central Alberta with an effective date of June 1, 2026. The property acquisition price was $12.15 million CAD (approximately $8.9 million USD), subject to closing adjustments and was funded from Arrow's cash reserves.
Arrow Exploration Corp.
MANAGEMENT's DISCUSSION AND ANALYSIS
THREE AND SIX MONTHS ENDED JUNE 30, 2026 and 2025
MANAGEMENT'S DISCUSSION AND ANALYSIS
This Management's Discussion and Analysis ("MD&A") as provided by the management of Arrow Exploration Corp. ("Arrow" or the "Company"), is dated as of August 26, 2026 and should be read in conjunction with Arrow's interim condensed (unaudited) consolidated financial statements and related notes as at and for the three and six months ended June 30, 2026 and 2025. Additional information relating to Arrow, including its annual consolidated financial statements and related notes as at and for years ended December 31, 2025 and 2024 (the "Annual Financial Statements"), is available under Arrow's profile on www.sedar.com.
Advisories
Basis of Presentation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"), and all amounts herein are expressed in United States dollars, unless otherwise noted, and all tabular amounts are expressed in United States dollars, unless otherwise noted. Additional information for the Company may be found on SEDAR at www.sedar.com.
Advisory Regarding Forward‐Looking Statements
This MD&A 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 "believe", "continue", "could", "expect", "likely", "may", "outlook", "plan", "potential", "will", "would" and similar expressions. In particular, but without limiting the foregoing, this MD&A contains forward-looking statements pertaining to the following: global pandemics and their impact; tax liability; capital management strategy; capital structure; credit facilities and other debt; letters of credit; Arrow's costless collar structure; cost reduction initiatives; potential drilling on the Tapir block; capital requirements; expenditures associated with asset retirement obligations; future drilling activity and the development of the Rio Cravo Este, Carrizales Norte and Alberta Llanos structures on the Tapir Block. Statements relating to "reserves" and "resources" are deemed to be forward-looking information, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described exist in the quantities predicted or estimated and can be profitably produced in the future.
The forward-looking statements contained in this MD&A reflect several material factors and expectations and assumptions of Arrow including, without limitation: current and anticipated commodity prices and royalty regimes; the impact of the global pandemics; the financial impact of Arrow's costless collar structure; availability of skilled labour; timing and amount of capital expenditures; future exchange rates; commodity prices; the impact of increasing competition; general economic conditions; availability of drilling and related equipment; receipt of partner, regulatory and community approvals; royalty rates; changes in income tax laws or changes in tax laws and incentive programs; future operating costs; effects of regulation by governmental agencies; uninterrupted access to areas of Arrow's operations and infrastructure; recoverability of reserves; future production rates; timing of drilling and completion of wells; pipeline capacity; that Arrow will have sufficient cash flow, debt or equity sources or other financial resources required to fund its capital and operating expenditures and requirements as needed; that Arrow's conduct and results of operations will be consistent with its expectations; that Arrow will have the ability to develop its oil and gas properties in the manner currently contemplated; current or, where applicable, proposed industry conditions, laws and regulations will continue in effect or as anticipated; that the estimates of Arrow's reserves and production volumes and the assumptions related thereto (including commodity prices and development costs) are accurate in all material respects; that Arrow will be able to obtain contract extensions or fulfil the contractual obligations required to retain its rights to explore, develop and exploit any of its undeveloped properties; and other matters.
Arrow believes the material factors, 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 MD&A 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 including, without limitation: the impact of general economic conditions; volatility in commodity prices; industry conditions including changes in laws and regulations including adoption of new environmental laws and regulations, and changes in how they are interpreted and enforced; competition; lack of availability of qualified personnel; the results of exploration and development drilling and related activities; obtaining required approvals of regulatory authorities; counterparty risk; risks associated with negotiating with foreign governments as well as country risk associated with conducting international activities; commodity price volatility; fluctuations in foreign exchange or interest rates; environmental risks; changes in income tax laws or changes in tax laws and incentive programs; changes to pipeline capacity; ability to secure a credit facility; ability to access sufficient capital from internal and external sources; risk that Arrow's evaluation of its existing portfolio of development and exploration opportunities is not consistent with future results; that production may not necessarily be indicative of long term performance or of ultimate recovery; and certain other risks detailed from time to time in Arrow's public disclosure documents including, without limitation, those risks identified in Arrow's 2018 AIF, a copy of which is available on Arrow's SEDAR profile at www.sedar.com. Readers are cautioned that the foregoing list of factors is not exhaustive and are cautioned not to place undue reliance on these forward-looking statements.
Non‐IFRS Measures
The Company uses non-IFRS measures to evaluate its performance which are measures not defined in IFRS. Working capital, funds flow from operations, realized prices, operating netback, adjusted EBITDA, and net debt as presented do not have any standardized meaning prescribed by IFRS and therefore may not be comparable with the calculation of similar measures for other entities. The Company considers these measures as key measures to demonstrate its ability to generate the cash flow necessary to fund future growth through capital investment, and to repay its debt, as the case may be. These measures should not be considered as an alternative to, or more meaningful than net income or cash provided by (used in) operating activities or net income and comprehensive income as determined in accordance with IFRS as an indicator of the Company's performance. The Company's determination of these measures may not be comparable to that reported by other companies.
Adjusted working capital is calculated as current assets minus current liabilities, excluding non-cash liabilities; funds from operations is calculated as cash flows provided by operating activities adjusted to exclude changes in non-cash working capital balances; realized price is calculated by dividing gross revenue by gross production, by product, in the applicable period; operating netback is calculated as total natural gas and crude revenues minus royalties and operating expenditures; adjusted EBITDA is calculated as net income adjusted for interest, income taxes, depreciation, depletion, amortization and other similar non-recurring or non-cash charges; and net debt (net cash) is defined as the principal amount of its outstanding debt, less working capital items excluding non-cash liabilities.
The Company also presents funds from operations per share, whereby per share amounts are calculated using weighted- average shares outstanding consistent with the calculation of net income per share.
A reconciliation of the non-IFRS measures is included as follows:
(in United States dollars)
Three months ended June 30, 2026
Six months ended June 30, 2026
Three months ended June 30, 2025
Six months ended June 30, 2025
Net income (loss)
10,357,179
15,578,649
(934,735)
1,729,029
Add/(subtract):
Share based payments
352,396
1,275,192
857,840
(243,630)
Financing costs:
Accretion on decommissioning obligations
94,707
183,137
72,769
141,046
Interest
6,536
12,174
7,368
14,535
Other
-
-
3,197
3,197
Depreciation and depletion
7,382,643
13,558,931
3,179,694
9,700,662
Income taxes, current and deferred
6,971,249
8,617,084
3,083,846
6,456,688
Adjusted EBITDA (1)
25,164,710
39,225,167
6,269,979
17,801,527
Cash flows provided by (used in) operating activities
15,726,233
29,389,799
(472,090)
13,958,094
Minus - Changes in non‑cash working capital balances:
Trade and other receivables
(2,557,666)
(2,853,746)
738,499
(1,054,458)
Restricted cash
24,538
29,221
25,000
33,136
Taxes receivable
(200,756)
907,671
970,149
898,229
Deposits and prepaid expenses
58,890
208,496
(62,715)
(40,477)
Inventory
86,363
78,217
13,694
16,962
Accounts payable and accrued liabilities
5,687,058
2,702,371
4,497,564
1,974,550
Income taxes
80,146
-
(1,715,575)
(2,045,957)
Funds flow from operations (1)
18,904,806
30,462,029
3,994,525
13,740,079
(1)Non-IFRS measures
The term barrel of oil equivalent ("boe") is used in this MD&A. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 thousand cubic feet ("Mcf") of natural gas to one barrel of oil ("bbl") is used in the MD&A. This conversion ratio of 6:1 is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
FINANCIAL AND OPERATING HIGHLIGHTS
(in United States dollars, except as otherwise noted)
Three months ended June 30, 2026
Six months
ended June 30, 2026
Three months ended June 30, 2025
Total natural gas and crude oil revenues, net of royalties
34,219,743
57,718,059
15,868,938
Funds flow from operations (1)
18,904,806
30,462,029
3,994,525
Funds flow from operations (1) per share -
Basic($)
0.07
0.11
0.01
Diluted ($)
0.07
0.11
0.01
Net income (loss)
10,357,179
15,578,650
(934,735)
Net income (loss) per share -
Basic ($)
0.04
0.05
(0.00)
Diluted ($)
0.04
0.06
(0.00)
Adjusted EBITDA (1)
25,164,710
39,225,167
6,269,979
Weighted average shares outstanding -
Basic
285,864,348
285,864,348
285,864,348
Diluted
289,523,559
288,231,181
295,209,883
Common shares end of period
285,864,348
285,864,348
285,864,348
Capital expenditures
9,361,608
17,243,943
14,771,206
Cash and cash equivalents
28,495,045
28,495,045
13,212,417
Current Assets
49,536,264
49,536,264
20,213,917
Current liabilities
35,021,379
35,021,379
19,820,706
Adjusted working capital(1)
14,514,885
14,514,885
393,211
Long-term portion of restricted cash
274,377
274,377
154,849
Total assets
126,194,668
126,194,668
92,729,950
Operating
Natural gas and crude oil production, before royalties
Natural gas (Mcf/d)
574
824
1,587
Natural gas liquids (bbl/d)
5
5
10
Crude oil (bbl/d)
4,801
4,666
3,493
Total (boe/d)
4,902
4,808
3,767
Operating netbacks ($/boe) (1)
Natural gas ($/Mcf)
($1.71)
($1.07)
($1.45)
Crude oil ($/bbl)
$64.90
$54.17
$30.08
Total ($/boe)
$63.42
$52.44
$27.36
(1)Non-IFRS measures - see "Non-IFRS Measures" section within this MD&A
The Company
Arrow is a junior oil and gas company engaged in the acquisition, exploration and development of oil and gas properties in Colombia and Western Canada. The Company's shares trade on the TSX Venture Exchange and the London AIM exchange under the symbol AXL.
The Company and Arrow Exploration Ltd. entered into an arrangement agreement dated June 1, 2018, as amended, whereby the parties completed a business combination pursuant to a plan of arrangement under the Business Corporations Act (Alberta) ("ABCA") on September 28, 2018. Arrow Exploration Ltd. and Front Range's then wholly-owned subsidiary, 2118295 Alberta Ltd., were amalgamated to form Arrow Holdings Ltd., a wholly-owned subsidiary of the Company (the "Arrangement"). On May 31, 2018, Arrow Exploration Ltd. entered in a share purchase agreement, as amended, with Canacol Energy Ltd. ("Canacol"), to acquire Canacol's Colombian oil properties held by its wholly-owned subsidiary Carrao Energy S.A. ("Carrao"). On September 27, 2018, Arrow Exploration Ltd. closed the agreement with Canacol, and during 2025 Carrao changed its name to Arrow Exploration Switzerland GmbH.
On May 31, 2018, Arrow Exploration Ltd., entered into a purchase and sale agreement to acquire a 50% beneficial interest in a contract entered into with Ecopetrol S.A. pertaining to the exploration and production of hydrocarbons in the Tapir block from Samaria Exploration & Production S.A. ("Samaria"). On September 27, 2018, Arrow Exploration Ltd. closed the agreement with Samaria. As at June 30, 2026 the Company held an interest in four oil blocks in Colombia and oil and natural gas leases in five areas in Canada as follows:
Gross Acres
Working Interest
Net Acres
COLOMBIA
Tapir
Operated1
65,125
50%
32,563
Oso Pardo
Operated
672
100%
672
Ombu
Non-operated
56,482
10%
5,648
COR-39
Operated
95,111
100%
95,111
Total Colombia
217,390
133,994
CANADA
Fir
Non operated
7,680
32%
2,458
Penhold
Non-operated
480
13%
61
Pepper
Operated
8,960
100%
8,960
Wapiti
Non-operated
1,280
13%
160
Ante Creek
Operated
2,560
100%
2,560
Ansell
Operated
640
100%
640
KEHO
Operated
7,358
100%
7,358
Total Canada
28,958
22,197
TOTAL
246,348
156,191
The Company's primary producing assets are located in Colombia in the Tapir, Oso Pardo and Ombu blocks, with natural gas production in Canada at Fir and Pepper, Alberta.
Llanos Basin
Within the Llanos Basin, the Company is engaged in the exploration, development and production of oil within the Tapir block. In the Llanos Basin most oil accumulations are associated with three-way dip closure against NNE-SSW trending normal faults and can have pay within multiple reservoirs. The Tapir block contain large areas not yet covered by 3D seismic, and in Management's opinion offer substantial exploration upside.
1The Company's interest in the Tapir block is held through a private contract with Petrolco, who holds a 50% participating interest in, and is the named operator of, the Tapir contract with Ecopetrol. The formal assignment to the Company is subject to Ecopetrol's consent. The Company is the de facto operator pursuant to certain agreements with Petrolco (details of which are set out in Paragraph 16.13 of the Company's AIM Admission Document dated October 20, 2021).
Middle Magdalena Valley ("MMV") Basin
Oso Pardo Field
The Oso Pardo Field is located in the Santa Isabel Block in the MMV Basin. It is a 100% owned property operated by the Company. The Oso Pardo field is located within a Production Licence covering 672 acres. Three wells have been drilled to date within the licensed area.
Ombu E&P Contract - Capella Conventional Heavy Oil Discovery
The Caguan Basin covers an area of approximately 60,000 km2 and lies between the Putumayo and Llanos Basins. The primary reservoir target is the Upper Eocene aged Mirador formation. The Capella structure is a large, elongated northeast-southwest fault-related anticline, with approximately 17,500 acres in closure at the Mirador level. The field is located approximately 250 km away from the nearest offloading station at Neiva, where production from Capella is trucked.
The Capella No. 1 discovery well was drilled in July 2008 and was followed by a series of development wells. The Company earned a 10% working interest in the Ombu E&P Contract by paying 100% of all activities associated with the drilling, completion, and testing of the Capella No. 1 well. The Capella field is currently suspended and temporarily shut in.
Fir, Alberta
The Company has an average non-operated 32% WI in 12 gross (3.84 net) sections of oil and natural gas rights and 17 gross (4.5 net) producing natural gas wells at Fir. The wells produce raw natural gas into the Cecilia natural gas plant where it is processed.
Pepper, Alberta
The Company holds a 100% operated WI in 37 sections of Montney P&NG rights on its Pepper asset in West Central Alberta. The 6-26-53-23W5M Montney gas well (West Pepper) is tied into the Galloway gas plant for processing. The 3-21-52-22W5M Montney gas well (East Pepper) is currently tied into the Sundance gas plant for processing. The majority of lands have tenure extending into 2026.
Three months ended June 30, 2026 Financial and Operational Highlights
· Arrow recorded $34,219,743 in revenues, net of royalties, on crude oil sales of 426,925 bbls, 482 bbls of natural gas liquids ("NGL's") and 52,194 Mcf of natural gas sales;
· Funds flow from operations of $18,904,806;
· Net income of $10,357,179 and adjusted EBITDA was $25,164,711;
Results of Operations
During Q2 2026, the Company's production continued to increase due to additional volumes of oil crude production from the Mateguafa Attic and the new Icaco field in the Tapir block, offset by decreased production in other fields due to natural declines. This has allowed the Company to continue its healthy level of operating results and EBITDA.
Average Production by Property
Average Production Boe/d
YTD 2026
Q2 2026
Q1 2026
YTD 2025
Q4 2025
Q3 2025
Q2 2025
Oso Pardo
101
104
98
114
95
103
131
Rio Cravo Este (Tapir)
817
753
881
1,043
996
1,065
996
Carrizales Norte (Tapir)
1,338
1,253
1,424
1,991
1,702
1,879
2,070
Alberta Llanos (Tapir)
284
275
294
474
446
943
296
Mateguafa (Tapir)
2,031
2,228
1,833
127
500
-
-
Icaco (Tapir)
95
188
-
-
-
-
-
Total Colombia
4,666
4,801
4,530
3,749
3,739
3,990
3,493
Fir, Alberta
79
90
67
100
107
29
100
Pepper, Alberta
64
11
118
162
129
47
170
KEHO, Alberta
-
-
-
1
-
-
5
TOTAL (Boe/d)
4,809
4,902
4,715
4,012
3,975
4,065
3,768
The Company's average production for the three and six months ended June 30, 2026 was 4,902 and 4,809 boe/d, respectively, which consisted of crude oil production in Colombia of 4,801 and 4,666 bbl/d, natural gas production of 574 and 824 Mcf/d, respectively, and minor amounts of natural gas liquids. The Company's Q2 2026 production was 30% higher than its Q2 2025 production and 4% higher than Q1 2026, due to the Mateguafa Attic and Icaco fields additional volumes, offset by declines in other fields. The Company's YTD 2026 production is 22% higher than the same period for 2025.
Average Daily Natural Gas and Oil Production and Sales Volumes
Three months ended
June 30
Six months ended
June 30
2026
2025
2026
2025
Natural Gas (Mcf/d)
Natural gas production
574
1,587
824
1,718
Natural gas sales
574
1,587
824
1,718
Realized Contractual Natural Gas Sales
574
1,587
824
1,718
Crude Oil (bbl/d)
Crude oil production
4,801
3,493
4,666
3,631
Inventory movements and other
(109)
(66)
(76)
(44)
Crude Oil Sales
4,692
3,427
4,590
3,587
Corporate
Natural gas production (boe/d)
96
264
137
286
Natural gas liquids(bbl/d)
5
10
5
8
Crude oil production (bbl/d)
4,801
3,493
4,666
3,631
Total production (boe/d)
4,902
3,767
4,808
3,925
Inventory movements and other (boe/d)
(109)
(66)
(76)
(44)
Total Corporate Sales (boe/d)
4,793
3,701
4,732
3,881
(1) Royalties paid in kind reduce the Company's crude oil sales volumes
During the three and six months ended June 30, 2026, the majority of production was attributed to Colombia, where all of Company's blocks were producing, except for Capella.
Natural Gas and Oil Revenues
Three months ended
June 30
Six months ended
June 30
2026
2025
2026
2025
Natural Gas
Natural gas revenues
64,754
183,267
233,172
434,784
NGL revenues
36,444
47,421
72,429
81,775
Royalties
(14,161)
(15,144)
(24,079)
(24,507)
Revenues, net of royalties
87,037
215,544
281,522
492,052
Oil
Oil revenues
38,994,525
17,718,580
65,609,754
39,568,868
Royalties
(4,861,819)
(2,065,186)
(8,173,217)
(4,685,857)
Revenues, net of royalties
34,132,706
15,653,394
57,436,537
34,883,011
Corporate
Natural gas revenues
64,754
183,267
233,172
434,784
NGL revenues
36,444
47,421
72,429
81,775
Oil revenues
38,994,525
17,718,580
65,609,754
39,568,868
Total revenues
39,095,723
17,949,268
65,915,355
40,085,427
Royalties
(4,875,980)
(2,080,330)
(8,197,296)
(4,710,364)
Natural gas and crude oil revenues, net of royalties
34,219,743
15,868,938
57,718,059
35,375,063
Natural gas and crude oil revenues, net of royalties, for the three and six months ended June 30, 2026 were $34,219,743 and $57,718,059 (2025: $15,868,938 and $35,375,063), respectively, which represents an increase of 116% and 63% when compared to 2025, respectively. The increase is mainly due to improved commodity prices and increased crude oil production from the Mateguafa Attic and Icaco fields in the Tapir block.
Average Benchmark and Realized Prices
Three months ended June 30
Six months ended June 30
2026
2025
Change
2026
2025
Change
Benchmark Prices
AECO (C$/Mcf)
$1.55
$1.72
(10%)
$1.75
$1.95
(10%)
Brent ($/bbl)
$96.87
$69.80
39%
$87.38
$70.64
24%
West Texas Intermediate ($/bbl)
$92.85
$63.70
46%
$82.55
$67.55
22%
Realized Prices
Natural gas, net of transportation ($/Mcf)
$1.24
$1.27
(2%)
$1.56
$1.40
12%
Natural gas liquids ($/bbl)
$47.85
$51.76
(8%)
$78.40
$55.63
41%
Crude oil, net of transportation ($/bbl)
$91.34
$56.87
61%
$78.97
$60.94
30%
Corporate average, net of transport ($/boe)(1)
$89.65
$53.33
68%
$76.95
$57.05
35%
(1)Non-IFRS measure
The Company realized prices of $89.65 and $76.95 per boe during the three and six months ended June 30, 2026 (2025: $53.33 and $57.05), respectively, due to overall increase in crude oil during the first half of 2026, offset by decreases in natural gas prices.
Operating Expenses
Three months ended June 30
Six months ended June 30
2026
2025
2026
2025
Natural gas & NGL's
139,909
377,245
368,866
786,123
Crude oil
6,424,657
6,283,602
12,430,733
11,231,323
Total operating expenses
6,564,566
6,660,847
12,799,599
12,017,446
Natural gas ($/Mcf)
$2.68
2.61
$2.47
2.53
Crude oil ($/bbl)
$15.05
20.17
$14.96
17.30
Corporate ($/boe)(1)
$15.05
19.79
$14.94
17.10
(1)Non-IFRS measure
During the three months ended June 30, 2026, Arrow incurred operating expenses of $6,564,566 (2025: $6,660,847). On a per boe basis operating costs are 24% lower than Q2 2025 due to the increased production in the Mateguafa Attic field.
Operating Netbacks
Three months ended June 30
Six months ended June 30
2026
2025
2026
2025
Natural Gas ($/Mcf)
Revenue, net of transportation expense
$1.24
$1.27
$1.56
$1.40
Royalties
($0.27)
($0.10)
($0.16)
($0.08)
Operating expenses
($2.68)
($2.61)
($2.47)
($2.53)
Natural Gas operating netback(1)
($1.71)
($1.45)
($1.07)
($1.21)
Crude oil ($/bbl)
Revenue, net of transportation expense
$91.34
$56.87
$78.97
$60.94
Royalties
($11.39)
($6.63)
($9.84)
($7.22)
Operating expenses
($15.05)
($20.17)
($14.96)
($17.30)
Crude Oil operating netback(1)
$64.90
$30.08
$54.17
$36.42
Corporate ($/boe)
Revenue, net of transportation expense
$89.65
$53.33
$76.95
$57.05
Royalties
($11.18)
($6.18)
($9.57)
($6.70)
Operating expenses
($15.05)
($19.79)
($14.94)
($17.10)
Corporate Operating netback(1)
$63.42
$27.36
$52.44
$33.24
(1)Non-IFRS measure
The operating netbacks of the Company for the three and six months ended June 30, 2026 have improved due to the overall increase in crude oil pricing, as well as increased production. The Company continues to develop alternatives to trucking water for disposal in order to improve operating costs.
General and Administrative Expenses (G&A)
Three months ended June 30
Six months ended June 30
2026
2025
2026
2025
General & administrative expenses
3,500,842
4,275,419
7,001,114
7,260,394
G&A recovered from 3rd parties
(279,866)
(504,051)
(530,655)
(607,036)
Total G&A
3,220,976
3,771,368
6,470,459
6,653,358
Cost per boe
$7.66
$11.21
$7.55
$9.47
For the three and six months ended June 30, 2026, net G&A expenses after recoveries totaled $3,220,976 and $6,470,459 (2025: $3,771,368 and $6,653,358), respectively. Gross G&A expenses were 18% lower when compared to Q2 2025 due to reductions in contracted services. On a per barrel basis, G&A expenses were reduced due to decreased G&A expenses and increased production in 2026 when compared to 2025.
Share-based Compensation
Three months ended June 30
Six months ended June 30
2026
2025
2026
2025
Share-based payments
352,396
857,840
1,275,192
(243,630)
Share-based compensation for the three and six months ended June 30, 2026 totaled an expense of $352,396 and $1,275,192 (2025: expense of $857,840 and recovery of $243,630), respectively, due to fair market valuation of this obligation with a corresponding effect in stock based compensation liability.
Financing Costs
Three months ended June 30
Six months ended June 30
2026
2025
2026
2025
Financing expense paid or payable
6,536
10,564
12,174
17,732
Non-cash financing costs
94,707
72,769
183,137
141,046
Net financing costs
$101,243
$83,333
$195,311
$158,778
The finance expense for 2026 is mostly related to lease obligation interest and the non-cash finance cost represents the accretion in the present value of the decommissioning obligation for the period. The amount of this expense will fluctuate commensurate with the asset retirement obligation as new wells are drilled or properties are acquired or disposed.
Depletion and Depreciation
Three months ended
June 30
Six months ended
June 30
2026
2025
2026
2025
Depletion and depreciation
7,382,644
3,179,694
13,558,931
9,700,662
Depletion and depreciation expense for the three and six months ended June 30, 2026 totaled $7,382,644 and $13,558,931 (2025: $3,179,694 and $9,700,662), respectively. The increase in depletion and depreciation is due to an increase in the depletable base from costs associated with the Mateguafa Attic and Icaco fields, and increased production. The Company uses the unit of production method and proved plus probable reserves to calculate its depletion and depreciation expense.
Income Tax Expense
Three months ended June 30
Six months ended June 30
2026
2025
2026
2025
Current
6,206,612
1,017,164
7,627,131
2,895,081
Deferred
764,637
2,066,682
989,953
3,561,607
Total income tax expense
6,971,249
3,083,846
8,617,084
6,456,688
The Company recognized a net income tax expense of $6,971,249 and $8,617,084 (2025: $3,083,846 and $6,456,688). This increase is mainly caused by the increase of the Company's net taxable income, especially in Colombia.
LIQUIDITY AND CAPITAL RESOURCES
Capital Management
The Company's objective is to maintain a capital base sufficient to provide flexibility in the future development of the business and maintain investor, creditor and market confidence. The Company manages its capital structure and makes adjustments in response to changes in economic conditions and the risk characteristics of the underlying assets. The Company considers its capital structure to include share capital, debt and adjusted working capital. In order to maintain or adjust the capital structure, from time to time the Company may issue common shares or other securities, sell assets or adjust its capital spending to manage current and projected debt levels. As at June 30, 2026 the Company has a working capital of $14,514,885. The Company has maintained a healthy working capital, using its operational cash flows to settle its obligations and to continue growing its operations.
Adjusted Working Capital
As at June 30, 2026 the Company's adjusted working capital was calculated as follows:
June 30, 2026
Current assets:
Cash
$
28,495,045
Restricted cash and deposits
286,107
Trade and other receivables
11,679,631
Taxes receivable
8,545,014
Other current assets
530,467
Less:
Accounts payable and accrued liabilities
(34,005,856)
Lease obligation
(78,504)
Stock based compensation liability
(937,019)
Working capital(1)
$
14,514,885
(1)Non-IFRS measure
Debt Capital
As at June 30, 2026 the Company does not have any outstanding debt balance. The Company has a crude oil prepayment agreement with an integrated energy major to market its oil production in Colombia. This agreement provides access to $20 million in a revolving line of credit until June 2026 and $15 million until June 2027. The interest rate is SOFR + 4% for the first $10 million and SOFR + 5% for amounts exceeding $10 million. Effective July 1st, 2026, the Company has extended its access to the $20 million line of credit until June 30, 2027. As at June 30, 2026, no funds have been withdrawn from this line of credit.
Subsequent Event
On August 13, 2026, the Company acquired a 100% working interest oil producing property in the Thorsby area of Central Alberta with an effective date of June 1, 2026. The property acquisition price was $12.15 million CAD (approximately $8.9 million USD), subject to closing adjustments and was funded from Arrow's cash reserves.
CONTRACTUAL OBLIGATIONS
Exploration and Production Contracts
The Company has entered into a number of exploration contracts in Colombia which require the Company to fulfill work program commitments and issue financial guarantees related thereto (see Letters of Credit section below). During 2026, the Company received confirmation that its COR-39 exploration and production contract has been terminated by mutual agreement with the ANH and, therefore, its $12,000,000 exploration commitment related to this contract has been canceled at no additional costs to the Company. As a result, the Company has no outstanding exploration commitments.
Letters of Credit
At June 30, 2026, the Company had obligations under Letters of Credit ("LC's") outstanding totaling $3.6 million to guarantee work commitments on exploration blocks and other contractual commitments. In the event the Company fails to secure the renewal of the letters of credit underlying the ANH guarantees, the ANH could decide to cancel the underlying exploration and production contract, as applicable.
Current Outstanding Letters of Credit
Contract
Beneficiary
Issuer
Type
Amount
(US $)
Renewal Date
SANTA ISABEL
ANH
AESC
Abandonment
685,297
April 14, 2027
ANH
AESC
Financial Capacity
1,672,162
December 30, 2026
COR - 39
ANH
AESC
Compliance
100,000
December 30, 2026
OMBU
ANH
AESC
Financial Capacity
436,300
October 14, 2026
ANH
AESC
Abandonment
708,119
August 28, 2026
Total
3,601,878
Share Capital
As at June 30, 2026, the Company had 285,864,348 common shares and 19,560,183 stock options outstanding.
SUMMARY OF THREE MONTHS RESULTS
2026
2025
2023
Q2
Q1
Q4
Q3
Q2
Q1
Q4
Q3
Oil and natural gas sales, net of royalties
34,219,744
23,498,316
16,535,583
18,543,974
15,868,938
19,506,125
22,873,626
21,300,115
Net income (loss)
10,357,179
5,221,470
(3,910,602)
3,089,683
(934,735)
2,663,764
2,081,956
6,668,493
Income (loss) per share -
basic
diluted
0.04
0.04
0.02
0.02
(0.03)
(0.03)
0.01
0.01
(0.00)
(0.00)
0.01
0.01
0.01
0.01
0.02
0.02
Working capital (deficit)
14,514,886
5,262,031
1,172,147
173,863
393,211
11,036,334
11,646,169
9,622,125
Total assets
126,194,668
111,547,344
106,017,624
93,684,265
92,729,950
90,532,063
81,268,734
73,535,397
Net capital expenditures
7,600,756
7,882,335
7,752,239
9,287,571
14,771,206
11,379,180
8,928,725
6,945,779
Average daily production (boe/d)
4,632
4,715
4,096
4,214
3,767
4,085
4,738
4,124
The Company's oil and natural gas sales in Q2 2026 have increased 46% and 116% when compared to Q1 2026 and Q2 2025 due to increased production on its existing assets and increased overall commodity prices. The Company's production levels in Colombia remain consistent. Trends in the Company's net income are also impacted most significantly by operating expenses, financing costs, income taxes, depletion, depreciation and impairment of oil and gas properties, and other income.
OUTSTANDING SHARE DATA
At August 26, 2026 the Company had the following securities issued and outstanding:
Number
Exercise Price
Expiry Date
Common shares
285,864,348
n/a
n/a
Stock options
250,000
CAD$ 1.15
October 22, 2028
Stock options
100,000
CAD$ 0.31
May 3, 2029
Stock options
1,681,667
GBP 0.1675
Jun. 21, 2024, 2025 and 2026
Stock options
50,000
GBP 0.1925
Jul. 23, 2024, 2025 and 2026
Stock options
333,334
CAD $0.330
Mar. 21, 2025, 2026 and 2027
Stock options
5,495,926
CAD $0.375
Oct. 29 2025, 2026 and 2027
Stock options
2,569,626
CAD $0.475
Mar. 11 2026, 2027 and 2028
Stock options
6,198,334
CAD $0.280
Apr. 8, 2027, 2028 and 2029
Stock options
2,881,295
CAD $0.375
Sept. 23, 2027, 2028 and 2029
OUTLOOK
The Company has efficiently deployed its resources on successful drilling campaigns at Rio Cravo, Carrizales Norte, Alberta Llanos and more recently Mateguafa and Icaco on the Tapir Block. These successful campaigns have translated into production growth and positive cashflows, providing Arrow with the funds required to expand its capital program in 2026. In 2026, the Company is having another year of production growth with a balanced program of both development and low risk exploration drilling on the Tapir Block. The Company has a strong balance sheet with no debt, access to financing and cash flow from operations which will fund the 2026 program.
CRITICAL ACCOUNTING ESTIMATES
A summary of the Company's critical accounting estimates is contained in Note 3 Annual Financial Statements. These accounting policies are subject to estimates and key judgements about future events, many of which are beyond Arrow's control.
SUMMARY OF MATERIAL ACCOUNTING POLICIES
A summary of the Company's material accounting policies is included in Note 3 of the Annual Financial Statements. These accounting policies are consistent with those of the previous financial year.
RISKS AND UNCERTAINTIES
The Company is subject to financial, business and other risks, many of which are beyond its control and which could have a material adverse effect on the business and operations of the Company. Please refer to "Risk Factors" in the MD&A for the year ended December 31, 2026 for a description of the financial, business and other risk factors affecting the Company which are available on SEDAR at www.sedar.com
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