Arrow Exploration Corp. (AIM: AXL): Flow rate in line with expectations at AB-1. Two more appraisal wells in January
• The AB-1 (Alberta Llanos) exploration well is now on production at an oil rate of 658 bbl/d gross (329 bbl/d net) with 49% water cut from 62 feet of net pay in the Ubaque.• The IP rate is in line with the expectations set out in the company’s September corporate presentation (321 bbl/d net).
• The AB-2 well has reached TD and the logs are being evaluated.
• The AB-3 well will be drilled immediately upon completion of the AB-2 well.
• The Guadalupe formation encountered at AB-1 is expected to be tested in the AB-2 or AB-3 wells.
• Total production in December was 4,899 boe/d with a peak rate of 5,175 boe/d. Our production forecasts are unchanged.
• Arrow held US$19.1 mm on 1 January 2025, in line with the cash position reported for 1 November 2024.
• We re-iterate our target price of £0.80 per share. We anticipate production will exceed 7 mbbl/d by YE25. The FY25 exploration programme (excluding Alberta Llanos) is targeting ~10 mmboe prospective resources with an aggregate unrisked NAV of £0.38 per share.
Valuation
Our Core NAV is £0.54 per share with a ReNAV of £0.81 per share. These represent over 100% and 200% upside respectively. The current share price discounts ~0.8x EV/DACF multiple for 2025. This is based on Brent prices of ~US$74/bbl for 2025 and US$70/bbl in later periods.
Front Range Resources is engaged in oil and natural gas exploration and production focusing on horizontal multi-stage frac development in Montney, Bluesky, Wilrich and Falher formations in the Deep Basin area of west central Alberta.
Auctus Advisors is a specialist Equity Capital Markets and Advisory business with a focus in the Energy Sector.
The partners have complementary skill sets, with decades of experience across Equity Capital Markets, Investment Banking and the Energy industry. We have worked at Société Générale, Canaccord Capital, BMO Capital Markets and Schlumberger. Most recently we have worked together for many years at GMP FirstEnergy.
Auctus has been set up at the beginning of a new decade in which we see significant opportunities in the Energy space. Globally, demand for energy is at record levels and continues to grow. Conversely, investment in traditional energy sources has been severely constrained. We believe this imbalance creates opportunities for both companies and investors.
Auctus provides Corporate Broking, Equity Research and Investment Banking services.
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