Arrow Exploration Corp. (AIM: AXL): Potential reserves addition in the C7. High impact drilling to start mid-September
• Current production exceeds 4,800 boe/d, marking an increase of approximately 600 boe/d since the last reported figure on 28 August.• This uplift reflects the contribution of two new wells brought online. CN HZ13 is producing ~1,000 bbl/d gross (~500 bbl/d net) from the Ubaque reservoir, with a water cut of 32%. AB-3, a vertical well, has been recompleted in the C7 formation and is currently producing 840 bbl/d gross (420 bbl/d net) with a water cut of 73%. The well is still in clean-up phase. Previously, AB-3 was producing ~150 bbl/d gross from the Ubaque, but those volumes are now expected to be recovered via AB HZ4 and AB HZ5.
• C7 reserves have not yet been booked at AB or in the northern part of CN. However, the strong initial flow rate from AB-3 suggests potential upside.
• At RCE, the Ubaque reservoir encountered by RCE HZ10 is currently flowing 200 bbl/d gross, though it appears tighter than at CN. Arrow is evaluating alternative completion techniques to enhance productivity. This could include small stimulations.
• High-impact drilling is scheduled to commence mid-September at Mateguafa Oeste, a ~6 mmbbl prospect (net to Arrow) targeting the Ubaque. A successful outcome could be transformational, with four additional horizontal wells planned on the structure—potentially lifting total production to ~6,000 bbl/d by YE25.
• We re-iterate our target price of £0.50 per share.
Exploration beyond Mateguafa Oeste
The exploration of Mateguafa Attic (2.5 mmbbl net, £0.08 per share unrisked), Icaco (3.7 mmbbl net, £0.15 per share unrisked), Macoya (2.2 mmbbl net, £0.07 per share unrisked), and Capullo (3.7 mmbbl net, £0.15 per share unrisked) is expected to follow the Mateguafa Oeste development.
Valuation and forecasts
Our forecasts are unchanged. Our Core NAV and ReNAV stand at £0.23 and £0.48 per share, respectively. We forecast that the company’s net cash will be higher than its market cap by ~YE28.
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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