Arrow Exploration Corp. (AIM: AXL): Second drilling rig to be mobilized in May
• 4Q24 net production was 4,738 boe/d. The YE24 cash position had been reported previously and there are no surprises in the remainder of the YE24 balance sheet.• The existing rig is being mobilized to Alberta Llanos to drill two new horizontal development wells in 2Q25.
• In May, a second rig will be mobilized to undertake development drilling at Rio Cravo Este and Carrizales Norte.
• The company has maintained its US$51 million capital expenditure plan for 2025, which includes drilling 23 wells. The addition of the second rig is expected to facilitate increased production.
• We re-iterate our target price of £0.70 per share.
Valuation
Our Core NAV and ReNAV stand at £0.39 per share and £0.70 per share, respectively. The primary contributor to the risked upside is the Mateguafa Oeste exploration well, which accounts for £0.31 per share of unrisked NAV. We assume US$65/bbl for Brent for 2Q25 and 3Q25 increasing to US$70/bbl thereafter.
Arrow’s valuation remains resilient against potential declines in oil prices, supported by low operating expenses. Assuming Brent at US$60/bbl from 3Q25 onward would only adjust the Core NAV to £0.33 per share and ReNAV to £0.60 per share.
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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