Arrow Exploration Corp. (AIM: AXL): High flow rate at first Mateguafa Hz well firms-up the upside case
• M-HZ7, the first horizontal well at Mateguafa Attic, has been brought onstream in the C9 zone. It is producing on a small choke (25/128) at a restricted gross oil rate of 1,694 bbl/d (847 bbl/d net to Arrow), with oil quality of 30.6° API and a 4% water cut. This initial rate is approximately double that of the M-6 vertical well.• This is a highly encouraging result, as it demonstrates the potential to develop the Mateguafa Attic field with horizontal wells. It suggests the field is larger than previously anticipated and that well economics will be stronger. Arrow plans to drill 2–3 additional horizontal development wells.
• The M-HZ7 well also encountered 20 feet of net oil pay in the C7 formation, which is already producing at M-6.
• Gross oil production at M-5 has increased from 550 bbl/d to 800 bbl/d (400 bbl/d net to Arrow). Arrow believes this improvement reflects the removal of “skin” from the formation.
• Total corporate production now stands at 4,510 boe/d, excluding 400 bbl/d net from M-5, which is currently shut in for a mandated 7‑day pressure test.
• We have made only minor adjustments to our forecasts, pending the YE25 reserves update, which will incorporate results from Mateguafa Attic. We re-iterate our target price of £0.40 per share.
Mateguafa Attic production and drilling
Current production capacity at Mateguafa Attic, including M-5 (800 bbl/d - shut in for 7 Days), now exceeds 3,250 bbl/d. The M-8 well has been spudded and is expected to be brought onstream in late December. As a result, 1Q26 gross oil production at Mateguafa could average 2.0–2.5 mbbl/d, significantly above our prior forecast of 1.4 mbbl/d. Arrow will subsequently drill the M-9 disposal well, a large step‑out well that could also encounter hydrocarbons. If successful, this would materially increase the field’s reserves, and the well would be completed as a producer. Regardless of the M-9 outcome, Arrow plans to drill 2–3 additional horizontal development wells at Mateguafa Attic before mobilizing the rig to the Icaco exploration well.
Valuation
Our ReNAV is £0.39 per share. Our unrisked NAV for Icaco is £0.12 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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