Arrow Exploration Corp. (AIM: AXL): Reserves additions. Flow rate at Carrizales Noroeste likely to add further reserves
• YE23 2P reserves were estimated at 11.8 mmboe, including 0.7 mmboe for Canada and 4.6 mmboe non-core, leaving 6.5 mmboe for the company’s core Colombian assets. This compares with 2.1 mmbbl at YE23 plus 3.9 mmbbl for Carrizales Norte reported in September for a total of 6 mmbbl. Adding back 0.6 mmbbl (net) produced at Tapir in 2023 suggests that Arrow has added 1.1 mmbbl at its core Colombian assets since the latest reserve reports (September 2023 for Carrizales Norte and YE23 for the other assets).• The CN-5 exploration well that had encountered 45 feet of Ubaque pay with 25% porosity and 5 Darcy permeability at the Carrizales Noroeste prospect has now been put in production at a rate of 175 bbl/d (net) with 8% water cut. Production is being restricted at the lowest ESP setting of 30Hz to evaluate the water cut and will be gradually increased. The flow rate is important as it confirms the producibility of this area of the field estimated to hold 3.35 mmbbl resources net to Arrow and could allow Arrow to book additional reserves.
• The CN-6 development well in the C7 formation has been put on stream at an oil rate of 110 bbl/d net to Arrow (33 deg API) with 71% water cut.
• The CN-7 well has encountered pay zones in the Carbonara C7, Gacheta and Ubaque, and should be on production in the next few weeks.
• The first horizonal well at Carrizales Norte continues to be expected to be drilled in April. This is a very important well.
• The impact on our valuation of the additional reserves is offset by assumptions of lower production and we re-iterate our target price of £0.60/sh.
Cash and production
Arrow holds US$12 mm in cash (US$13 mm as at 15 February). Total production is currently 2.9 mboe/d (3.2 mboe/d previously) as Arrow has experienced some minor disruptions caused by drilling operations and water disposal requirements. Arrow is expecting regulatory approval to turn RCE-1 and CN-1 into water disposal wells to increase the water disposal capacity and increase production.
Valuation and cashflow
We have reduced our production forecast for 1Q24 from 3.2 mboe/d to 2.9 mmboe/d. We have also factored additional downtime for future periods. We now forecast ~4.3 mboe/d in 2024 and 5.5 mboe/d in 2025. Booking 3.35 mmbbl net reserves at Carrizales Noroeste could add a further £0.08/sh, while success at Mateguafa Attic (3Q24) and Baquiano (April) is worth a total of £0.18 per share. Assuming US$85/bbl for Brent until YE25, we forecast that the company will hold >US$55 mm at YE25.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.