Mr. Marshall Abbott reports
ARROW ANNOUNCES Q1 2023 INTERIM RESULTS
Arrow Exploration Corp. has filed its interim condensed consolidated financial statements and management's discussion and analysis (MD&A) for the quarter ended March 31, 2023, which are available on SEDAR and will also shortly be available on Arrow's website.
Q1 2023 highlights:
- Recorded $6.9-million of total oil and natural gas revenue, net of royalties, more than double compared with 2022 (Q1 2022: $3.4-million);
- Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $4.3-million, more than seven times compared with 2022 (Q1 2022: $600,000);
- Average corporate production up 43 per cent to 1,635 barrels of oil equivalent per day (Q1 2022: 1,144 boe/d);
- Realized corporate oil operating netbacks of $58.31 per barrel due to increased production allowing operating cost to be spread over more barrels;
- Cash position of $12.3-million at the end of Q1 2023;
- Generated positive operating cash flows of $2.4-million (Q1 2022: negative $100,000);
- Drilled three successful wells at Rio Cravo Este (RCE) resulting in material production additions.
Postperiod-end highlights:
- The Carrizales Norte-1 (CN-1) well has been drilled and reached its target depth, and is currently under production testing.
Outlook
- Arrow anticipates two additional wells to be drilled at Carrizales Norte by year-end.
- Arrow anticipates two additional wells at RCE by year-end to target the Gacheta formation which was successfully tested at commercial rates in RCE-2.
- Arrow plans to drill two development wells at the Oso Pardo block in the Middle Magdalena basin.
Marshall Abbott, chief executive officer of Arrow Exploration, commented:
"Arrow has had a strong start to 2023, including the drilling of three RCE wells and the CN-1 well, which is expected to have a significant impact on the company's production and reserves, as well as establishing a new core area. The 3-D seismic West Tapir project has completed shooting, is currently being processed and is expected to further evaluate the 2-D recognized fault prospects. The Arrow team continues to strive towards excellence and increasing shareholder value."
FINANCIAL AND OPERATING HIGHLIGHTS
(in United States dollars, except as otherwise noted)
Three months ended
March 31,
2023 2022
Total natural gas and crude oil revenues, net of royalties $6,992,860 $3,402,962
Funds flow from operations 4,240,603 312,951
Funds flow from operations per share --
Basic $0.02 $0.00
Diluted $0.01 $0.00
Net income (loss) 2,989,735 (5,431,865)
Net income (loss) per share --
Basic $0.01 (0.03)
Diluted $0.01 (0.02)
Adjusted EBITDA 4,271,726 562,284
Operating
Natural gas and crude oil production, before royalties
Natural gas (Mcf/d) 2,459 4,221
Natural gas liquids (bbl/d) 4 6
Crude oil (bbl/d) 1,222 434
Total (boe/d) 1,635 1,144
Operating netbacks ($/boe) (1)
Natural gas ($/Mcf) $(0.42) $0.73
Crude oil ($/bbl) $58.31 $48.94
Total ($/boe) $42.21 $20.16
Discussion of operating results
The company maintained its overall production and continued improving its operations. This has allowed the company to continue to improve its balance sheet and its business profile. In early 2023, the company increased production on its Tapir block through drilling the RCE-3, RCE-4 and RCE-5 wells, offset by the current production shut in at its Ombu block. There has also been a decrease in the company's natural gas production in Canada due to natural declines.
AVERAGE PRODUCTION BY PROPERTY
Average production boe/d Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022
Oso Pardo 138 115 104 112 121
Ombu (Capella) 80 238 215 97 177
Rio Cravo Este (Tapir) 1,004 832 860 366 136
Total Colombia 1,222 1,185 1,179 575 434
Fir, Alberta 74 79 82 86 73
Pepper, Alberta 340 472 242 319 636
Total (boe/d) 1,635 1,736 1,503 980 1,144
For the three months ended March 31, 2023, the company's average production was 1,635 barrels of oil equivalent per day, which consisted of crude oil production in Colombia of 1,222 barrels per day, natural gas production of 2,459 thousand cubic feet per day and minor amounts of natural gas liquids from the company's Canadian properties. The company's Q1 2023 total production was 43 per cent higher than its total production for the same period in 2022.
Discussion of financial results
During Q1 2023 the company continued to realize strong oil prices, offset by decreased gas prices, as summarized in the "Oil prices" table.
OIL PRICES
Three months
ended March 31,
2023 2022
Benchmark prices
AECO ($/Mcf) $2.43 $3.68
Brent ($/bbl) $79.21 $97.90
West Texas Intermediate ($/bbl) $76.10 $94.94
Realized prices
Natural gas, net of transportation ($/Mcf) $2.11 $3.65
Natural gas liquids ($/bbl) $66.13 $76.89
Crude oil, net of transportation ($/bbl) $73.31 $73.87
Corporate average, net of transport ($/boe) $57.23 $40.13
Operating netbacks
The company also continued to realize positive operating netbacks, as summarized in the "Operating netbacks" table.
OPERATING NETBACKS
Three months ended March 31,
2023 2022
Natural gas ($/Mcf)
Revenue, net of transportation expense $2.11 $3.65
Royalties (0.19) (0.79)
Operating expenses (2.34) (2.13)
Natural gas operating netback $(0.42) $0.73
Crude oil ($/bbl)
Revenue, net of transportation expense $73.31 $73.87
Royalties (9.11) (6.24)
Operating expenses (5.88) (18.69)
Crude oil operating netback $58.31 $48.94
Corporate ($/boe)
Revenue, net of transportation expense $57.23 $40.13
Royalties (6.98) (5.22)
Operating expenses (8.03) (14.76)
Corporate operating netback $42.21 $20.16
The operating netbacks of the company continued improving in 2023 due to increasing production from its Colombian assets, and consistent crude oil prices, which were offset by decreases in natural gas prices and increases in royalties and operating expenses for natural gas.
During Q1 2023, the company incurred in $4.3-million of capital expenditures, primarily in connection with the drilling of the three RCE wells, civil works completed in Rio Cravo, and shooting 100 square kilometres of 3-D seismic in the Tapir block to highlight existing leads and prospects for drilling. This acceleration in operational tempo is expected throughout 2023, financed by cash on hand and cash flow.
Arrow participating interest in the Tapir block
By way of a private commercial contract with the recognized interest holder before Ecopetrol SA, Arrow is entitled to receive 50 per cent of the production from the Tapir block. The formal assignment to the company is subject to Ecopetrol's consent.
About Arrow Exploration Corp.
Arrow Exploration (operating in Colombia via a branch of its 100-per-cent-owned subsidiary Carrao Energy SA) is a publicly traded company with a portfolio of premier Colombian oil assets that are underexploited, underexplored and offer high potential growth. The company's business plan is to expand oil production from some of Colombia's most active basins, including the Llanos, Middle Magdalena Valley (MMV) and Putumayo basin. The asset base is predominantly operated with high working interests, and the Brent-linked light oil pricing exposure combines with low royalties to yield attractive potential operating margins. Arrow's 50-per-cent interest in the Tapir block is contingent on the assignment by Ecopetrol SA of such interest to Arrow. Arrow's seasoned team is led by a hands-on executive team supported by an experienced board.
We seek Safe Harbor.
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