Arrow Exploration Corp (TSX-V:AXL, AIM:AXL, OTC:CSTPF) last week provided an update on its 2024 year-end reserves, reporting significant growth in reserves and highlighting new discoveries in Colombia’s Llanos Basin.
The company said its PDP reserves nearly doubled in 2024, while its total proven reserves reached 5.3 million barrels. The reserve replacement ratio stood at 230%, significantly above industry norms.
CEO Marshall Abbott noted that Arrow Exploration’s wells have outperformed forecasts, contributing to the strong reserve numbers.
Proactive: Your 2024 year-end reserves have been released, and obviously, there's some real good numbers in there. Marshall, tell me a bit about the highlights from your point of view.
Marshall Abbott: Well, it's been a good year. We've had some luck, Steve, as you mentioned. But, you know, all aspects of the reserve report support the business model and the sustainability of that business model. Just as an example, PDP reserves are up almost 100%. We doubled production and were still able to replace reserves.
From a reserve replacement ratio perspective, we're at 230%. From a recycle ratio perspective, we're at 2.4 times. Typically, one times is the standard number. So when you compare that to our peer group, we've performed quite well this year. We're proud of it.
Obviously, this is a major increase in reserves, something that jumps off the page right away. Tell us a little bit about how you were able to do that because the numbers are quite substantial.
Well, we had a very exciting discovery 18 months ago in the Ubaque at the Llanos Tapir Block in the Llanos Basin. It has taken time to really develop and exploit that asset, and we're not done yet. We've added reserves on the periphery of the initial discovery. It's much bigger than we originally thought.
The wells have also outperformed what our forecasts predicted. So, once again, we've had some luck, and both drilling and performance issues have proven up more than expected.
Marshall, maybe you can give us a bit of an explanation on the breakdown of the different reserve categories and why that’s significant for the value of the asset.
The results are quite strong. From a proven developed producing (PDP) perspective, which is where most valuations take place on a PV-10 number, we stand at 2.38 million barrels. On a total proven basis, we’re at 5.3 million barrels. These are two very positive results on the proven side of the equation. It bodes well not only for last year but also for the year ahead.
Also, the reserve replacement ratios continue to be strong as well. Talk to me a bit about why that number is interesting, because it really looks at the future of the asset, right?
Once again, Steve, you're correct. It speaks to the sustainability of the asset. A 2.3 times reserve replacement ratio is strong. A lot of entities have issues reaching one to two times. So from that perspective, it’s been a good year, and that’s even with a much more conservative price stack that our third-party engineers used.
We’re happy with the number, and we expect that with what we’re planning for this year, we’ll be able to replicate or even improve on it.
I want to talk to you about 2025 because you’re still drilling. In fact, there was some drilling included in this particular report. Obviously, there’s a lot of exploration happening. Take me through what was left out and what’s ahead in 2025.
Before year-end, we drilled and discovered the Ubaque reservoir in the Alberta Llanos Prospect. That well was actually brought on stream just before December 31st, proving up a brand-new exploration discovery that we’re quite proud of.
We encountered a very thick pay zone in Ubaque and in the Carbonera C7, which has been the traditional zone that we exploit. We also had log hydrocarbon indications in the Guadalupe reservoir, which is quite thick. That’s exciting for us.
For this reserves report, we were only able to claim the PDP reserves on the Ubaque reservoir. The other reservoirs we’re evaluating will be included in 2025, and based on their performance to date, they should be excellent additions.
Quotes have been lightly edited for style and clarity