Arrow Exploration Corp (TSX-V:AXL, AIM:AXL, OTC:CSTPF) CEO Marshall Abbott talked with Proactive about the company’s strongest quarter to date, highlighting rising revenue, EBITDA, cash flow and continued operational momentum across the Tapir block in Colombia.
Proactive: Welcome back inside our Proactive newsroom. Joining me now is Marshall Abbott, CEO of Arrow Exploration. Marshall, great to have you back again. How are you?
Marshall Abbott: I’m doing great. How are you doing?
I’m doing good. Really interesting to read your Q1 financials released today. Exciting for the company with lots of positive numbers. Overall, what were your thoughts on Q1?
It was the best quarter ever for the company. Revenue was up, EBITDA was up, cash flow was up and cash in the bank was at US$24 million. We’re in good shape. Cash flow is very strong on a monthly basis. We’re active with rigs moving, a drilling rig operating and a service rig operating. We’ve also had a lot of success in the Tapir block in Colombia.
Let’s talk about that. What did you see there in Q1 and where is it headed?
In Q4 last year we had success in the Mateguafa play. We have three zones being completed there. Production is very solid, declines are minimal and water production is manageable. We only had three wells included for reserves at year-end, with the balance expected to be booked this year. We are even considering a potential mid-year reserve update.
We continue drilling Mateguafa wells. While additional drilling infrastructure is being prepared, we moved to the Icaco pad. The Icaco-1 well was a discovery and we are very excited about it. We identified fault-related structures through 3D seismic and the well encountered three separate producing zones. One zone is producing currently and we will test another zone shortly to evaluate productivity.
Initial flow rates were above 550 barrels per day and production appears stable. We drilled a second well and expect to release additional information soon. The area has performed better than expected. We remain very active on the drilling front and have a strong prospect inventory extending through the potential expiry of the block in February 2028.
Production is now above 5,000 barrels per day and we intend to continue growing. Our strong cash position gives us flexibility to expand drilling activity and evaluate acquisitions. We are seeing more onshore Colombia transactions. Last year we ranked among the top ten operators in Colombia and are increasingly recognised as a serious operator.
We also drilled the longest horizontal well leg in Colombia. I recently met with Ecopetrol regarding a Tapir block extension and discussions have been positive and supportive. Ecopetrol is also planning asset sales and we intend to evaluate opportunities.
Do you feel the Icaco success could mirror what you’ve seen at Tapir?
We’ve drilled six exploration wells throughout the block and five resulted in discoveries. We are very excited about Icaco. The play type has been repeated successfully and repeatability is central to our strategy. We are pleased with the results moving forward.
What key developments should investors watch over the next three to six months?
We plan to increase activity on the Tapir block through workovers, development wells and exploration wells. Additional exploration targets near Icaco on separate fault trends are being prepared now.
We also expect acquisition activity. Over the last 12 months we evaluated around 60 separate transactions. We remain disciplined and focused on opportunities with upside potential at the right valuation. We are well funded and excited about the opportunities across the portfolio.
Congratulations on the quarter and thanks for joining us.
Thanks.
Quotes have been lightly edited for style and clarity