Arrow Exploration Corp (CVE:AXL) said it has successfully restarted production at its Oso Pardo-1 and Oso Pardo-2 wells at the Oso Pardo Field, located on the Santa Isabel Block, Middle Magdalena Valley Basin in Colombia.
Both wells were restarted on July 4, 2021. The company said the combined production from the wells is currently approximately 61 barrels of oil per day, which is in addition to the production from the Morsa-1 well re-commenced output during the week of June 21, 2021.
The Calgary-based company has a portfolio of Colombia oil assets that are under-exploited, underexplored and offer high potential growth. Its business plan is to expand oil production from some of the country’s most active basins, including the Llanos, Middle Magdalena Valley and Putumayo basins.
READ: Arrow Exploration plans $12 million capital raise as it prepares for AIM listing in London
In addition to the production restart, Arrow also highlighted the commencement of equity research analyst coverage on the company by Arden Partners and by Auctus Advisors, two London, UK-based stockbrokers.
In the Arden initiation research report on Arrow, dated July 5, 2021, the company was given a Buy recommendation, with the broker's analyst citing the full upcoming work program of up to 10 wells to be drilled and/or brought on stream between now and the end of 2023.
“Our forecasts anticipate net production of 1.4 (million barrels oil equivalent per day) mboe/d in 2022, and over 1.7mboe/d in 2023 on exploration success,” Arden analyst Daniel Slater wrote in his report.
He went on to note the numerous sources of upside potential: “Our total risked net asset value (NAV) for Arrow is C$0.41/share, going to C$1.51/share unrisked. The full work programme, growth potential and discount to our NAV all support our initiating with a Buy recommendation."
Similarly, the Auctus initiation research report on Arrow, also referenced the company’s growth potential.
“Arrow is one of the few micro-cap companies that has the potential to replicate the success of the previous generation,” Stephane Foucaud of Auctus wrote in the report.
He went on: “The company is looking to grow production 3.0 mboe/d by YE22, aggressively increase the ready to drill prospects inventory from an asset located in a prime postcode in Colombia and secure a licence extension to access a low-risk 14-million-barrel (bbl) development.”
Arrow’s ability to consolidate smaller ‘orphan’ assets was also highlighted by the Auctus analyst as a factor that would make the company more attractive to sector majors.
“On 2.4 mboe/d production in 2022, we forecast US$20 million cashflow at US$61/bbl. At U$$75/bbl, the 2021-2023 Free Cash Flow is greater than Arrow’s Enterprise Value including funding,” Foucaud noted. “Our ReNAV for Arrow with the US$12 million funding required to deliver this production is US$80 million. Securing an expansion of Oso Pardo and drilling a low-risk well to confirm the geology interpretation has an unrisked value of US$150 million.
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