Arrow Exploration Corp. (TSX-V:AXL) has reported its second-quarter financials which showed the company had a positive working capital position of $3.1 million, and a cash position of $4.6 million as of June 30, 2021.
The company's average corporate production in the second quarter of 2021 was 331 barrels of oil equivalent per day (boe/d), an increase of 89 barrels per day (bbls/d), or 37%, compared to Q1 2021 average corporate production of 242 bbls/d. The company exited Q2 2021 with corporate production of 535 boe/d.
Arrow Exploration said the increase in production quarter-over-quarter was largely attributable to the re-start of production from its Oso Pardo field and its share of production from the Capella field, both in Colombia.
READ: Arrow Exploration announces plans to tie-in natural gas well in West Pepper, Alberta
The company noted that it benefited from production at the Oso Pardo field for only 9 out of 91 days in Q2 2021, as the Morsa-1 well was re-stared on approximately June 22, 2021. During Q3 2021, Arrow Explration expects to benefit from a full quarter of production from the Morsa-1 well, as well as production from the Oso Pardo-1 and Oso Pardo-2 wells.
During Q2 2021 and subsequent to the quarter-end the company successfully executed on several initiatives to continue increasing its production and cash flow, including:
- Replacing a pump in the Morsa-1 well at the Oso Pardo field (100% Arrow), bringing the well back on production at an initial rate of 392 bbls/day, which has since stabilized at a rate of approximately 105 bbls/d
- Re-starting production from the Oso Pardo-1 and Oso Pardo-2 wells, located adjacent to Morsa-1, and adding combined current production of approximately 31 bbls/d
- After a brief pause in production due to nation-wide protests in Colombia, re-starting production at the Capella Field (10% Arrow) at a rate of 177 bbls/d, net to Arrow, which has since increased to a rate of approximately 197 bbls/d, net to Arrow
- Announcing the planned tie-in of behind-pipe natural gas from the 03-26-52-23W5 well located at West Pepper, Alberta.
The company noted that the operating costs incurred in Q2 2021 to re-start production from the Morsa-1, Oso Pardo-1, and Oso Pardo-2 wells were approximately $325,000 (exclusive of VAT), or the equivalent of approximately $7.40 per flowing barrel of initial production from these wells, making the re-start of these wells highly capital-efficient. The company did not incur material capital expenditures during Q2 2021.
Arrow Exploration reported an adjusted EBITDA loss of $529,784 for 2Q 2021, against an adjusted EBITDA loss of $946,363 for the same period in 2021. The company's adjusted EBITDA loss for the first half of 2021 was $702,202.
Arrow Exploration operates in Colombia via a branch of its 100% owned subsidiary Carrao Energy S.A. The company has a portfolio of premier Colombian oil assets that are under-exploited, under-explored 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.
The company's 50% interest in the Tapir Block is contingent on the assignment by Ecopetrol (NYSE:EC) SA of such interest to Arrow.
Contact the author at jon.hopkins@proactiveinvestors.com