Arrow Exploration Corp said it has filed its unaudited interim financial statements and Management's Discussion and Analysis (MD&A) for the quarter ended June 30, 2022, which show the company continues to realize good oil and gas prices and good operating netbacks increases quarter-over-quarter.
Arrow said its operating netbacks increased to $49.18 per barrel of oil equivalent (/boe) in the second quarter of 2022, up from $20.16/boe in the first quarter of 2022. The increase was due to higher crude oil production and better netbacks from natural gas, it added.
The first six months of 2022 saw the company deploy the capital it raised at the time of its admission to London's AIM on a successful two-well drilling campaign at Rio Cravo on the Tapir Block. The better than forecasted results from this drilling campaign and the subsequent generation of positive cashflows in Q3 means Arrow is committing to a further drilling program.
READ: Arrow Exploration provides operations update, announces results of 2022 mid-year oil reserves evaluation
Commencing in Q4 2022, the company expects to drill up to three further wells at Rio Cravo and plans a two-well program on the Carrizales Norte Structure on the Tapir Block. A letter of intent has been signed with a drilling contractor to execute the planned five-well program on the Tapir Block.
Along with workovers to other existing wells, the company said it will seek to tie in the East Pepper well in Q4 2022, confirming that the company remains on target to increase production to 3,000 barrels of oil equivalent per day (boe/d) within 18 months of AIM admission.
The company said it anticipates being able to support the planned 2023 CAPEX program with current cash and cashflow from operations. Arrow added that it continues to focus on growth and improving its balance sheet and free cash flow.
The company's second quarter 2022 average corporate production decreased by 29% to 899 boe/d, compared to the first quarter 2022 average production of 1,144 boe/d. This decrease was largely attributable to the West Pepper well in Alberta, Canada, which was brought on production in December 2021 and has been recently affected by a third party's temporary processing facility constraints.
For the three months ended June 30, 2022, the company's average production mix consisted of crude oil and natural gas production in Colombia of 575 barrels per day (2021: 264 bbl/d) and 2,398 Mcf/d (2021: 373 Mcf/d), along with minor amounts of natural gas liquids from Arrow's Canadian properties.
During the quarter, the company successfully drilled the RCE-2 and RCS-1 wells, which were put into production and have contributed to the increase in Colombia's crude oil production.
During Q2 2022, the company incurred capital expenditures in connection with the drilling of the RCE-2 and RCS-1 wells. At the end of the quarter, Arrow had a positive working capital position of $5.6 million and a cash position of $7.4 million, which it said are expected to fund the company's expenditure plan for the foreseeable future.
The company noted that its full audited interim financial statements and Management's Discussion and Analysis (MD&A) for the quarter ended June 30, 2022, are available on SEDAR (www.sedar.com).
Arrow Exploration, operating in Colombia via a branch of its 100% owned subsidiary Carrao Energy S.A., is a publicly-traded company with a portfolio of premier Colombian oil assets that are underexploited, 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.
Arrow's 50% interest in the Tapir Block is contingent on the assignment by Ecopetrol SA of such interest to Arrow. The company's seasoned team is led by a hands-on executive team supported by an experienced board
Contact the author at jon.hopkins@proactiveinvestors.com