Arrow Exploration Corp (TSX-V:AXL, AIM:AXL, OTC:CSTPF) is on track to deliver its target production of 3,000 barrels of oil per day (bopd) and its current assets have considerable further growth potential, according to analysts at Canaccord Genuity (TSX:CF, LSE:CF) Ltd, which has initiated coverage on the oil producer with a ‘Buy’ rating.
Analysts set a target price for the company’s TSX Venture Exchange and United Kingdom AIM-listed stock of C$0.54 (£0.36). Arrow is currently trading at C$0.26 (£0.17).
They wrote in a note that this year Arrow had already drilled two successful development wells on the Rio Cravo Este (RCE) field on Tapir, which more than tripled the company’s total production to around 1,500 bopd, with further drilling set to deliver its target production level of 3,000 bopd by spring 2023.
READ: Arrow Exploration posts second quarter results which show good operating netbacks increases quarter-over-quarter
They noted the growth potential of the company’s current assets, specifically the RCE field, the nearby low-risk Carrizales Norte prospect, other Tapir exploration targets, and the Oso Pardo field extension on the Santa Isabel licence. “We see potential to increase production to over 6,000 bopd,” analysts wrote.
They also noted that Colombia provided Arrow with an attractive fiscal environment, Arrow’s production had a low and largely fixed operating cost base, and the company had a strong balance sheet finishing 2Q, 2022 with net cash of US$3.8 million.
“Even if production rises to only 3,000 bopd, we see net cash increasing to C$120 million by (year end 2028), providing ample scope for shareholder cash returns, organic growth, and potentially inorganic expansion,” analysts wrote.
Arrow Exploration has a portfolio of premier Colombian oil assets that are under-exploited, under-explored, and offer high potential growth.
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