Arrow Exploration Corp (TSX-V:AXL, AIM:AXL, OTC:CSTPF), the Colombia-focused oiler, has told investors it continues to focus on improving its balance sheet and generating free cash flow as it unveiled a record third quarter.
In the three months to end-September 2022, the group posted record cashflow from operations and said it has seen a threefold increase in production since shares started trading on London's AIM in October last year.
Capital raised then was deployed on a two-well drilling campaign at the Rio Cravo field on the Tapir block - both of which have been producing for most of the quarter.
Arrow also confirmed it is "on track" to achieve output of 3,000 barrels of oil per day (bopd) within 18 months of the London listing.
READ: Arrow Exploration says East Pepper well tie-in has been completed, and production began on October 25
In the results statement, Arrow CEO Marshall Abbott said: "Arrow has successfully executed the two workovers with production improving daily. The plan to add further perforations to RCS-1 provides additional and material production increase potential. The RCE infill drilling program will aid in achieving our 3,000 (net) bop/d production target in H1 2023."
He noted that the group's low-risk Carrizales Norte project had significant production and reserve potential, while the West Tapir seismic project was expected to add low-risk exploration prospects, which have the potential to provide material production and reserves increases in the near term.
"The seismic project will highlight the reserves potential of the western section of the Tapir block. The company's plans are to explore the east half of the Tapir block with a second seismic shoot in 2024," added Abbott.
In the third quarter, Arrow produced 1,503 barrels of oil equivalent per day (boe/d), up from 575 boe/d in the third quarter of 2021, while operating netbacks quarter-over-quarter increased to US$56.75 per boe, up from US$30.73 in Q3, 2021.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) was around US$4.6 million versus US$966,234 in Q3,2021. The company's net income came in at around US$2 million compared to a loss of US$21,781 in the year-earlier period.
Arrow ended the quarter with working capital of US$7.4 million and cash of US$11 million.
At its Canadian operations, Arrow noted that its East Pepper well was put into production on October 25 this year at 1,167 boe/d and as expected, initial production decline was steep but the well appears to have now stabilized and is producing over 250 boe/d.
Looking ahead, the firm said it expected to begin drilling the first of five additional wells - three wells at Rio Cravo and two wells at Carrizales Norte on the Tapir Block - around the end of 2022 and expects the program will be funded from cash on hand and from operations.
Arrow says its Colombian oil assets are underexploited, under-explored and offer high potential growth. The aim is to expand oil production from some of Colombia's most active basins, including the Llanos, Middle Magdalena Valley (MMV) and Putumayo Basin.
The company's assets are mainly operated with high working interests, and the Brent-linked light oil pricing exposure combines with low royalties to yield attractive potential operating margins.
Contact the author at giles@proactiveinvestors.com