Oil Discovery Could Add More Reserves Than First Thought
Research Report

Arrow Exploration Corp. (AXL:TSX.V; AXL:LSE) provided an update on the Carrizales Norte-1 (CN-1) discovery in Colombia's Llanos basin, in which it holds a 50% beneficial interest, reported Auctus Advisors analyst Stephane Foucaud in a June 8 research note.

117% Upside From Here

Foucaud noted that the potential return for investors in Arrow is significant, at about 117%.

This upside is implied in the difference between the current share price of the Alberta, Canada-based energy company, of about £0.23, and Auctus' target price on it, of £0.50 per share.

Prospective Zones Do Not Flow

In one bit of news regarding the CN-1 well discovery, the Gacheta zones in the area failed to produce any oil when recently tested, wrote Foucaud. This was surprising given they are above the Ubaque reservoirs that did produce, flowing at 1,100 barrels or more per day.

Arrow's management is working to determine why the Gacheta zones did not flow and intends to revisit them down the line with additional wells.

Next, though, the energy company will put the primary zones at CN-1, which are C7A and C7, into production over the next week, reported Foucaud.

After Arrow gets the CN-1 well producing, the analyst relayed, it will move the rig to and spud the Carrizales Norte-2 well, followed by the Carrizales Norte-3 well. After that, an updated reserve estimate will be prepared.

Original Estimates Low

The second piece of news regarding the CN-1 discovery is that "aggregate reserve capture materially exceeds initial expectations," Foucaud highlighted, thanks to flows from the Ubaque and the C7 proving to be greater than first anticipated.

"The development of Carrizales Norte could now be expanded beyond the three wells initially envisaged," wrote Foucaud.

This could ultimately translate into Carrizales Norte having greater value, added Foucaud. Currently, Auctus forecasts net resources from Carrizales Norte to be about 1,800,000 barrels (1.8 MMbbl). Should they actually be, say, 50% greater, about 2.7 MMbbl, they would boost Auctus' core net asset value of Carrizales Norte by about £0.05 per share.

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Disclosures for Auctus Advisors, Arrow Exploration Corp., June 8, 2023

Arrow Exploration Corp. (“Arrow” or the “Company”) is a corporate client of Auctus Advisors LLP (“Auctus”). Auctus receives, and has received in the past 12 months, compensation for providing corporate broking and/or investment banking services to the Company, including the publication and dissemination of marketing material from time to time. MiFID II Disclosures This document, being paid for by a corporate issuer, is believed by Auctus to be an ‘acceptable minor non-monetary benefit’ as set out in Article 12 (3) of the Commission Delegated Act C(2016) 2031 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. It is produced solely in support of our corporate broking and corporate finance business. Auctus does not offer a secondary execution service in the UK. This note is a marketing communication and NOT independent research. As such, it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and this note is NOT subject to the prohibition on dealing ahead of the dissemination of investment research. Author The research analyst who prepared this research report was Stephane Foucaud, a partner of Auctus.

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