Arrow Exploration Corp. (AXL:TSX.V; AXL:LSE) released its 2024 drilling plan and production guidance on January 9, 2024, according to a January 9 report by Auctus Advisors analyst Stephane Foucaud.
The £0.18 per share explorer aims to drill 15 wells this year, funded by a US$45 million capital expenditure budget.
Financial Results and Production
Arrow exited 2023 with production above 3.2 thousand barrels of oil equivalent per day (mboe/d). However, fourth-quarter volumes were impacted by delayed stimulation operations on two Oso Pardo wells. These wells are now expected to commence production in the first quarter of 2024, each adding 250-300 barrels per day (bbl/d).
Two recent wells, RCE-7 and RCE-8, are outperforming with over 850 bbl/d combined. For 2024, Arrow guides to an average production of 4.6 mboe/d. Exit volumes should reach 6 mboe/d, representing significant growth. The 2024 drilling campaign will be funded through operating cash flow, which is seen reaching US$51 million.
2024 Drilling Campaign
This year's drilling will consist of 15 wells across several properties. Five vertical wells are planned at Carbonera, including four C7 wells and one Ubaque well using a dedicated rig. These should average 320 bbl/d per well net to Arrow. A second vertical well will test the Carrizales Noroeste prospect, which carries 3.4 million barrels of prospective resources.
Starting in April, Arrow will deploy a second rig to drill four Ubaque horizontal wells over eight months. Management estimates initial production rates of 1,000 bbl/d per horizontal well net to Arrow. The campaign also includes six exploration/appraisal wells testing the low-risk Baquiano and Mateguafa Attic prospects. Both carry multi-million barrel potential.
Valuation
Foucaud maintains his price target of £0.55 per share, representing 206% upside potential. The rerating thesis rests on Arrow's steep production trajectory along with the exploration of 37 million barrels of gross prospective resources.
The 2024 drilling results should catalyze significant value creation.
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Disclosures for Auctus Advisors, Arrow Exploration Corp., January 9, 2024
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.
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