Arrow Exploration Corp. (AXL:TSX.V; AXL:LSE) made a material discovery with its Alberta Llanos AB-1 exploration well on the Tapir block in Colombia's Llanos basin, reported Auctus Advisors Analyst Stephane Foucaud in a Dec. 17 research note. On the news, Auctus raised its target price on the company.
"The success of this well could open a new area of development and add reserves," Foucaud wrote.
264% Return Implied
Auctus' new target price on Arrow is £0.80 per share, up from £0.75. Compared to the new target, this Canadian oil and gas junior was trading at the time of the report at about £0.22 per share.
The difference between these two prices suggests a potential return for investors of 264%.
Results Beat Expectations
Foucaud reported that the AB-1 well encountered four main hydrocarbon-bearing reservoirs with a 121-foot true vertical depth: C7, Gacheta, Guadalupe, and Ubaque.
The goal going in was to hit the C7 and Ubaque formations only because the Gacheta and Guadalupe carried a higher risk, and thus, the chances of hitting them were lower than with the others. So AB-1, having encountered Gacheta and Guadalupe, is an unexpected achievement.
"Initial log interpretation shows very strong potential for the Guadalupe," Foucaud noted.
The analyst pointed out that horizontal drilling likely would be the preferred method for the Ubaque and the Guadalupe because they are thick reservoirs. This bodes well for production.
Estimates Increased
The success of AB-1 led Auctus and Arrow to revise their respective expectations for Alberta Llanos, Stephane reported.
Auctus increased its forecasted chance of success for Alberta Llanos to 75% from 50%. The financial advisory firm also upwardly revised its estimate of the amount the discovery holds to 1,800,000 barrels (1.8 MMbbl) net from 1.2 MMbbl.
Similarly, before it drilled AB-1, Arrow also estimated net prospective resources from three producing Alberta Llanos wells to be 1.2 MMbbl. Now, however, it believes "there could be in excess of five wells in the Alberta Llanos area," noted Foucaud.
Coming Up Next
Next, for AB-1, Arrow will test the well and put it on production in the Ubaque formation, reported Foucaud. Then, the company will drill its next Alberta Llanos well, AB-2, to further assess the discovery.
With its full-year 2025 exploration program, Arrow is targeting prospective resources, excluding from Alberta Llanos, of about 10,000,000 barrels of oil equivalent, which has an aggregate unrisked net asset value of £0.38 per share.
"We anticipate production will exceed 7,000 barrels per day by year-end 2025," Foucaud wrote.
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Disclosures for Auctus Advisors, Arrow Exploration Corp., December 17, 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. 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. Not an offer to buy or sell Under no circumstances is this note to be construed to be an offer to buy or sell or deal in any security and/or derivative instruments. It is not an initiation or an inducement to engage in investment activity under section 21 of the Financial Services and Markets Act 2000. Note prepared in good faith and in reliance on publicly available information Comments made in this note have been arrived at in good faith and are based, at least in part, on current public information that Auctus considers reliable, but which it does not represent to be accurate or complete, and it should not be relied on as such. The information, opinions, forecasts and estimates contained in this document are current as of the date of this document and are subject to change without prior notification. No representation or warranty either actual or implied is made as to the accuracy, precision, completeness or correctness of the statements, opinions and judgements contained in this document. Auctus’ and related interests The persons who produced this note may be partners, employees and/or associates of Auctus. Auctus and/or its employees and/or partners and associates may or may not hold shares, warrants, options, other derivative instruments or other financial interests in the Company and reserve the right to acquire, hold or dispose of such positions in the future and without prior notification to the Company or any other person. Information purposes only This document is intended to be for background information purposes only and should be treated as such. This note is furnished on the basis and understanding that Auctus is under no responsibility or liability whatsoever in respect thereof, whether to the Company or any other person. Investment Risk Warning The value of any potential investment made in relation to companies mentioned in this document may rise or fall and sums realised may be less than those originally invested. Any reference to past performance should not be construed as being a guide to future performance. Investment in small companies, and especially upstream oil & gas companies, carries a high degree of risk and investment in the companies or commodities mentioned in this document may be affected by related currency variations. Changes in the pricing of related currencies and or commodities mentioned in this document may have an adverse effect on the value, price or income of the investment. 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Disclaimer This note has been forwarded to you solely for information purposes only and should not be considered as an offer or solicitation of an offer to sell, buy or subscribe to any securities or any derivative instrument or any other rights pertaining thereto (“financial instruments”). This note is intended for use by professional and business investors only. This note may not be reproduced without the prior written consent of Auctus. The information and opinions expressed in this note have been compiled from sources believed to be reliable but, neither Auctus, nor any of its partners, officers, or employees accept liability from any loss arising from the use hereof or makes any representations as to its accuracy and completeness. Any opinions, forecasts or estimates herein constitute a judgement as at the date of this note. There can be no assurance that future results or events will be consistent with any such opinions, forecasts or estimates. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied is made regarding future performance. This information is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the company and its subsidiaries. Auctus is not agreeing to nor is it required to update the opinions, forecasts or estimates contained herein. The value of any securities or financial instruments mentioned in this note can fall as well as rise. Foreign currency denominated securities and financial instruments are subject to fluctuations in exchange rates that may have a positive or adverse effect on the value, price or income of such securities or financial instruments. 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