Arrow Exploration Corp. (AXL:TSX.V; AXL:LSE) announced favorable developments regarding the Rio Cravo Este-6 (RCE-6) and Oso-Pardo 3 wells in Colombia, reported Auctus Advisors analyst Stephane Foucaud in a November 16 research note.
"The discovery in the Ubaque at RCE and additional volumes at Oso Pardo are expected to be accretive to our core and risked exploration net asset value," Foucaud wrote.
224% Implied Gain
Accordingly, Auctus reiterated its £0.55 per share price target on the Alberta-based oil and gas company, currently trading at about £0.17 per share.
From the current price, the return to target represents a robust return for investors of 224%.
Flow Rate Surprise
In the high-quality upper C7 sand, the RCE-6 well encountered 16 feet of pay and now is flowing naturally at a higher rate than expected, Foucaud reported. The flow rate is 834 barrels per day (834 bbl/d), 417 bbl/d net to Arrow, which holds a 50% interest in the asset.
"This initial rate is above our expectations of 700 bbl/d," Foucaud wrote.
Positive Test Result
In the Ubaque formation, the RCE-6 well encountered 7 feet of high-quality pay with an average porosity of 24%. The zone was tested at an oil rate of up to 393 bbl/d (179 bbl/d net to Arrow) of 13.3 degree API crude, with no pressure decline.
"This is a new discovery," wrote Foucaud. "Further drilling will be required to estimate the areal extent."
The analyst pointed out that the downhole pressure and reservoir quality there are consistent with those of the Ubaque in the Carrizales Norte oilfield, about 2 kilometers away.
Volumes Beat Estimate
The Oso Pardo-3 well in Colombia's Middle Magdalena Valley basin showed larger volumes than expected, Foucaud pointed out. In high-quality sands in the Umir formation, the well encountered multiple pay zones totaling 53 feet of net pay, with an average porosity of 23%. It hit oil 120 feet below expectations across the fault.
"This potentially opens five new drilling locations on the lands already held by Arrow and could result in additional reserves and production," Foucaud wrote.
Now, Oso Pardo-3 will be put into production.
More Drilling on Horizon
Foucaud indicated the current drill campaign is continuing. The RCE-7 well was slated for drilling in mid-November, targeting multiple zones, including the Ubaque. The RCE-8 well is to follow.
Subsequently, the drill rig will be mobilized back to Carrizales Norte, where highly anticipated horizontal wells will be drilled in the Ubaque in H1/24.
"A new prospect (Carrizales Noroeste) will also be drilled, which, with success, could potentially add a material amount of resources," noted Foucaud.
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Disclosures for Auctus Advisors, Arrow Exploration, November 16, 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.
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.
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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. Certain transactions, including those involving futures, options and other derivative instruments, can give rise to substantial risk and are not suitable for all investors. This note does not have regard to the specific instrument objectives, financial situation and the particular needs of any specific person who may receive this note. Auctus (or its partners, officers or employees) may, to the extent permitted by law, own or have a position in the securities or financial instruments (including derivative instruments or any other rights pertaining thereto) of the Company or any related or other company referred to herein, and may add to or dispose of any such position or may make a market or act as principle 5 | Page Prepared by Auctus Advisors LLP See final two pages for important disclosures in any transaction in such securities or financial instruments. Partners of Auctus may also be directors of the Company or any other of the companies mentioned in this note. Auctus may, from time to time, provide or solicit investment banking or other financial services to, for or from the Company or any other company referred to herein. Auctus (or its partners, officers or employees) may, to the extent permitted by law, act upon or use the information or opinions presented herein, or research or analysis on which they are based prior to the material being published.
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