Cash-Flowing Colombian Oil Producer has Plans for 2025 Growth

Disseminated on Behalf of: Arrow Exploration Corp.

• Arrow Exploration has a large acreage position on key onshore basins in Colombia
• The company has rapidly grown its production profile with a horizontal drilling program on its license in the Llanos Basin
• Arrow has a US$50 million CAPEX program planned for 2025 to further grow production and cash flow

The oil and gas sector plays a significant role in Colombia’s economy, contributing around 10% of GDP and 20% of exports.

Colombia produced 777,016 barrels of oil per day and 1,546 million cubic feet of natural gas per day in 2023, according to the International Energy Agency.

Oil and gas junior Arrow Exploration Corp. (TSXV: AXL | AIM: AXL) has found the stable government and rule of law in Colombia make it an excellent place to do business, enabling the company to benefit from the many opportunities in-country, with a hydrocarbon industry on the verge of tremendous growth.

Indeed, Arrow has successfully grown its production in-country to 5,000 barrels a day net (the company holds a 50% working interest in the Tapir block which is a block in the Llanos basin in Colombia, and holds interests in other blocks in Colombia.)

That production has generated significant cash flow and the company is looking forward to a big work program in 2025 that should expand production still further.

We have a US$50 million CAPEX program that’s board approved, and we intend to drill 23 wells that occupy the full spectrum of risk.

—  Marshall Abbott, CEO, Arrow Exploration

Arrow Exploration: A Wealth of Technical and Management Experience

Investors assessing a publicly traded oil and gas company like Arrow would be well advised to take a close look at management.

In Arrow’s case, the company has a team with a wealth of experience both exploring for oil and gas and producing a return for investors.

It’s management team has experience turning explorers into producers, including Canadian company Cougar Hydrocarbons, which exited with 3,000 BOE/D, Indonesian company Equatorial Energy, which exited with production of 13,000 BOE/D, and Canadian company Sabretooth Energy, which exited with 1,700 BOE/D in production.

The company has an in-country technical team with a firm understanding of the country’s key basins.

Arrow CEO Marshall Abbott comments, “We’ve got an excellent technical team in Colombia. We’re proud of those guys, and we pride ourselves on also being likely the lowest cost operator in the Llanos Basin.”

The company’s team has over 100 years’ experience operating in the international arena.

Growth in 2024 through Horizontal Drilling

Arrow Exploration has used horizontal drilling on the company’s Tapir Block licenses in the Llanos Basin to rapidly expand production there in 2024.

To date, the company has drilled six horizontal wells into the Ubaque Sandstone on the Carrizales Norte B pad on the Tapir Block.

The wells have been coming on at rates between 1,000 and 3,000 BOE/D gross and with the company’s 50% working interest in the concessions, its share of production is half that.

According to Abbott, “Those wells have the capacity to pay out in one to four months, so the IRRs are exceeding 500% and we have more to drill.”

These horizontal wells are based on an exploitation program that’s based on a discovery made 14 months ago.

An Aggressive Exploration Program Planned for 2025

With these newer wells coming online, Arrow is producing 5,000 BOE/D net and is seeing US$4-5 million a month from production.

That cash flow has Arrow sitting on a cash position of approximately US$19 million.

The company has no debt and an aggressive plan to exploit its Llanos Basin licenses in 2025.

Says Abbott, “We have a US$50 million CAPEX program that’s board approved, and we intend to drill 23 wells that occupy the full spectrum of risk. The CAPEX program will be funded by the company’s cash reserves and cash flow from operations.”

That includes infill, development, outpost and exploration wells.

The goal is to spend around 30% of the 2025 budget to keep production flat and then focus the rest of it on drilling that can grow production and cash flow.

Arrow will also shoot a 3D seismic survey on the southern end of its Tapir Block holdings. Abbott notes, “We did the same thing two years ago and that has really been the difference in us getting production from 100–200 barrels a day to 5,000 barrels a day.”

Abbott and team are targeting an increase in production to 10,000 barrels a day in the next two or three years. They believe they have that capacity, just with its current asset base.

Undervalued…For Now

Despite appreciating on the good news from this year’s horizontal drilling at Carrizales Norte B, Arrow Exploration continues to trade at less than three times 2024 estimated cash flow.

Abbott says the company, which trades primarily on the London-based AIM exchange, has been impacted by recent capital gains tax changes in the UK. And, in the face of political headwinds in Colombia, he notes, “We were able to get our wells drilled in record time.”

The company has been aggressive on the marketing side, travelling consistently to tell its story in the UK, Europe, and Canada.

Arrow can self-fund its entire 2025 capital expenditure program, and its production is based on the Brent benchmark for crude, which typically trades at higher prices than West Texas Intermediate.

Charlie Sharp, E&P Analyst for UK Research at Canaccord Genuity, comments, “If Arrow can continue to deliver step change cash flow generation next year, we would expect to see that reflected in strong market performance.”

In short, Arrow Exploration looks like a junior oil producer with the projects and the plan to deliver results for investors in 2025.

To learn more about Arrow Exploration Inc., visit their website here.
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