Arrow Exploration Corp. Reports 2018 Year-End Reserves

Source Press Release
Company Arrow Exploration Corp. 
Tags Strategy - Corporate, Financial & Operating Data
Date April 08, 2019

ARROW Exploration Corp. ("Arrow" or the "Company") (TSXV: AXL) is pleased to report its year-end 2018 reserves in Colombia and Canada as evaluated by DeGolyer and MacNaughton ("D&M") of Dallas, Texas in its report dated effective as of December 31, 2018 (the "D&M Reserves Report"). This evaluation was prepared using the guidelines outlined in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and is in accordance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities ("NI 51-101").

In accordance with the requirements of NI 51-101, the Company expects to file more detailed disclosure relating to its oil and gas activities for the year ended December 31, 2018 in its 2018 Annual Information Form, together with an operational update, audited annual financial statements and management's discussion and analysis, on or before April 30, 2019.

Year-End 2018 Company Gross Reserves Highlights

  • 4.97 MMboe of Proved Reserves
  • 10.57 MMboe of Proved plus Probable Reserves
  • Proved Reserves estimated net present value before income taxes of US $56,138,000 calculated at a 10% discount rate
  • Proved plus Probable Reserves estimated net present value before income taxes of US $114,018,000 calculated at a 10% discount rate
  • Reserve Life Index of 8.1 for Proved Reserves and 17.2 for Proved plus Probable Reserves based on average fourth quarter 2018 corporate production of 1,683 boe/d

Mr. Gary Wine, Chief Executive Officer of Arrow, commented, "We're very pleased to have increased our reserves in 2018 through the acquisition of assets in Colombia complemented by the success of our first explorationwell in Colombia in Q4 2018. Our long Reserve Life Index and large under-developed land position in Colombia positions the Company very well for future growth."

A summary of the Company's Gross Reserves volumes according to reserve category as at December 31, 2018 is provided in the following table. Numbers in this table may not add exactly due to rounding.

2018 Year-End Company Gross Reserves Volumes (1) 
             
Reserve Category  Light &
Medium
Crude Oil
(Mbbl) 
Heavy
Oil
(Mbbl) 
Condensate
(Mbbl) 
Sales
Gas
(MMcf) 
NGL
(Mbbl) 
Total Oil
Equivalent
(Mboe) 
Proved Developed Producing  1,247  254  1,699  12  1,796 
Proved Developed Non-Producing  789  154  35  3,366  36  1,575 
Proved Undeveloped  1,598  1,598 
Total Proved  2,036  2,006  35  5,065  48  4,969 
Probable  1,475  3,747  13  2,053  22  5,599 
Total Proved plus Probable  3,511  5,753  48  7,118  70  10,568 

Note:
(1)   See Oil and Gas Advisories and Reserves Definitions below.

A summary of the net present value of the Company's estimated future net revenues associated with the Company's Gross Reserves as at December 31, 2018 is provided in the following table. The net present values are estimated based on the forecast prices set out below and readers should not assume that the net present values estimated by D&M represent the fair market value of the Company's Gross Reserves. Numbers in this table may not add exactly due to rounding.

2018 Year-End Company Gross Reserves Values (1) 
   
  Before Income Taxes Discounted at (% / year) 
Reserves Category  0% (M
US $) 
5% (M
US $) 
10% (M
US $) 
15% (M
US $) 
20% (M
US $) 
Proved Developed Producing  30,767  28,406  26,422  24,729  23,278 
Proved Developed Non-Producing  33,254  27,485  23,043  19,574  16,815 
Proved Undeveloped  12,498  9,093  6,673  4,924  3,641 
Total Proved  76,519  64,984  56,138  49,227  43,734 
Probable  104,207  76,676  57,880  44,694  35,226 
Total Proved plus Probable  180,726  141,660  114,018  93,921  78,960 

Note:
(1)   The forecast prices used in the calculations of the present value of future net revenue for year-end 2018 are shown below.

Forecast Prices, Cost Escalation Rates and Exchange Rates 
               
Year  WTI
Reference
Price 
AECO Gas Price  Edmonton
Condensate
Price 
Edmonton
Propane
Price 
Edmonton
Butane
Price 
Inflation
Rates 
Exchange
Rate 
  (US $/bbl)  (CDN
$/MMBtu) 
(CDN $/bbl)  (CDN
$/bbl) 
(CDN
$/bbl) 
(%/year)  (US $/CDN
$) 
Forecast               
2019  58.58  1.88  70.10  26.13  27.32  2.0  0.757 
2020  64.60  2.31  79.21  31.27  41.10  2.0  0.782 
2021  68.20  2.74  83.33  34.58  49.28  2.0  0.797 
2022  71.00  3.05  86.20  37.25  55.65  2.0  0.803 
2023  72.81  3.21  88.16  38.73  57.92  2.0  0.807 
2024  74.59  3.31  90.20  39.75  59.27  2.0  0.808 
2025  76.42  3.39  92.43  40.76  60.77  2.0  0.808 
2026  78.40  3.46  94.87  41.93  62.37  2.0  0.808 
2027  79.98  3.54  96.80  42.84  63.65  2.0  0.808 
2028  81.59  3.62  98.79  43.80  64.97  2.0  0.808 
2029  83.22  3.70  100.76  44.73  66.26  2.0  0.808 
2030  84.87  3.78  102.77  45.64  67.56  2.0  0.808 
2031  86.57  3.85  104.84  46.56  68.92  2.0  0.808 
2032  88.30  3.92  106.94  47.46  70.33  2.0  0.808 
2033  90.08  4.00  109.10  48.44  71.72  2.0  0.808 
2034 +  +2% / yr  +2% / yr  +2% / yr  +2% / yr  +2% / yr  2.0  0.808 

Discussion of the D&M Reserves Report

On October 1, 2018, the Company announced it had closed its acquisition of Carrao Energy S.A. from Canacol Energy Ltd. as well as the asset purchase of a 50% beneficial interest in the under-developed Tapir Block (collectively, the "Colombian Assets"), and completed the reverse takeover transaction with Arrow Exploration Ltd.

During the year ended December 31, 2018, the Company recorded increases in all categories of reserves due primarily to the acquisition of the Colombian Assets. Prior to acquiring the Colombian Assets, the Company's reserves were located entirely in Canada in the Fir and Pepper MontneyFields. The Company's Gross Proved and Probable Reserves in these fields constituted approximately 12% of the Company's Gross Proved and Probable Reserves at year-end 2018. Subsequent to the acquisition of the Colombian Assets, Arrow successfully drilled an exploration well, Danes-1, on the LLA-23 Block in the Llanos Basin in Colombia. The Danes-1 well resulted in recognition of 376 Mbbl of Company Gross Proved Reserves and 509 Mbbl of Company Gross Proved plus Probable Reserves as discoveries in the D&M Reserves Report.

Year-End 2018 Company Gross Reserves Reconciliation

A reconciliation of the Company's Gross Reserves volumes according to reserve category as at December 31, 2018 compared to the Company's Gross Reserves volumes at December 31, 2017 is provided in the following table. Numbers in this table may not add exactly due to rounding.

TOTAL PROVED  Light/Medium
Crude Oil
(Mbbl) 
Heavy Crude Oil 
(Mbbl) 
Conventional
Natural Gas (MMcf) 
NGL
(Mbbl) 
Total Oil
Equivalent
(Mboe) 
Opening Balance (December 31, 2017)  16  5,371  125  1,036 
Extensions 
Improved Recovery 
Technical Revisions  325  (6)  (7)  (38)  280 
Discoveries  376  376 
Acquisitions  1,468  2,160  3,628 
Dispositions  (16)  (109)  (24)  (2)  (131) 
Economic Factors  (24)  (24) 
Production  (109)  (39)  (275)  (2)  (196) 
Closing Balance (December 31, 2018)  2,036  2,006  5,065  83  4,969 
           
TOTAL PROVED + PROBABLE  Light/Med
Crude Oil
(Mbbl) 
Heavy Crude Oil
(Mbbl) 
Conventional
Natural Gas (MMcf) 
NGL
(Mbbl) 
Total Oil
Equivalent
(Mboe) 
Opening Balance (December 31, 2017)  23  7,707  175  1,483 
Extensions 
Improved Recovery 
Technical Revisions  (296)  136  (279)  (52)  (259) 
Discoveries  509      509 
Acquisitions  3,452  6,240      9,692 
Dispositions  (23)  (578)  (35)  (3)  (610) 
Economic Factors  (45)  (6)      (51) 
Production  (109)  (39)  (275)  (2)  (196) 
Closing Balance (December 31, 2018)  3,511  5,753  7,118  118  10,568 

Source: EvaluateEnergy® ©2019 EvaluateEnergy Ltd