Arrow Exploration Corp. Announces First Quarter 2019 Financial and Operating Results and Imminent Testing of Rio Cravo Este-1 Well

Source Press Release
Company Arrow Exploration Corp. 
Tags Capital Spending, Guidance, Financial & Operating Data, Strategy - Corporate
Date May 30, 2019

ARROW Exploration Corp. ("Arrow" or the "Company") (TSXV: AXL) is pleased to announce the filing of its 2019 first quarter unaudited Financial Statements and MD&A and to provide an operational update. The Company's Financial Statements and MD&A are available on SEDAR (). All numbers are expressed in US dollars unless otherwise noted.

   
Financial  Three months ended 
(US Dollars)  March 2019  March 2018  December 2018 
Total natural gas and crude oil revenues, 
net of royalties ($) 
6,008,640  5,911,425 
       
Funds from (used in) from operations (1)  980,952  (312,020)  922,280 
Per share – basic ($) and diluted ($) (1)  0.02  (0.00)  0.01 
       
Net income (loss)  (1,704,180)  (312,020)  1,242,936 
Per share – basic ($) and diluted ($)  (0.02)  (0.00)  0.02 
       
EBITDA ($) (1)  1,387,235  (312,020)  1,170,678 
       
Weighted average shares outstanding –
basic and diluted 
68,674,602  61,591,065  68,674,602 
Common shares end of period  68,674,602  61,591,065  68,674,602 
       
Capital expenditures ($)  3,401,365  7,007,580 
       
Cash and cash equivalents ($)  1,434,648  7,781  1,994,233 
Current assets ($)  10,553,677  7,781  8,599,160 
Current liabilities ($) (2)  18,353,525  324,861  17,157,942 
Working capital (deficit) ($) (1)  (7,799,848)  (303,553)  (8,558,782) 
Restricted cash ($) (3)  3,245,624  3,154,839 
Total assets ($)  77,066,582  21,308  76,962,315 
       
Operating       
       
Natural gas and crude oil production, 
before royalties 
     
Natural gas (Mcf/d)  696  733 
Natural gas liquids (bbl/d) 
Crude oil (bbl/d)  1,588  1,553 
Total (boepd)  1,710  1,682 
       
Natural gas and crude oil revenues, 
net of transportation expense 
     
Natural gas revenues ($/Mcf)  2.12  1.31 
Crude oil revenues ($/bbl)  46.49  48.36 
       
Operating expenses       
Natural gas ($/Mcf)  1.85  3.22 
Crude oil ($/bbl)  23.00  23.98 
Total operating expenses ($/boe)  22.10  22.23 
       
Operating netbacks (1)       
Natural gas ($/Mcf)  0.10  (1.97) 
Crude oil ($/bbl)  18.44  19.15 
Total ($/boe)  17.29  16.88 

   
(1)  Non-IFRS Measures – see "Non-IFRS Measures" below 
   
(2)  Includes $5 million Canacol promissory note 
   
(3)  Restricted cash not included in working capital 

First Quarter 2019 Highlights and Subsequent Events

  • Production averaged 1,710 boe/d, an increase of 28 boe/d over the fourth quarter of 2018. Unscheduled maintenance activities during the quarter negatively impacted production by approximately 150 boe/d.
  • Revenue net of royalties was $6 million, an increase of $97,000 over the previous quarter. Towards the end of quarter, Brent oil prices began to improve and the Colombian Vasconia price differential narrowed, positively impacting operating netbacks.
  • Operating costs were $3,371,061 or $22.10 per produced boe of which unscheduled maintenance costs totaled $900,000. Management is focused on several initiatives which are expected to reduce operating costs.
  • Subsequent to quarter end, Arrow announced the sale of its remaining interest in the VMM-2 block and the Coati farm-in commitment for a total of $5 million prior to closing adjustments. Both transactions have had a positive impact to working capital. VMM-2 sale proceeds are included in Q1 financials under 'Assets Held for Sale' while the $1.5 million in sale proceeds from Coati will be recognized in the second quarter financials.
  • Current debt includes the $5 million Canacol promissory note which was renegotiated subsequent to the quarter end.
  • To protect downside risk, Arrow entered into a 'costless collar' hedge, subsequent to the quarter end, for 18,000 barrels per month of Brent crude oil from June 1 to December 31, 2019. The hedge has a floor price of US $65 per barrel and a ceiling price of US $71 per barrel.

John Newman, CFO of Arrow commented, "During and subsequent to the first quarter, we have been focused on improving our capital structure and drilling our commitment well at RCE-1 to earn a 50% working interest in the Tapir Block. Drilling and completing the RCE-1 well, combined with the Coati sale, have reduced corporate commitments by approximately $13.5 million. These initiatives are expected to facilitate the closing of a long-term credit facility. If the Company is unable to close a facility, our hedging program and projected cashflow are expected to enable us to service our current obligations."

Operational Update and Outlook

2019 corporate guidance remains unchanged at 1,600 – 1,700 boe/d prior to any production additions from the Rio Cravo Este-1 ("RCE-1") well. Following production test results from RCE-1, management intends to provide updated production guidance for 2019.

As announced on May 15, 2019, Arrow's petrophysical analysis of the well logs for the RCE-1 well on the Tapir Block in Colombia's Llanos Basin indicated 103 feet true vertical depth ("ft tvd") of potential net oil pay in multiple conventional sandstone reservoirs within the C7, Gacheta and Ubaque formations. The Weatherford 839 rig was retained by the Company to complete the well and cement bond logs have been run which indicate good hydraulic isolation of the target zone. Arrow has perforated the "C7 A" sand and equipped the well with a submersible pump for initial testing expected to begin shortly and, if successful, the well will be immediately placed on production.

Mr. Bruce McDonald, President & CEO, said "we're very encouraged with the progress of our business plan and improvements to our balance sheet. We look forward to communicating further information on the test results of the RCE-1 exploration well and an update to our credit facility negotiations in the near-term."

Source: EvaluateEnergy® ©2019 EvaluateEnergy Ltd