Arrow Exploration Corp. Announces Second Quarter 2019 Financial and Operating Results and Operational Update

Source Press Release
Company Arrow Exploration Corp. 
Tags Capital Spending, Strategy - Corporate, Financial & Operating Data
Date August 28, 2019

ARROW Exploration Corp. ("Arrow" or the "Company") (TSXV: AXL) is pleased to announce the filing of its 2019 second 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.

(in United States dollars (tabular amounts in thousands) 
except as otherwise noted) 
Three months 
ended June 30, 2019 
Six months ended
June 30, 2019 
Three months 
ended March 
31, 2019 
Total natural gas and crude oil revenues, net of royalties  7,525,728  13,534,368  6,008,640 
       
Funds from operations (1)  965,570  1,946,522  980,952 
Per share – basic ($) and diluted ($)  0.01  0.03  0.02 
       
Net loss  (1,776,740)  (3,480,920)  (1,704,180) 
Per share – basic ($) and diluted ($)  (0.03)  (0.05)  (0.02) 
EBITDA (1)  1,952,816  3,340,051  1,387,235 
Weighted average shares outstanding – basic and diluted  68,674,602  68,674,602  68,674,602 
Common shares end of period  68,674,602  68,674,602  68,674,602 
       
Capital expenditures  4,171,680  7,573,045  3,401,365 
       
Cash and cash equivalents  844,983  844,983  1,434,648 
Current Assets  10,725,489  10,725,489  10,553,677 
Current liabilities (2)  18,800,186  18,800,186  18,353,525 
Working capital (deficit) (1)  (8,074,697)  (8,074,697)  (7,799,848) 
Long-term portion of restricted cash (3)  368,662  368,662  3,245,624 
Total assets  76,333,739  76,333,739  77,066,582 
       
Operating       
       
Natural gas and crude oil production, before royalties       
Natural gas (Mcf/d)  677  686  696 
Natural gas liquids (bbl/d) 
Crude oil (bbl/d)  1,741  1,665  1,588 
Total (boe/d)  1,859  1,786  1,710 
       
Operating netbacks ($/boe) (1)       
Natural gas ($/Mcf)  ($1.19)  ($0.53)  0.10 
Crude oil ($/bbl)  $27.50  $23.12  18.43 
Total ($/boe)  $25.40  $21.43  17.29 

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

Second Quarter 2019 Highlights and Subsequent Events

  • For the three months ended June 30, 2019, Arrow recorded $7,525,728 in revenues (net of royalties) on crude oil sales of 148,829 barrels, 616 barrels of NGL's and 61,589 Mcf of natural gas sales.
  • EBITDA for the three months ended June 30, 2019 was $1,952,816.
  • Production averaged 1,859 boe/d, an increase of 149 boe/d over the first quarter of 2019.
  • Revenue (net of royalties) of $7.5 million represented an increase of approximately $1.5 millionover the previous quarter. Brent oil prices retraced from highs near $75 achieved in April to the low $60 range to end the second quarter. Higher Brent oil prices in the quarter compared to the previous quarter had a positive impact on operating netbacks which were $25.40 per boe vs. $17.29 per boe, respectively.
  • Operating costs were $3,205,137 or $19.02 per produced boe which represents a reduction of $165,924 versus the first quarter of 2019.
  • Working Capital deficit of approximately $8 million includes the $5 million promissory note to Canacol Energy Ltd. ("Canacol") which was renegotiated subsequent to the quarter end.
  • Subsequent to quarter end, Arrow entered into a Second Amended and Restated Promissory Note (the "Note") with Canacol. The amendments provide a deferral of principal payments to commence on October 1, 2020 and which shall be paid in six monthly instalments such that all Note obligations are paid in full on or before March 1, 2021. The amendments also provide that the Company will repay all interest accrued to July 31, 2019 (totaling $628,767) by December 31, 2019, and that commencing on September 1, 2019 the Company will make monthly interest-only payments on the principal sum then outstanding plus the outstanding accrued interest balance. Interest payable on the Note remains unchanged at 15% per annum, and the Note continues to be repayable at any time without penalty.

Bruce McDonald, CEO of Arrow commented, "We were pleased to achieve our best revenue and EBITDA quarter thanks to production increases from the RCE-1 discovery well drilled in the quarter and a full quarter of production from the Danes-1 well after replacement of a failed pump. At the same time, we were able to realize strong realized oil prices and further reduce operating costs to achieve a best ever quarterly operating netback of $25.40. Cost reductions remain a key focus of the Company as we move forward."

Operational Update

Management remains focused on several initiatives which are expected to further reduce operating costs including the recent implementation of an improved water handling solution for the Rio Cravo Este-1 ("RCE-1") well and purchasing rented oilfield equipment. The improved water handling solution is expected to decrease operating costs for the RCE-1 well by approximately 30% and management has identified over $4 million in oilfield equipment capitalization opportunities which are expected to have a positive impact on operating costs once the equipment is purchased in coming months.

Credit Facility

As previously disclosed, Arrow has been working to secure a credit facility. The Company continues to engage in discussions with various potential credit facility providers and is evaluating alternative debt solutions in the event the Company is unable to close the credit facility as originally contemplated.

Source: EvaluateEnergy® ©2019 EvaluateEnergy Ltd