CALGARY, May 30, 2019 /CNW/ - 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
(www.sedar.com). 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
($)
|
77,066,582
|
21,308
|
76,962,315
|
|
|
|
|
Operating
|
|
|
|
|
|
|
|
Natural gas and
crude oil production,
before royalties
|
|
|
|
Natural gas
(Mcf/d)
|
696
|
-
|
733
|
Natural gas liquids
(bbl/d)
|
6
|
-
|
7
|
Crude oil
(bbl/d)
|
1,588
|
-
|
1,553
|
Total
(boepd)
|
1,710
|
-
|
1,682
|
|
|
|
|
Natural gas and
crude oil revenues,
net of transportation expense
|
|
|
|
Natural gas revenues
($/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."
About ARROW Exploration
Arrow Exploration Corp. (operating in Colombia via a branch of its 100% owned
subsidiary Carrao Energy S.A.) is a publicly-traded company with a
portfolio of premier Colombian oil assets that are under-exploited,
under-explored and offer high potential growth. The Company's
business plan is to rapidly expand oil production from some of
Colombia's most active basins,
including the Llanos, Middle Magdalena Valley (MMV) and Putumayo
Basin. The asset base is predominantly operated with high working
interests, and the Brent-linked light oil pricing exposure combines
with low royalties to yield attractive potential operating margins.
Arrow's seasoned team is led by a hands-on and in-country executive
team supported by an experienced board. Arrow is listed on
the TSX Venture Exchange under the symbol "AXL".
Neither the TSX Venture Exchange (TSXV) nor its regulation
services provider (as that term is defined in the policies of the
TSXV) accepts responsibility for the adequacy or accuracy of this
release.
Forward-looking Statements
This news release contains certain statements or disclosures
relating to Arrow that are based on the expectations of its
management as well as assumptions made by and information currently
available to Arrow which may constitute forward-looking statements
or information ("forward-looking statements") under applicable
securities laws. All such statements and disclosures, other than
those of historical fact, which address activities, events,
outcomes, results or developments that Arrow anticipates or expects
may, could or will occur in the future (in whole or in part) should
be considered forward-looking statements. In some cases,
forward-looking statements can be identified by the use of the
words "anticipate", "expect", "forward", "guidance", "intend",
"will" and similar expressions. In particular, but without limiting
the foregoing, this news release contains forward-looking
statements pertaining to the following: cost reduction initiatives;
recognition of Coati sale proceeds; long-term credit facility;
Arrow's ability to service its current obligations; 2019 corporate
guidance; RCE-1; and updated production guidance.
The forward-looking statements contained in this news release
reflect several material factors and expectations and assumptions
of Arrow including, without limitation: current and anticipated
commodity prices and royalty regimes; availability of skilled
labour; timing and amount of capital expenditures; future exchange
rates; commodity prices; the impact of increasing competition;
general economic conditions; availability of drilling and related
equipment; receipt of partner, regulatory and community approvals;
royalty rates; future operating costs; effects of regulation by
governmental agencies; uninterrupted access to areas of Arrow's
operations and infrastructure; recoverability of reserves; future
production rates; timing of drilling and completion of wells;
pipeline capacity; that Arrow will have sufficient cash flow, debt
or equity sources or other financial resources required to fund its
capital and operating expenditures and requirements as needed; that
Arrow's conduct and results of operations will be consistent with
its expectations; that Arrow will have the ability to develop its
oil and gas properties in the manner currently contemplated;
current or, where applicable, proposed industry conditions, laws
and regulations will continue in effect or as anticipated; that the
estimates of Arrow's reserves and production volumes and the
assumptions related thereto (including commodity prices and
development costs) are accurate in all material respects; that
Arrow will be able to obtain contract extensions or fulfil the
contractual obligations required to retain its rights to explore,
develop and exploit any of its undeveloped properties; and other
matters.
Arrow believes the material factors, expectations and
assumptions reflected in the forward-looking statements are
reasonable at this time but no assurance can be given that these
factors, expectations and assumptions will prove to be correct. The
forward-looking statements included in this news release are not
guarantees of future performance and should not be unduly relied
upon. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause actual
results or events to differ materially from those anticipated in
such forward-looking statements including, without limitation: the
impact of general economic conditions; volatility in commodity
prices; industry conditions including changes in laws and
regulations including adoption of new environmental laws and
regulations, and changes in how they are interpreted and enforced;
competition; lack of availability of qualified personnel; the
results of exploration and development drilling and related
activities; obtaining required approvals of regulatory authorities;
risks associated with negotiating with foreign governments as well
as country risk associated with conducting international
activities; commodity price volatility; fluctuations in foreign
exchange or interest rates; environmental risks; changes in income
tax laws or changes in tax laws and incentive programs; changes to
pipeline capacity; ability to secure a credit facility; ability to
access sufficient capital from internal and external sources; risk
that Arrow's evaluation of its existing portfolio of development
and exploration opportunities is not consistent with future
results; that production may not necessarily be indicative of long
term performance or of ultimate recovery; and certain other risks
detailed from time to time in Arrow's public disclosure documents
including, without limitation, those risks identified in Arrow's
annual information form, a copy of which is available on Arrow's
SEDAR profile at www.sedar.com. Readers are cautioned that the
foregoing list of factors is not exhaustive and are cautioned not
to place undue reliance on these forward-looking
statements.
The forward-looking statements contained in this news release
are made as of the date hereof and the Company undertakes no
obligations to update publicly or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, unless so required by applicable securities
laws.
Non-IFRS Measures
Two of the benchmarks the Company uses to evaluate its
performance are funds from operations and EBITDA, which are
measures not defined in IFRS. Funds from operations represents cash
flow provided by operating activities before settlement of
decommissioning obligations and changes in non-cash working
capital. EBITDA is calculated on a rolling 12-month basis and is
defined as net income (loss) and comprehensive income (loss)
adjusted for interest, income taxes, depreciation, depletion,
amortization and other similar non-recurring or non-cash charges.
The Company considers these measures as key measures to demonstrate
its ability to generate the cash flow necessary to fund future
growth through capital investment, pay dividend and to repay its
debt. These measures should not be considered as an alternative to,
or more meaningful than, cash provided by operating activities or
net income (loss) and comprehensive income (loss) as determined in
accordance with IFRS as an indicator of the Company's performance.
The Company's determination of these measures may not be comparable
to that reported by other companies.
The Company also presents funds from operations per share,
whereby per share amounts are calculated using weighted- average
shares outstanding consistent with the calculation of net income
(loss) and comprehensive income (loss) per share.
Working capital and operating netback as presented do not
have any standardized meaning prescribed by IFRS and therefore may
not be comparable with the calculation of similar measures for
other entities. Working capital is calculated by subtracting
current liabilities from current assets. Operating netback is
calculated by subtracting operating costs and royalties from
revenue.
Oil and Gas Metrics
The term barrel of oil equivalent ("boe") is used in this
release. Boe may be misleading, particularly if used in
isolation. A boe conversion ratio of 6,000 cubic feet of
natural gas to one barrel of oil is used in this release. This
conversion ratio of 6 mcf:1 boe is based on an energy equivalency
conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead.
SOURCE ARROW Exploration Corp.