Q1 2024 Interim Results

Arrow Exploration Corp.
30 May 2024
 

NOT FOR RELEASE, DISTRIBUTION, PUBLICATION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM THE UNITED STATES, AUSTRALIA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.

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ARROW ANNOUNCES Q1 2024 INTERIM RESULTS

            

CALGARY, May 30, 2024 - Arrow Exploration Corp. (AIM: AXL; TSXV: AXL) ("Arrow" or the "Company"), the high-growth operator with a portfolio of assets across key Colombian hydrocarbon basins, announces the filing of its Interim Condensed (unaudited) Consolidated Financial Statements and Management's Discussion and Analysis ("MD&A") for the three months ended March 31, 2024 which are available on SEDAR (www.sedar.com) and will also  be available shortly on Arrow's website at www.arrowexploration.ca.

 

Q1 2024 Highlights:

·    Recorded $14.4 million of total oil and natural gas revenue, net of royalties, more than double compared to the same period in 2023 (Q1 2023: $6.9 million).

·    Net income of $3.2 million (Q1 2023: $3.0 million).

·    Adjusted EBITDA(1) of $10 million more than double compared to 2023 (Q1 2023: $4.4 million).

·    Average corporate production up 139% to 2,730 boe/d (Q1 2023: 1,144 boe/d).

·    Realized corporate oil operating netbacks(1) of $56.27/bbl. 

·    Cash position of $11.6 million at the end of Q1 2024.

·    Generated operating cashflows of $8.6 million (Q1 2023: $2.4 million).

·    Successfully drilled four development Carrizales Norte (CN) wells, resulting in additional production and reserves additions.

(1)Non-IFRS measures - see "Non-IFRS Measures" section

 

Post Period End Highlights:

·    Drilled two additional CN development wells.

·    Spud the first CN Horizontal well ("CNB HZ-1") from the Carrizales Norte B ("CNB") pad.  The Company expects to be able to provide an update on the production figures for CNB HZ-1 in the coming weeks.  Subject to successful completion, CNB HZ-1, in conjunction with the other three planned CNB HZ wells, are expected to result in a positive increase in Arrow's production rates.

 

Outlook:

·    Continued monitoring of the drilling of the horizontal wells at Carrizales Norte B pad.

·    Completing stimulation efforts at the Oso Pardo-3 and 4 wells in the Middle Magdalena Basin.

·    Continuing with the balance of the 2024 capital program, the majority of which will be focused on the Carrizales Norte field and will include three horizontal wells.  Low risk step-out and exploration wells are also planned at the Mateguafa Attic and Baquiano prospects.  The 2024 capital program will be self-funded by a combination of cash flow from operations and cash reserves.

 

Marshall Abbott, CEO of Arrow Exploration Corp., commented:

 

"In Q1 2024, Arrow experienced its strongest quarter to date for production and EBITDA. The Q1 2024 wells drilled, at the Carrizales Norte discovery, explored the extent of the C7 and Ubaque reservoir and gathered further data for the horizontal drilling program.  Horizontal wells have been determined as the best way to develop the Ubaque reservoir and are expected to thrust Arrow to the next level for production and stability.  The water disposal plan has also made great strides forward with the first disposal well at RCE being brough on production and the CN-4 well's conversion currently waiting on regulatory approval.   Management remains confident in the Arrow team to execute on the planned exploitation campaign pursuing our opportunity rich portfolio and getting shareholder value to the next level."

FINANCIAL AND OPERATING HIGHLIGHTS

 

 

(in United States dollars, except as otherwise noted)

Three months ended March 31, 2024

Three months ended March 31, 2023

Total natural gas and crude oil revenues, net of royalties

             14,404,921

               6,992,860


 


Funds flow from operations (1)

               7,210,683

               4,240,603

Funds flow from operations (1) per share -

 


    Basic($)

                        0.03

                        0.02

    Diluted ($)

                        0.02

                        0.01

Net income

               3,176,727

               2,989,735

Net income per share -

 


   Basic ($)

                        0.01

                        0.01

   Diluted ($)

                        0.01

                        0.01

Adjusted EBITDA (1)

             10,021,140

               4,271,726

Weighted average shares outstanding -

 


   Basic ($)

285,864,348

222,717,847

   Diluted ($)

292,791,385

288,639,348

Common shares end of period

285,864,348

228,979,841

Capital expenditures

               6,281,328

               4,271,693

Cash and cash equivalents

             11,606,343

             12,354,424

Current Assets

             20,779,081

             15,849,150

Current liabilities

             11,258,252

             13,315,499

Adjusted working capital (1)

               9,520,829

               9,325,680

Long-term portion of restricted cash (2)

                  237,814

                  831,048

Total assets

             64,579,940

             53,719,944

 

 

 

Operating






Natural gas and crude oil production, before royalties



Natural gas (Mcf/d)

1,760

4,221

Natural gas liquids (bbl/d)

4

6

Crude oil (bbl/d)

2,432

434

Total (boe/d)

2,730

1,144

 

 


Operating netbacks ($/boe) (1)

 


Natural gas ($/Mcf)

($0.14)

$0.73

Crude oil ($/bbl)

$56.27

$48.94

Total ($/boe)

$50.10

$20.16

(1)Non-IFRS measures - see "Non-IFRS Measures" section within this MD&A

(2)Long term restricted cash not included in working capital

Discussion of Operating Results

The Company increased its production from new wells at CN which allowed the Company to continue to improve its operating results and EBITDA.  There has been a decrease in the Company's natural gas production in Canada due to natural declines.

 

Average Production by Property

Average Production Boe/d

Q1 2024

Q4 2023

Q3 2023

Q2 2023

Q1 2023

Q4 2022

Oso Pardo

166

80

93

130

138

115

Ombu (Capella)

-

-

-

-

80

238

Rio Cravo Este (Tapir)

1,644

1,326

1,443

1,592

1,004

832

Carrizales Norte (Tapir)

622

621

642

57

-

-

Total Colombia

2,432

2,027

2,178

1,779

1,222

1,185

Fir, Alberta

78

80

81

77

74

79

Pepper, Alberta

220

228

259

313

340

472

TOTAL (Boe/d)

2,730

2,335

2,518

2,169

1,635

1,736

 

For the three months ended March 31, 2024, the Company's average production was 2,730 boe/d, which consisted of crude oil production in Colombia of 2,432 bbl/d, natural gas production of 1,760 Mcf/d and minor amounts of natural gas liquids from the Company's Canadian properties. The Company's Q1 2024 total production was 138% higher than its total production for the same period in 2023.

 

Discussion of Financial Results

During Q1 2024 the Company continued to realize good oil prices, offset by lower gas prices, as summarized below:

 


Three months ended March 31

2024

2023

Change

Benchmark Prices

 



AECO ($/Mcf)

$2.55

$3.28

(22%)

Brent ($/bbl)

$84.67

$79.21

7%

West Texas Intermediate ($/bbl)

$76.95

$76.10

1%

Realized Prices

 



Natural gas, net of transportation ($/Mcf)

$1.87

$2.11

(11%)

Natural gas liquids ($/bbl)

$66.20

$66.13

0%

Crude oil, net of transportation ($/bbl)

$73.31

$73.31

0%

Corporate average, net of transport ($/boe)

$66.58

$57.23

16%

   (1)Non-IFRS measure

 

Operating Netbacks

The Company also continued to realize strong oil operating netbacks, as summarized below:

 

Three months ended

March 31

 

2024

2023

Natural Gas ($/Mcf)



Revenue, net of transportation expense

$1.87

$2.11

Royalties

($0.10)

(0.19)

Operating expenses

($1.91)

(2.34)

Natural gas operating netback(1)

($0.14)

($0.42)

Crude oil ($/bbl)

 


Revenue, net of transportation expense

$73.31

$73.31

Royalties

($9.00)

(9.11)

Operating expenses

($8.04)

(5.88)

Crude oil operating netback(1)

$56.27

$58.31

Corporate ($/boe)

 


Revenue, net of transportation expense

$66.58

$57.23

Royalties

($8.08)

(6.98)

Operating expenses

($8.40)

(8.03)

Corporate operating netback(1)

$50.10

$42.21

 (1)Non-IFRS measure

The operating netbacks of the Company remained strong in Q1 2024 due to several factors, principally the increase in production from its Colombian assets and increased crude oil prices.  In Cananda, decreases in natural gas prices were offset by reduced operating expenses for natural gas.

During the first three months of 2024, the Company incurred $6.3 million of capital expenditures, primarily in connection with the drilling of four CN wells and civil works completed in the Baquiano pad in the Tapir block to get it ready for drilling. This accelerated tempo is expected to continue during the remainder of 2024, funded by cash on hand and cashflow.

 

For further Information, contact:

Arrow Exploration


Marshall Abbott, CEO

+1 403 651 5995

Joe McFarlane, CFO

+1 403 818 1033



Canaccord Genuity (Nominated Advisor and Joint Broker)


Henry Fitzgerald-O'Connor

James Asensio

George Grainger                         

+44 (0)20 7523 8000

 

Auctus Advisors (Joint Broker)

 

Jonathan Wright

+44 (0)7711 627449

Rupert Holdsworth Hunt


 

Camarco (Financial PR)


Andrew Turner

+44 (0)20 3781 8331

Rebecca Waterworth


 

 

About Arrow Exploration Corp.

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 underexploited, under-explored and offer high potential growth. The Company's business plan is to 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 50% interest in the Tapir Block is contingent on the assignment by Ecopetrol SA of such interest to Arrow. Arrow's seasoned team is led by a hands-on executive team supported by an experienced board. Arrow is listed on the AIM market of the London Stock Exchange and on TSX Venture Exchange under the symbol "AXL".

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 "continue", "expect", "opportunity", "plan", "potential" and "will" and similar expressions. The forward-looking statements contained in this news release reflect several material factors and expectations and assumptions of Arrow, including without limitation, Arrow's evaluation of the impacts of COVID-19, the potential of Arrow's Colombian and/or Canadian assets (or any of them individually), the prices of oil and/or natural gas, and Arrow's business plan to expand oil and gas production and achieve attractive potential operating margins. Arrow believes the 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. 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.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Glossary

Bbl/d or bop/d: Barrels per day

$/Bbl: Dollars per barrel

Mcf/d: Thousand cubic feet of gas per day

Mmcf/d: Million cubic feet of gas per day

$/Mcf: Dollars per thousand cubic feet of gas

Mboe: Thousands of barrels of oil equivalent

Boe/d: Barrels of oil equivalent per day

$/Boe: Dollars per barrel of oil equivalent

MMbbls: Million of barrels

 

BOE's may be misleading particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 bblis based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Non‐IFRS Measures

The Company uses non-IFRS measures to evaluate its performance which are measures not defined in IFRS. Working capital, funds flow from operations, realized prices, operating netback, adjusted EBITDA, and net debt 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. 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, and to repay its debt, as the case may be. These measures should not be considered as an alternative to, or more meaningful than net income (loss) or cash provided by operating activities or net loss and comprehensive 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.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Arrow Exploration Corp.

 

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE MONTHS ended MARCH 31, 2024 AND 2023

IN UNITED STATES DOLLARS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

                                               

 



 

Notice of No Auditor Review of the Interim Condensed Consolidated Financial Statements

as at and for the three months ended March 31, 2024

 

 

Under National Instrument 51-102, Part 4, subsection 4.3 (3)(a), if an auditor has not performed a review of the interim condensed consolidated financial statements, they must be accompanied by a notice indicating that an auditor has not reviewed the financial statements.

 

The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared by and are the responsibility of the Company's management.

 

The Company's independent auditor has not performed a review of these financial statements in accordance with standards established by the Chartered Professional Accountants of Canada for a review of interim financial statements by an entity's auditor.


Arrow Exploration Corp.

Interim Consolidated Statements of Financial Position

In United States Dollars

(Unaudited)

 

As at

Notes

 

March 31, 2024


December 31, 2023

ASSETS

 

 

 

 


Current assets

 

 

 

 


Cash


$

11,606,342

$

12,135,376

Restricted cash and deposits

3

 

273,274


611,753

Trade and other receivables

4

 

3,237,382


3,536,936

Taxes receivable

5

 

4,819,478


4,655,399

Deposits and prepaid expenses

 

 

350,365


197,402

Inventory

 

 

492,240


492,332


 

 

20,779,081


21,629,198

Non-current assets

 

 

 



Deferred income taxes

 

 

2,157,575


2,031,383

Restricted cash and deposits

3

 

237,814


243,081

Exploration and evaluation assets

6

 

578,082


-

Property and equipment

7

 

40,827,388


38,371,361

Total Assets


$

64,579,940

$

62,275,023

 

 

 

 



LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 



Current Liabilities

 

 

 



Accounts payable and accrued liabilities


$

6,698,702

$

9,747,906

Lease obligation

8

 

108,583


103,674

Income taxes

 

 

4,450,967


3,108,504

 

 

 

11,258,252


12,960,084

Non-current liabilities

 

 

 



Lease obligations

8

 

193,136


216,919

Other liabilities

 

 

345,528


345,528

Deferred income taxes

 

 

3,855,953


3,269,894

Decommissioning liability

9

 

4,282,861


3,973,075

Total liabilities

 

 

19,935,730


20,765,500

 

 

 

 



Shareholders' equity

 

 

 



Share capital

11

 

73,829,795

 

73,829,795

Contributed surplus

 

 

2,263,223


2,161,945

Deficit

 

 

(30,769,168)


(33,945,895)

Accumulated other comprehensive loss

 

 

(679,640)


(536,322)

Total shareholders' equity

 

 

44,644,210

 

41,509,523

Total liabilities and shareholders' equity


$

64,579,940

$

62,275,023

 

Commitments and contingencies (Note 12)

 

The accompanying notes are an integral part of these interim consolidated financial statements.

 

On behalf of the Board:

                                                               

 signed "Gage Jull"       Director                                                             signed "Ian Langley"         Director

Gage Jull                                                                                                 Ian Langley

 

 

 

 

 

 

 

Arrow Exploration Corp.

Interim Condensed Consolidated Statements of Operations and Comprehensive Income

In United States Dollars

(Unaudited)

 

 

For the three months ended March 31,

Notes

 

2024

 

2023


 

 

 

 


Revenue

 

 

 

 


Oil and natural gas

14

 

$  16,393,642

 

$     7,964,857

 

Royalties

14

 

(1,988,721)

 

(971,997)

 

Total oil and natural gas revenue, net of royalties

 

 

14,404,921

 

6,992,860

 


 

 

 

 


 

Expenses

 

 

 

 


 

Operating

 

 

2,069,011

 

1,117,590

 

Administrative

 

 

2,681,922

 

1,619,470

 

Share-based compensation expense

11

 

101,278

 

132,240

 

Financing costs:

 

 

 

 


 

Accretion

9

 

37,376

 

29,156

 

Interest

8

 

9,769

 

60,887

 

Other

 

 

199,065

 

45,682

 

Foreign exchange (gain) loss

 

 

(288,739)

 

(40,816)

 

Depletion and depreciation

7

 

3,531,772

 

2,454,364

 

Gain on derivative liability

10

 

-

 

(1,354,275)

 

Other expenses (income)

 

 

(78,412)

 

(61,173)

 

    Total expenses, net

 

 

8,263,042

 

4,003,125

 

 

 

 

 

 


 

Income before income tax

 

 

6,141,879

 

2,989,735

 

 

 

 

 

 


 

Income tax expense

 

 

 

 


 

Current

14

 

2,505,285

 

-

 

Deferred

14

 

459,867

 

-

 

 

 

 

2,965,152

 

-

 

 

 

 

 

 


 

Net income

 

 

3,176,727

 

2,989,735

 


 

 

 

 


 

Other comprehensive income (loss)

 

 

 

 


 

Foreign exchange

 

 

(143,318)

 

(18,420)

 

    Total other comprehensive income (loss)

 

 

(143,318)

 

(18,420)

 

 

 

 

 

 


 

Total comprehensive income

 

 

$    3,033,409

 

$    2,971,315

 


 

 

 

 


 

Net income per share:

 

 

 

 


 

Basic

 

 

$           0.01

 

$             0.01

 

Diluted

 

 

$           0.01

 

$             0.01

 


 

 

 

 


 

Weighted average shares outstanding

 

 

 

 


 

Basic

 

 

285,864,348

 

222,717,847

 

Diluted

 

 

292,791,385

 

288,639,348

 

 

The accompanying notes are an integral part of these consolidated financial statements.



 

Arrow Exploration Corp.

Interim Condensed Statements of Changes in Shareholders' Equity

In United States Dollars

(Unaudited)

 

 

 

 

 

 

 

 

Share Capital

 

 

 

 

 

Contributed Surplus

 

 

 

 

Accumulated other comprehensive loss

 

 

 

 

 

 

 Deficit

 

 

 

 

 

 

Total Equity

 












Balance January 1, 2024

$

73,829,795

$

2,161,945

$

(536,322)

$

(33,945,895)

$

41,509,523












Net income for the period


-


-


-


3,176,727


3,176,7`27












Other comprehensive income


-


-


(143,318)


-


(143,318)

    Total comprehensive income


-


-


(143,318)


3,176,727


3,033,409












Share-based compensation


-


101,278


-


-


101,278












Balance March 31, 2024

$

73,829,795

$

2,263,223

$

(679,640)

$

(30,769,168)

$

44,644,210












 

 

 

 

 

 

 

 

 

Share Capital

 

 

 

 

 

Contributed Surplus

 

 

 

 

Accumulated other comprehensive loss

 

 

 

 

 

 

 Deficit

 

 

 

 

 

 

Total Equity

 












Balance January 1, 2023

$

57,810,735

$

1,570,491

$

(645,372)

$

(32,839,282)

$

25,896,572












Net income for the period


-


-


-


2,989,735


2,989,735












Other comprehensive loss


-


-


(18,420)


-


(18,420)

    Total comprehensive income


-


-


(18,420)


2,989,735


2,971,315












Issuances of common shares, net


2,635,484


-


-


-


2,635,484












Share-based compensation


-


132,240


-


-


132,240












Balance March 31, 2023

$

60,446,219

$

1,702,731

$

(663,792)

$

(29,849,547)

$

31,635,611












 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

 



Arrow Exploration Corp.

Interim Condensed Consolidated Statements of Cash Flows

In United States Dollars

(Unaudited)

 



For the three months ended March 31,

2024

2023

 

 

 

 


 

Cash flows provided by operating activities:

 

 


 

Net income

 

$    3,176,727

$    2,989,735

 

Items not involving cash:

 

 


 

 Deferred taxes

 

459,867

-

 

 Share-based compensation

11

101,278

132,240

 

 Depletion and depreciation

7

3,531,772

2,454,364

 

 Interest on leases

8

9,769

1,596

 

 Interest on promissory note

 

-

60,887

 

 Accretion

9

37,376

29,156

 

 Unrealized foreign exchange loss

 

(35,877)

(73,101)

 

     Gain on derivative liability

10

-

(1,354,275)

 

Payment of asset decommissioning obligations

9

(70,229)

-

 

Changes in non‑cash working capital balances:

 

 


 

Restricted cash and deposits

 

343,746

(12,266)

 

Trade and other receivables

 

299,554

1,704,944

 

Taxes receivable

 

(164,078)

(602,369)

 

Deposits and prepaid expenses

 

(152,963)

(113,612)

 

Inventory

 

92

(117,798)

 

Income tax payable

 

1,342,465

(2,482,665)

 

Accounts payable and accrued liabilities

 

(297,211)

(236,642)

 

Cash provided by operating activities

 

8,582,288

2,380,195

 


 

 


 

Cash flows used in investing activities:

 

 


 

Additions to exploration and evaluation assets

6

(578,082)

(972,692)

 

Additions to property and equipment

7

(5,703,246)

(3,299,001)

 

Changes in non-cash working capital

 

(2,751,994)

(11,916)

 

Cash flows used in investing activities

 

(9,033,322)

(4,283,609)

 


 

 


 

Cash flows provided by (used in) financing activities:

 

 


 

Issuances of common shares

11

-

1,147,827

 

Lease payments

8

(20,486)

(11,586)

 

Cash flows provided by (used in) financing activities

 

(20,486)

1,136,241

 


 

 


 

Effect of changes in the exchange rate on cash

 

(57,514)

60,628

 

(Decrease) increase in cash

 

(529,034)

(706,545)

 

Cash, beginning of period

 

12,135,377

13,060,969

 

Cash, end of period

 

11,606,342

12,354,424

 

 

 

 


 

Supplemental information

 

 


 

Interest paid

 

$            -

   $                -

 

Taxes paid

 

$            - 

   $                -

 

The accompanying notes are an integral part of these consolidated financial statements.

 



 

Arrow Exploration Corp.

Notes to the Interim Condensed Consolidated Financial Statements

In United States Dollars

(Unaudited)

 

March 31, 2024

1.    Corporate Information

 

 

Arrow Exploration Corp. ("Arrow" or "the Company") is a public junior oil and gas company engaged in the acquisition, exploration and development of oil and gas properties in Colombia and in Western Canada. The Company's shares trade on the TSX Venture Exchange and the AIM Market of the London Stock Exchange plc under the symbol AXL. The head office of Arrow is located at 203, 2303 - 4th Street SW, Calgary, Alberta, Canada, T2S 2S7 and the registered office is located at 600, 815 8th Avenue SW, Calgary, Alberta, Canada, T2P 3P2.

 

 

 

2.    Basis of Presentation

 

 

Statement of compliance

These interim condensed consolidated financial statements (the "Financial Statements") have been prepared in accordance with International Accounting Standard ("IAS") 34 Interim Financial Reporting. These Financial Statements were authorized for issue by the board of directors of the Company on May 29, 2024. They do not contain all disclosures required by International Financial Reporting Standards ("IFRS") for annual financial statements and, accordingly, should be read in conjunction with the audited consolidated financial statements as at December 31, 2023.

 

These Financial Statements have been prepared on the historical cost basis, except for financial assets and liabilities recorded in accordance with IFRS 9. The Financial Statements have been prepared using the same accounting policies and methods as the consolidated financial statements for the year ended December 31, 2023, except for the adoption of new accounting standards effective January 1, 2024. In preparing these condensed consolidated financial statements, the significant judgements made by management in applying the group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended December 31, 2023.

 

Adoption of New Accounting Standards

The Company adopted amendments to IAS 1 Presentation of Financial Statements, issued by the IASB, related to the presentation of liabilities as current or non-current and classification and disclosure of liabilities with covenants. These amendments were adopted by the Company from January 1, 2024 but they did not have a material impact on the interim consolidated financial statements.

 

 

3.    Restricted Cash and deposits

 

 


 

March 31,

2024


December 31, 2023


 

 



Colombia (i)

$

311,082

$

312,530

Canada (ii)

 

200,006


542,304

Sub-total

 

511,088


854,834

  Long-term portion

 

(237,814)


(243,081)

  Current portion of restricted cash and deposits

$

273,274

$

611,753

 

(i)            This balance is comprised of a deposit held as collateral to guarantee abandonment expenditures related to the Tapir and Santa Isabel blocks.

(ii)            During Q1 2024, the Company was able to recover its $337,031 (CAD $445,749) deposit related to the Company's liability rating management ("LMR"). This deposit was held by a Canadian chartered bank with interest paid to the Company on a monthly basis based on the bank's deposit rate. The remaining $200,006 (2023: $205,273) pertain to commercial deposits with customers, lease and other deposits held in Canada.

 

 

4.    Trade and other receivables

 

 


 

March 31,

2024


December 31, 2023


 

 



Trade receivables, net of advances

$

2,394,419

$

2,238,918

Other accounts receivable

 

842,963


1,298,018


$

3,237,382

$

3,536,936

 

As at March 31, 2024, other accounts receivable include $680,976 (December 31, 2023 - $682,197) receivable from on demand loans with executives and directors.

 

 

5.    Taxes receivable

 

 


 

March 31,

2024


December 31, 2023


 

 



Value-added tax (VAT) credits recoverable

$

2,087,691

$

1,703,260

Income tax withholdings and advances, net

 

2,731,787


2,952,139


$

4,819,478

$

4,655,399

 

The VAT recoverable balance pertains to non-compensated value-added tax credits originated in Colombia as operational and capital expenditures are incurred. The Company is entitled to compensate or claim for the reimbursement of these VAT credits.

 

 

6.    Exploration and Evaluation

 

 


 

March 31,

2024


December 31,

2023


 

 



Balance, beginning of the period

$

-

$

-

Additions, net

 

578,082


3,212,808

Reclassification to Property and Equipment (Note 8)

 

-


(3,212,808)

Balance, end of the period

$

578,082

$

-

 

During 2023, the Company incurred in geological and geophysical costs in its Carrizales Norte prospect located in its Tapir block, and determined the technical feasibility and commercial viability of these assets, transferring $3,212,808 to its property and equipment.  An impairment test on these assets was prepared and no losses were identified as a result of such tests.

 

 

 

 

7.    Property and Equipment

 

 

 

Cost

Oil and Gas Properties

Right of Use and Other Assets

 

Total

Balance, December 31, 2022

$ 47,545,026

$     234,156

$     47,779,182

Additions

23,907,357

310,061

24,217,418

Dispositions

(111,151)

-

(111,151)

Transfers from exploration and evaluation assets

3,212,808

-

3,212,808

Decommissioning adjustment

738,825

-

738,825

Balance, December 31, 2023

$ 75,292,865

$     544,217

$     75,837,082

Additions

5,703,481

-

5,703,481

Decommissioning adjustment

368,679

-

368,679

Balance, March 31, 2024

$ 81,365,025

$     544,217

$     81,909,242

 

Accumulated depletion and depreciation and impairment

 

 

 

 

Balance, December 31, 2022

$ 13,153,709

$   161,236  

$     13,314,945

 

Depletion and depreciation

12,120,871

65,906

12,186,777

 

Impairment loss of oil and gas properties

11,799,740

-

11,799,740

 

Balance, December 31, 2023

$ 37,074,320

$   227,142

$     37,301,462

 

Depletion and depreciation

3,503,305

28,267

3,531,772

 

Balance, March 31, 2024

$ 40,577,825

$   255,409

$     40,833,234

 

 

Foreign exchange




 

Balance December 31, 2022

$      (249,908)     

     $   (8,719)     

$      (258,627)

Effects of movements in foreign

       exchange rates

 

88,671

 

5,697

 

94,368

Balance December 31, 2023

$      (161,237)     

     $   (3,022)     

$      (164,259)

Effects of movements in foreign

       exchange rates

 

(76,781)

 

(7,580)

 

(84,361)

Balance March 31, 2024

$      (238,018)

$ (10,602)

$      (248,620)

 

Net Book Value




Balance December 31, 2023

$     38,057,308

$     314,053

$    37,371,361

Balance March 31, 2024

$     40,459,183

$     278,206

$    40,827,388

 

Canada

As at December 31, 2023, the Company determined there were indicators of impairment in its Canada CGU, mainly due to decreases in forward gas prices and revision of reserves, and prepared estimates of its fair value less costs of disposal of its Canada CGU. It was determined that carrying value of its Canada CGU exceeded its recoverable amount and, therefore, an impairment loss of $1,248,400 was included in the consolidated statements of operations and comprehensive (loss) income for the three months and year ended December 31, 2023.

 

Colombia

During 2023, the Agencia Nacional de Hidrocarburos ("ANH") approved the suspension of the obligations and operations of the OMBU contract due to force majeure circumstances generated by the blockades and social unrest around the Capella field. The suspension was for an initial term of three months and has been extended until August 2024. At December 31, 2023, the Company determined there were indicators of impairment in the Capella CGU based on updates from the operator once access to the field was restored in late 2023 causing uncertainty in timing and resources required to resume operations, as well as the extent of which operations may be able to be resumed. The Company has recorded an impairment loss of $10,551,340 corresponding to the full carrying value of the Capella CGU as at December 31, 2023.  

 

 

 

 

8.      Lease Obligations

 

 

A reconciliation of the discounted lease obligation is set forth below:

 

 

 


2024

2023

Obligation, beginning of the year

 


320,593

$         63,751

Additions

 


-

302,930

Lease payments

 


(20,486)

(74,211)

Interest

 


9,769

22,011

Effects of movements in foreign exchange rates

 


(8,157)

6,112

Obligation, end of the year

 


301,719

320,593

Current portion

 


(108,583)

(103,674)

Long-term portion

 


193,316

216,919

 

As at March 31, 2024, the Company has the following future lease obligations:

 

Less than one year

 


108,771

2 - 5 years

 


291,186

Total lease payments

 


399,957

Amounts representing interest over the term

 


(98,238)

Present value of the net obligation

 


301,719

 

 

9.      Decommissioning Liability

 

 

The following table presents the reconciliation of the beginning and ending aggregate carrying amount of the obligation associated with the decommissioning of oil and gas properties:

 

 

December 31,

2023


December 31,

2023

Obligation, beginning of the year

3,973,075


$      3,303,301

Additions

368,679


1,000,889

Change in estimated cash flows

-


(262,066)

Payments or settlements

(70,229)


(19,545)

Dispositions

-


(191,081)

Accretion expense

37,376


127,478

Effects of movements in foreign exchange rates

(26,040)


14,099

 

Obligation, end of the year

4,282,861


3,973,075

 

 

The obligation was calculated using a risk-free discount rate range of 1.25% to 4.50% in Canada (2023: 1.25% to 4.50%) and between 4.00% and 4.29% in Colombia (2022: 4.00% and 4.29%) with an inflation rate of 2.5% and 2.6%, respectively (2023: 2.5% and 2.6%). The majority of costs are expected to occur between 2024 and 2038.

The undiscounted amount of cash flows, required over the estimated reserve life of the underlying assets, to settle the obligation, adjusted for inflation, is estimated at $6,092,913 (2023: $5,686,938).

 

 

10.    Derivative liability

 

 

Derivative liability includes warrants issued and outstanding as follows:

 

 

March 31,

2024

December 31,

2023

Warrants

Number

Amounts

Number

Amounts

Balance beginning of the period

-

$                      -

67,837,418

$       9,540,423

   Exercised

-

(67,462,418)

(8,539,257)

   Expired

-

(375,000)

(50,589)

   Fair value adjustment

-

-

(1,041,992)

   Foreign exchange

-

-

-

91,415

Balance end of the period

-

$                      -

-

$                      -

 

There are no warrants outstanding nor exercisable at March 31, 2024 or December 31, 203.

 

 

11.  Share Capital

 

 

(a)   Authorized: Unlimited number of common shares without par value

 

(b)   Issued:

 

March 31, 2024

December 31, 2023

Common shares

Shares

Amounts

Shares

Amounts

Balance beginning of the period

285,864,348

73,829,795

218,401,931

57,810,735

   Issued from warrants exercised

-

-

67,462,417

16,019,060

Balance at end of the period

285,864,348

73,829,795

285,864,348

73,829,795

 

(b)   Stock options:

The Company has a stock option plan that provides for the issuance to its directors, officers, employees and consultants options to purchase a number of non-transferable common shares not exceeding 10% of the common shares that are outstanding. The exercise price is based on the closing price of the Company's common shares on the day prior to the day of the grant. A summary of the Company stock option plan as at March 31, 2024 and December 31, 2023 and changes during the periods ended on those dates is presented below:

 

March 31, 2024

December 31, 2023

Stock Options

Number of options

Weighted average

exercise price

(CAD $)

Number of options

Weighted average

exercise price

(CAD $)

Beginning of period

20,531,668

$0.24

20,590,000

$0.18

Granted

-

-

1,650,000

$0.27

Expired/Forfeited

-

-

(1,375,000)

$0.12

Exercised

3,177,221

$18.32

(333,332)

$0.11

End of period

17,354,447

$0.24

20,531,668

$0.24

Exercisable, end of period

6,918,887

$0.25

9,879,441

$0.42

 

Date of Grant

Number Outstanding

Exercise Price

(CAD $)

Weighted

Average Remaining Contractual Life

Date of

Expiry

Number

Exercisable

March 31, 2024

October 22, 2018

750,000

$1.15


Oct. 22, 2028

750,000

May 3, 2019

270,000

$0.31


May 3, 2029

270,000

March 20, 2020

1,200,000

$0.05


Mar. 20, 2030

1,200,000

April 13, 2020

1,200,000

$0.05


April 13, 2030

1,200,000

December 13, 2021

5,150,002

$0.13


June 13, 2024 and 2025

2,166,666

June 9, 2022

1,533,335

$0.28


Dec. 9, 2023, 2024 and 2025

-

September 7, 2022

833,334

$0.26


Mar. 7, 2024, 2025 and 2026

-

December 21, 2022

4,951,110

$0.28


June 21, 2024, 2025 and 2026

1,298,888

January 23, 2023

466,666

$0.32


July 23, 2024, 2025 and 2026

33,333

September 21, 2023

1,000,000

$0.33


Mar. 21, 2025, 2026 and 2027

-

Total

17,354,447

$0.23

2.05 years

 

6,918,887

 

During the three months ended March 31, 2024, the Company recognized $101,278 (2023: $132,240)  as share-based compensation expense, with a corresponding effect in the contributed surplus account.

 

 

12.    Commitments and Contingencies

 

 

Exploration and Production Contracts

The Company has entered into a number of exploration contracts in Colombia which require the Company to fulfill work program commitments and issue financial guarantees related thereto. In aggregate, the Company has outstanding exploration commitments at March 31, 2024 of $12 million. The Company has made an application to the ANH to mutually cancel its COR-39 contract. Presented below are the Company's exploration and production contractual commitments at December 31, 2023:

 

Block

 

Less than 1 year

1-3 years

Thereafter

Total

COR-39


-

12,000,000

-

12,000,000

Total

 

-

 

 

12,000,000

-

12,000,000

 

Contingencies

From time to time, the Company may be involved in litigation or has claims sought against it in the normal course of business operations.  Management of the Company is not currently aware of any claims or actions that would materially affect the Company's reported financial position or results from operations. Under the terms of certain agreements and the Company's by-laws the Company indemnifies individuals who have acted at the Company's request to be a director and/or officer of the Company, to the extent permitted by law, against any and all damages, liabilities, costs, charges or expenses suffered by or incurred by the individuals as a result of their service.

Letters of Credit

At March 31, 2024, the Company had obligations under Letters of Credit ("LC's") outstanding totaling $2.8 million to guarantee work commitments on exploration blocks and other contractual commitments. In the event the Company fails to secure the renewal of the letters of credit underlying the ANH guarantees, or any of them, the ANH could decide to cancel the underlying exploration and production contract for a particular block, as applicable.

Current Outstanding Letters of Credit







Contract

Beneficiary

Issuer

Type

Amount

(US $)

Renewal Date

SANTA ISABEL

ANH

Carrao Energy

Abandonment

$563,894

April 14, 2025

ANH

Carrao Energy

Financial Capacity

$1,672,162

June 30, 2024

CORE - 39

ANH

Carrao Energy

Compliance

$100,000

June 30, 2024

OMBU

ANH

Carrao Energy

Financial Capacity

$436,300

October 14, 2024

Total

 



$2,772,356

 

 

 

13.    Risk Management

 

 

The Company holds various forms of financial instruments. The nature of these instruments and the Company's operations expose the Company to commodity price, credit and foreign exchange risks. The Company manages its exposure to these risks by operating in a manner that minimizes its exposure to the extent practical.

 

(a)    Commodity price risk

Commodity price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of changes in commodity prices.  Lower commodity prices can also impact the Company's ability to raise capital.  Commodity prices for crude oil are impacted by world economic events that dictate the levels of supply and demand.  There were no derivative contracts during 2024 and 2023.

 

(b)    Credit Risk

Credit risk reflects the risk of loss if counterparties do not fulfill their contractual obligations. The majority of the Company's account receivable balances relate to petroleum and natural gas sales.  The Company's policy is to enter into agreements with customers that are well established and well financed entities in the oil and gas industry such that the level of risk is mitigated. In Colombia, a significant portion of the sales is with a producing company and a commodities trader under existing sale/offtake agreements with prepayment provisions and priced using the Brent benchmark. The Company's trade account receivables primarily relate to sales of crude oil and natural gas, which are normally collected within 25 days (in Canada) and up to 15 days (in Colombia) after the month of production. 

 

Other accounts receivable mainly relate to balances owed by the Company's partner in one of its blocks, and are mainly recoverable through join billings. The Company has historically not experienced any collection issues with its customers and partners.

 

(c)    Market Risk

Market risk is comprised of two components: foreign currency exchange risk and interest rate risk.

 

i)      Foreign Currency Exchange Risk

The Company operates on an international basis and therefore foreign exchange risk exposures arise from transactions denominated in currencies other than the United States dollar. The Company is exposed to foreign currency fluctuations as it holds cash and incurs expenditures in exploration and evaluation and administrative costs in foreign currencies. The Company incurs expenditures in Canadian dollars, United States dollars, British Pounds and the Colombian peso and is exposed to fluctuations in exchange rates in these currencies. There are no exchange rate contracts in place.

 

ii)       Interest Rate Risk

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Company is not currently exposed to interest rate risk.

 

(d)    Liquidity Risk

Liquidity risk includes the risk that, as a result of the Company's operational liquidity requirements:

·      The Company will not have sufficient funds to settle a transaction on the due date;

·      The Company will be forced to sell financial assets at a value which is less than what they are worth; or

·      The Company may be unable to settle or recover a financial asset.

 

The Company's approach to managing its liquidity risk is to ensure, within reasonable means, sufficient liquidity to meet its liabilities when due, under both normal and unusual conditions, without incurring unacceptable losses or jeopardizing the Company's business objectives. The Company prepares annual capital expenditure budgets which are monitored regularly and updated as considered necessary.  Petroleum and natural gas production is monitored daily to provide current cash flow estimates and the Company utilizes authorizations for expenditures on projects to manage capital expenditures. Any funding shortfall may be met in a number of ways, including, but not limited to, the issuance of new debt or equity instruments, further expenditure reductions and/or the introduction of joint venture partners.

 

(e)     Capital Management

The Company's objective is to maintain a capital base sufficient to provide flexibility in the future development of the business and maintain investor, creditor and market confidence.  The Company manages its capital structure and makes adjustments in response to changes in economic conditions and the risk characteristics of the underlying assets. The Company considers its capital structure to include share capital, bank debt (when available), promissory notes and working capital, defined as current assets less current liabilities.  From time to time the Company may issue common shares or other securities, sell assets or adjust its capital spending to manage current and projected debt levels. The Company adjusts its capital structure based on its net debt level.  Net debt is defined as the principal amount of its outstanding debt, less working capital items.  The Company prepares annual budgets, which are updated as necessary including current and forecast crude oil prices, changes in capital structure, execution of the Company's business plan and general industry conditions.  The annual budget is approved by the Board of Directors. The Company's capital includes the following:

 


March 31, 2024

December 31, 2023

Working capital

$        9,520,829       

 $        8,669,114       

 

 

14.    Segmented Information

 

 

The Company has two reportable operating segments: Colombia and Canada. The Company, through its operating segments, is engaged primarily in oil exploration, development and production, and the acquisition of oil and gas properties. The Canada segment is also considered the corporate segment. The following tables show information regarding the Company's segments for the three months ended and as at March 31:

 

 

 

 

 

 

Three months ended March 31, 2024


Colombia

 

Canada

 

Total

 

Revenue:







 

Oil Sales

$

16,067,291

$

                          -  

$

16,067,291

Natural gas and liquid sales


-  


326,351


326,351

Royalties


(1,972,379)


 (16,342)


(1,988,721)

Expenses


(5,586,708)


 (2,676,335)


        (8,263,042)

Income taxes


(2,965,152)


                          -  


(2,965,152)

Net income (loss)

$

5,543,052

$

      (2,366,326)

$

3,176,727

 

As at March 31, 2024

 

Colombia

 

Canada

 

Total

Current assets

$

17,668,035

$

3,111,046

$

20,779,081

Non-current:

 

 

 

 

 

 

Deferred income taxes


2,157,575


                          -  


2,157,575

Restricted cash


37,808


200,006


237,814

Exploration and evaluation


578,082


                          -  


578,082

Property, plant and equipment


38,083,385


2,744,003


40,827,388

Total Assets

$

58,524,885

$

6,055,055

  $

64,579,940

Current liabilities

$

9,414,634

$

1,843,618

$

11,258,252

Non-current liabilities:







Deferred income taxes


3,855,953


                          -  


3,855,953

Other liabilities


345,528


                          -  


345,528

Lease obligation


-  


193,136


193,136

Decommissioning liability


3,708,821


574,040


4,282,861

Total liabilities

$

17,234,936

$

2,610,794

$

19,935,730

 

 

 

Three months ended March 31, 2023


Colombia


Canada


Total

 








 

Revenue:







 

Oil Sales

$

7,473,836

$

                          -  

$

7,473,836

Natural gas and liquid sales


-  


491,021


491,021

Royalties


(929,033)


 (42,964)


(971,997)

Expenses


(3,190,316)


 (812,809)


        (4,003,125)

Net income (loss)

$

3,354,487

$

(364,752)

$

2,989,735

 

As at March 31, 2023


Colombia


Canada


Total








Current assets

$

14,119,230

$

1,815,983

$

15,935,213

Non-current:







Deferred income taxes


872,286


                          -  


872,286

Restricted cash


37,808


573,888


611,696

Exploration and evaluation


972,692


                          -  


972,692

Property, plant and equipment


30,678,708


4,649,349


35,328,057

Total Assets

$

46,680,724

$

7,039,220

$

53,719,944








Current liabilities

$

3,755,781

$

9,559,718

$

13,315,499

Non-current liabilities:







Deferred income taxes


5,066,684


                          -  


5,066,684

Other liabilities


80,484


                          -  


80,484

Lease obligation


-  


11,307


11,307

Decommissioning liability


2,869,359


741,000


3,610,359

Total liabilities

$

13,189,670

$

14,104,006

$

22,084,333

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Arrow Exploration Corp.

 

MANAGEMENT's DISCUSSION AND ANALYSIS

THREE MONTHS ENDED MARCH 31, 2024

 

 

 

 

 

 

 


MANAGEMENT'S DISCUSSION AND ANALYSIS

This Management's Discussion and Analysis ("MD&A") as provided by the management of Arrow Exploration Corp. ("Arrow" or the "Company"), is dated as of May 29, 2024 and should be read in conjunction with Arrow's interim condensed (unaudited) consolidated financial statements and related notes as at and for the three months ended March 31, 2024 and 2023. Additional information relating to Arrow, including its annual consolidated financial statements and related notes for the year ended December 31, 2023 and 2022 (the "Annual Financial Statements"), is available under Arrow's profile on www.sedar.com.

Advisories

Basis of Presentation

The condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"), and all amounts herein are expressed in United States dollars, unless otherwise noted, and all tabular amounts are expressed in United States dollars, unless otherwise noted.  Additional information for the Company may be found on SEDAR at www.sedar.com

Advisory Regarding Forward‐Looking Statements

This MD&A 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 "believe", "continue", "could", "expect", "likely", "may", "outlook", "plan", "potential", "will", "would" and similar expressions. In particular, but without limiting the foregoing, this MD&A contains forward-looking statements pertaining to the following: the COVID-19 pandemic and its impact; tax liability; capital management strategy; capital structure; credit facilities and other debt; performance by Canacol (as defined herein) and the Company in connection with the Note (as defined herein) and letters of credit; Arrow's costless collar structure;; cost reduction initiatives; potential drilling on the Tapir block; capital requirements; expenditures associated with asset retirement obligations; future drilling activity and the development of the Rio Cravo Este structure on the Tapir Block. Statements relating to "reserves" and "resources" are deemed to be forward-looking information, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described exist in the quantities predicted or estimated and can be profitably produced in the future.

The forward-looking statements contained in this MD&A reflect several material factors and expectations and assumptions of Arrow including, without limitation: current and anticipated commodity prices and royalty regimes; the impact of the COVID-19 pandemic; the financial impact of Arrow's costless collar structure; 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; changes in income tax laws or changes in tax laws and incentive programs; 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 MD&A 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; counterparty risk; 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 2018 AIF, 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. 

Non‐IFRS Measures

The Company uses non-IFRS measures to evaluate its performance which are measures not defined in IFRS. Working capital, funds flow from operations, realized prices, operating netback, adjusted EBITDA, and net debt 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. 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, and to repay its debt, as the case may be. These measures should not be considered as an alternative to, or more meaningful than net income or cash provided by (used in) operating activities or net income and comprehensive income 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.

Adjusted working capital is calculated as current assets minus current liabilities, excluding non-cash liabilities; funds from operations is calculated as cash flows provided by operating activities adjusted to exclude changes in non-cash working capital balances; realized price is calculated by dividing gross revenue by gross production, by product, in the applicable period; operating netback is calculated as total natural gas and crude revenues minus royalties, transportation costs and operating expenditures; adjusted EBITDA is calculated as net income adjusted for interest, income taxes, depreciation, depletion, amortization and other similar non-recurring or non-cash charges; and net debt (net cash) is defined as the principal amount of its outstanding debt, less working capital items excluding non-cash liabilities. 

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 per share.

A reconciliation of the non-IFRS measures is included as follows:

 

 

(in United States dollars)

Three months ended March 31, 2024

Three months ended March 31, 2023

Net income

3,176,727

2,989,735

Add/(subtract):

 


   Share based payments

101,278

132,240

   Financing costs:

 


      Accretion on decommissioning obligations

37,376

29,156

      Interest

                      9,769

60,887

      Other

199,065

45,682

   Depreciation and depletion

3,531,772

2,454,364

   Derivative loss

                            -  

 (1,354,275)

   Income tax expense

2,965,152

-

Adjusted EBITDA (1)

10,021,139

4,357,790


 


Cash flows provided by operating activities

8,582,288

2,380,195

Minus - Changes in non‑cash working capital balances:

 


Trade and other receivables

 (299,554)

 (1,704,944)

Restricted cash

 (343,746)

12,266

Taxes receivable

164,078

602,369

Deposits and prepaid expenses

152,963

113,612

Inventory

                         (92)

117,798

Accounts payable and accrued liabilities

297,211

2,482,665

Income tax payable

 (1,342,465)

236,642

Funds flow from operations (1)

7,210,683

4,240,603

(1)Non-IFRS measures

 

The term barrel of oil equivalent ("boe") is used in this MD&A.  Boe may be misleading, particularly if used in isolation.  A boe conversion ratio of 6 thousand cubic feet ("Mcf") of natural gas to one barrel of oil ("bbl") is used in the MD&A. This conversion ratio of 6:1 is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

FINANCIAL AND OPERATING HIGHLIGHTS

 

 

(in United States dollars, except as otherwise noted)

Three months ended March 31, 2024

Three months ended March 31, 2023

Total natural gas and crude oil revenues, net of royalties

             14,404,921

               6,992,860


 


Funds flow from operations (1)

               7,210,683

               4,240,603

Funds flow from operations (1) per share -

 


    Basic($)

                        0.03

                        0.02

    Diluted ($)

                        0.02

                        0.01

Net income

               3,176,727

               2,989,735

Net income per share -

 


   Basic ($)

                        0.01

                        0.01

   Diluted ($)

                        0.01

                        0.01

Adjusted EBITDA (1)

             10,021,139

               4,271,726

Weighted average shares outstanding -

 


   Basic ($)

285,864,348

222,717,847

   Diluted ($)

292,791,385

288,639,348

Common shares end of period

285,864,348

228,979,841

Capital expenditures

               6,281,328

               4,271,693

Cash and cash equivalents

             11,606,342

             12,354,424

Current Assets

             20,779,081

             15,849,150

Current liabilities

             11,258,252

             13,315,499

Adjusted working capital (1)

               9,520,829

               9,325,680

Long-term portion of restricted cash (2)

                  237,814

                  831,048

Total assets

             64,579,940

             53,719,944




Operating






Natural gas and crude oil production, before royalties



Natural gas (Mcf/d)

1,760

4,221

Natural gas liquids (bbl/d)

4

6

Crude oil (bbl/d)

2,432

434

Total (boe/d)

2,730

1,144

 

 


Operating netbacks ($/boe) (1)

 


Natural gas ($/Mcf)

($0.14)

$0.73

Crude oil ($/bbl)

$56.27

$48.94

Total ($/boe)

$50.10

$20.16

(1)Non-IFRS measures - see "Non-IFRS Measures" section within this MD&A

(2)Long term restricted cash not included in working capital

 

The Company

Arrow is a junior oil and gas company engaged in the acquisition, exploration and development of oil and gas properties in Colombia and Western Canada. The Company's shares trade on the TSX Venture Exchange and the London AIM exchange under the symbol AXL.

The Company and Arrow Exploration Ltd. entered into an arrangement agreement dated June 1, 2018, as amended, whereby the parties completed a business combination pursuant to a plan of arrangement under the Business Corporations Act (Alberta) ("ABCA") on September 28, 2018. Arrow Exploration Ltd. and Front Range's then wholly-owned subsidiary, 2118295 Alberta Ltd., were amalgamated to form Arrow Holdings Ltd., a wholly-owned subsidiary of the Company (the "Arrangement"). On May 31, 2018, Arrow Exploration Ltd. entered in a share purchase agreement, as amended, with Canacol Energy Ltd. ("Canacol"), to acquire Canacol's Colombian oil properties held by its wholly-owned subsidiary Carrao Energy S.A. ("Carrao"). On September 27, 2018, Arrow Exploration Ltd. closed the agreement with Canacol.

On May 31, 2018, Arrow Exploration Ltd., entered into a purchase and sale agreement to acquire a 50% beneficial interest in a contract entered into with Ecopetrol S.A. pertaining to the exploration and production of hydrocarbons in the Tapir block from Samaria Exploration & Production S.A. ("Samaria"). On September 27, 2018, Arrow Exploration Ltd. closed the agreement with Samaria. As at December 31, 2023 the Company held an interest in four oil blocks in Colombia and oil and natural gas leases in five areas in Canada as follows:

 

 

 

Gross Acres

Working Interest

Net Acres

COLOMBIA





Tapir

Operated1

65,125

50%

32,563

Oso Pardo

Operated

672

100%

672

Ombu

Non-operated

56,482

10%

5,648

COR-39

Operated

95,111

100%

95,111

Total Colombia

 

217,390

 

133,994

CANADA





Ansell

Operated

640

100%

640

Fir

Non operated

7,680

32%

2,458

Penhold

Non-operated

480

13%

61

Pepper

Operated

19,200

100%

19,200

Wapiti

Non-operated

1,280

13%

160

Total Canada

 

29,280

 

22,519

TOTAL

 

246,670

 

156,513

The Company's primary producing assets are located in Colombia in the Tapir, Oso Pardo and Ombu blocks, with natural gas production in Canada at Fir and Pepper, Alberta.

 

Llanos Basin

Within the Llanos Basin, the Company is engaged in the exploration, development and production of oil within the Tapir block. In the Llanos Basin most oil accumulations are associated with three-way dip closure against NNE-SSW trending normal faults and can have pay within multiple reservoirs. The Tapir block contain large areas not yet covered by 3D seismic, and in Management's opinion offer substantial exploration upside. 

1The Company's interest in the Tapir block is held through a private contract with Petrolco, who holds a 50% participating interest in, and is the named operator of, the Tapir contract with Ecopetrol. The formal assignment to the Company is subject to Ecopetrol's consent. The Company is the de facto operator pursuant to certain agreements with Petrolco (details of which are set out in Paragraph 16.13 of the Company's AIM Admission Document dated October 20, 2021).

Middle Magdalena Valley ("MMV") Basin

Oso Pardo Field

The Oso Pardo Field is located in the Santa Isabel Block in the MMV Basin.  It is a 100% owned property operated by the Company.  The Oso Pardo field is located within a Production Licence covering 672 acres. Three wells have been drilled to date within the licensed area.

Ombu E&P Contract - Capella Conventional Heavy Oil Discovery

The Caguan Basin covers an area of approximately 60,000 km2 and lies between the Putumayo and Llanos Basins. The primary reservoir target is the Upper Eocene aged Mirador formation. The Capella structure is a large, elongated northeast-southwest fault-related anticline, with approximately 17,500 acres in closure at the Mirador level. The field is located approximately 250 km away from the nearest offloading station at Neiva, where production from Capella is trucked.

The Capella No. 1 discovery well was drilled in July 2008 and was followed by a series of development wells. The Company earned a 10% working interest in the Ombu E&P Contract by paying 100% of all activities associated with the drilling, completion, and testing of the Capella No. 1 well. The Capella field is currently suspended and temporarily shut in.

Fir, Alberta

The Company has an average non-operated 32% WI in 12 gross (3.84 net) sections of oil and natural gas rights and 17 gross (4.5 net) producing natural gas wells at Fir. The wells produce raw natural gas into the Cecilia natural gas plant where it is processed.

Pepper, Alberta

The Company holds a 100% operated WI in 37 sections of Montney P&NG rights on its Pepper asset in West Central Alberta. The 6-26-53-23W5M Montney gas well (West Pepper) is tied into the Galloway gas plant for processing. The 3-21-52-22W5M Montney gas well (East Pepper) is currently tied into the Sundance gas plant for processing. The majority of lands have tenure extending into 2025.

Three Months Ended March 31, 2024 Financial and Operational Highlights

·      Arrow recorded $14,404,921 in revenues, net of royalties, on crude oil sales of 219,160 bbls, 395 bbls of natural gas liquids ("NGL's") and 160,119 Mcf of natural gas sales;

·      Funds flow from operations of $7,210,683;

·      Net income of $3,176,727 and adjusted EBITDA was $10,021,139;

·      Drilled four development wells at its Carrizales Norte field

 

 

Results of Operations

The Company increased its production from new wells at both Rio Cravo Este and Carrizales Norte fields in the Tapir block. These have allowed the Company to continue to improve its operating results and EBITDA.  There has also been a decrease in the Company's natural gas production in Canada due to natural declines.

 

Average Production by Property

Average Production Boe/d

Q1 2024

Q4 2023

Q3 2023

Q2 2023

Q1 2023

Q4 2022

Oso Pardo

166

80

93

130

138

115

Ombu (Capella)

-

-

-

-

80

238

Rio Cravo Este (Tapir)

1,644

1,326

1,443

1,592

1,004

832

Carrizales Norte (Tapir)

622

621

642

57

-

-

Total Colombia

2,432

2,027

2,178

1,779

1,222

1,185

Fir, Alberta

78

80

81

77

74

79

Pepper, Alberta

220

228

259

313

340

472

TOTAL (Boe/d)

2,730

2,335

2,518

2,169

1,635

1,736

The Company's average production for the three months ended March 31, 2024 was 2,730 boe/d, which consisted of crude oil production in Colombia of 2,432 bbl/d, natural gas production of 1,760 Mcf/d, and minor amounts of natural gas liquids from the Company's Canadian properties. The Company's Q1 2024 production was 17% higher than its Q4 2023 production and 67% higher when compared to Q1 2023.

Average Daily Natural Gas and Oil Production and Sales Volumes

 

 

Three months ended

March 31

2024

2023

Natural Gas (Mcf/d)

 


Natural gas production

1,760

2,459

Natural gas sales

1,760

2,459

Realized Contractual Natural Gas Sales

1,760

2,459

Crude Oil (bbl/d)



Crude oil production

2,432

1,222

Inventory movements and other

3

 (89)

Crude Oil Sales

2,435

1,133

Corporate

 

Natural gas production (boe/d)

294

410

Natural gas liquids(bbl/d)

4

4

Crude oil production (bbl/d)

2,432

1,222

Total production (boe/d)

2,730

1,635

Inventory movements and other (boe/d)

3

 (89)

Total Corporate Sales (boe/d)

2,733

1,546

 

During the three months ended March 31, 2024 the majority of production was attributed to Colombia, where most of Company's blocks were producing. In Canada, the Company has two operated and two non-operated properties located in the province of Alberta at Fir, Pepper, Harley and Wapiti.

Natural Gas and Oil Revenues


Three months ended

March 31

 

2024

2023

Natural Gas



Natural gas revenues

$      300,224

 $    467,876

NGL revenues

26,127

23,145

Royalties

 (16,342)

 (42,964)

Revenues, net of royalties

310,009

448,057

Oil



Oil revenues

$ 16,067,291

$ 7,473,836

Royalties

 (1,972,379)

 (929,033)

Revenues, net of royalties

14,094,912

6,544,803

Corporate



Natural gas revenues

$      300,224

$    467,876

NGL revenues

26,127

23,145

Oil revenues

16,067,291

7,473,836

Total revenues

16,393,642

7,964,857

Royalties

 (1,988,721)

 (971,997)

Natural gas and crude oil revenues, net of royalties, as reported

$ 14,404,921

$ 6,992,860

Natural gas and crude oil revenues, net of royalties, for the three months ended March 31, 2024 was $14,404,921 (2023: $6,992,860) which represents an increase of 106% when compared to the same 2023 period, and 7% higher than Q4 2023. These significant increases are mainly due to increased oil production in Colombia, offset by decrease in revenue in Canada.

Average Benchmark and Realized Prices 


Three months ended March 31

2024

2023

Change

Benchmark Prices

 



AECO ($/Mcf)

$2.55

$3.28

(22%)

Brent ($/bbl)

$84.67

$79.21

7%

West Texas Intermediate ($/bbl)

$76.95

$76.10

1%

Realized Prices

 



Natural gas, net of transportation ($/Mcf)

$1.87

$2.11

(11%)

Natural gas liquids ($/bbl)

$66.20

$66.13

0%

Crude oil, net of transportation ($/bbl)

$73.31

$73.31

0%

Corporate average, net of transport ($/boe)

$66.58

$57.23

16%

   (1)Non-IFRS measure

The Company realized prices of $66.58 per boe during the three months ended March 31, 2024 (2023: $57.23) due to small increases in oil prices during 2024, except for natural gas prices which decreased during this period.

Operating Expenses


Three months ended

March 31

2024

2023

Natural gas & NGL's

306,224

517,653

Crude oil

1,762,787

599,937

 Total operating expenses

2,069,011

1,117,590

Natural gas ($/Mcf)

$1.91

$2.34

Crude oil ($/bbl)

$8.04

$5.88

Corporate ($/boe)(1)

$8.40

$8.03

(1)Non-IFRS measure

During the three months ended March 31, 2024, Arrow incurred in operating expenses of $2,069,011 (2023: $1,117,590). This increase is mainly due to increase in production in the Company's Carrizales Norte field in the Tapir block and higher costs of producing heavier oil. The Company's corporate operating expense of $8.40 per boe (2023: $8.03) which is slightly higher than Q1 2023.

Operating Netbacks

 

Three months ended

March 31

 

2024

2023

Natural Gas ($/Mcf)



Revenue, net of transportation expense

$1.87

$2.11

Royalties

($0.10)

(0.19)

Operating expenses

($1.91)

(2.34)

Natural gas operating netback(1)

($0.14)

($0.42)

Crude oil ($/bbl)

 


Revenue, net of transportation expense

$73.31

$73.31

Royalties

($9.00)

(9.11)

Operating expenses

($8.04)

(5.88)

Crude oil operating netback(1)

$56.27

$58.31

Corporate ($/boe)

 


Revenue, net of transportation expense

$66.58

$57.23

Royalties

($8.08)

(6.98)

Operating expenses

($8.40)

(8.03)

Corporate operating netback(1)

$50.10

$42.21

 (1)Non-IFRS measure

The operating netbacks of the Company continued within healthy levels during 2024 due increasing production from its Colombian assets and improved crude oil prices, which were offset by decreases in natural gas prices.

 

General and Administrative Expenses (G&A)

 

Three months ended

March 31

 

2024

2023

General & administrative expenses

2,937,113

 1,752,947

G&A recovered from 3rd parties

 (255,191)

 (134,199)

Total G&A

2,681,922

1,618,748

Total G&A per boe

$10.89

$11.63

For the three months ended March 31, 2024, G&A expenses before recoveries totaled $2,937,113 (2023: $1,752,947), which represent an increase when compared to the same period in 2023, but a decrease when compared with Q4 2023. This variance is mainly due to additional personnel and payment of performance bonuses to employees. Despite these increased expenses, due to the Company's increased production, G&A expenses were reduced, on a per barrel basis, when compared to 2023.

Share-based Compensation

 

Three months ended

March 31

 

2024

2023

Share-based Compensation expense

101,278

132,240

Share-based compensation expense for the three months ended March 31, 2024 totaled $101,278 (2023: $132,240). During 2023, the Company granted 1,650,000 options to its personnel and Directors, which was offset by reversal of expenses from cancelled options due to resignations of option holders. No options were granted during Q1 2024.

Financing Costs

 

Three months ended

March 31

 

2024

2023

Financing expense paid or payable

208,834

106,570

Non-cash financing costs

37,376

29,156

Net financing costs

246,210

135,726

The finance expense for 2023 represents mostly interest on the promissory note due to Canacol. The non-cash finance cost represents an increase in the present value of the decommissioning obligation for the current periods. The amount of this expense will fluctuate commensurate with the asset retirement obligation as new wells are drilled or properties are acquired or disposed.

Depletion and Depreciation

 

Three months ended

March 31

 

2024

2023

Depletion and depreciation

3,531,772

2,454,364

Depletion and depreciation expense for the three months ended March 31, 2024 totaled $3,531,772 (2023: $2,454,364). The increase is due to higher carrying value of depletable property and equipment and increased production. The Company uses the unit of production method and proved plus probable reserves to calculate its depletion and depreciation expense.

Gain on Derivative Liability

 

Three months ended

March 31

 

2024

2023

Gain on Derivative Liability

-

(1,354,275)

During the three months ended March 31, 2024, the Company recorded no gain or loss in derivative liability (2023: gain of $1,354,275) related to the valuation of its outstanding warrants issued during its AIM listing and private placement completed in 2021, which were mostly settled or expired during 2023.

LIQUIDITY AND CAPITAL RESOURCES

Capital Management

The Company's objective is to maintain a capital base sufficient to provide flexibility in the future development of the business and maintain investor, creditor and market confidence.  The Company manages its capital structure and makes adjustments in response to changes in economic conditions and the risk characteristics of the underlying assets. The Company considers its capital structure to include share capital, debt and adjusted working capital. In order to maintain or adjust the capital structure, from time to time the Company may issue common shares or other securities, sell assets or adjust its capital spending to manage current and projected debt levels.

As at March 31, 2024 the Company has a working capital of $9,520,829. The Company has maintained a healthy working capital, using its operational cash flows to settle its obligations and to continue growing its operations. The stability in energy commodity prices has allowed the Company's capacity to generate sufficient financial resources to sustain its operations and growth. As at March 31, 2024 the Company's net debt (net cash) was calculated as follows:

 

 

 

March 31, 2024


 

 



Current assets

 

 

$

20,779,081

Less:

 

 



Accounts payable and accrued liabilities

 

 


6,698,702

Income taxes payable

 

 


4,450,967

Net debt (Net cash) (1)

 

 

$

(9,629,412)

(1)Non-IFRS measure

Working Capital

As at March 31, 2024 the Company's adjusted working capital was calculated as follows:

 

 

 

March 31, 2024

Current assets:

 

 



   Cash

 

 

$

11,606,342

   Restricted cash and deposits

 

 


273,274

   Trade and other receivables

 

 


3,237,382

   Taxes receivable

 

 


4,819,478

   Other current assets

 

 


842,605


 

 



Less:

 

 



  Accounts payable and accrued liabilities

 

 


6,698,702

  Lease obligation

 

 


108,583

   Income tax payable

 

 

 

4,450,967

Working capital(1)

 

 

$

9,520,829

(1)Non-IFRS measure

Debt Capital

As at March 31, 2024 the Company does not have any outstanding debt balance.

Letters of Credit

As at March 31, 2024, the Company had obligations under Letters of Credit ("LC's") outstanding totaling $2.7 million to guarantee work commitments on exploration blocks and other contractual commitments. In the event the Company fails to secure the renewal of the letters of credit underlying the ANH guarantees, or any of them, the ANH could decide to cancel the underlying exploration and production contract for a particular block, as applicable. In this instance, the Company could risk losing its entire interest in the applicable block, including all capital expended to date and could possibly also incur additional abandonment and reclamation costs if applied by the ANH.

Current Outstanding Letters of Credit







Contract

Beneficiary

Issuer

Type

Amount

(US $)

Renewal Date

SANTA ISABEL

ANH

Carrao Energy

Abandonment

$563,894

April 14, 2025

ANH

Carrao Energy

Financial Capacity

$1,672,162

June 30, 2024

CORE - 39

ANH

Carrao Energy

Compliance

$100,000

June 30, 2024

OMBU

ANH

Carrao Energy

Financial Capacity

$436,300

October 14, 2024

Total

 



$2,772,356

 

 

Share Capital

As at March 31, 2024, the Company had 285,864,348 common shares and 17,354,447 stock options outstanding.

CONTRACTUAL OBLIGATIONS

The following table provides a summary of the Company's cash requirements to meet its financial liabilities and contractual obligations existing at March 31, 2024:

 

Less than 1 year

1-3 years

Thereafter

Total






Exploration and production contracts

 

-

 

12,000,000

 

-

 

12,000,000

Exploration and Production Contracts

The Company has entered into a number of exploration contracts in Colombia which require the Company to fulfill work program commitments. In aggregate, the Company has outstanding commitments of $12 million. The Company have made an application to cancel its commitments on the COR-39.

 

 

 

 

SUMMARY OF THREE MONTHS RESULTS

 

 

2024

2023

2022

 

Q1

Q4

Q3

Q2

Q1

Q4

Q3

Q2

Oil and natural gas sales, net of royalties

 

14,404,921

 

13,406,513

 

13,990,353

 

11,637,968

 

6,992,860

 

8,931,562

 

7,614,336

 

5,024,604

Net income (loss)

3,176,727

(10,492,053)

7,153,120

(757,416)

2,989,735

2,968,117

2,041,955

768,318

Income (loss) per share -

   basic

   diluted

 

0.01

0.01

 

(0.04)

(0.04)

 

0.03

0.02

 

(0.00)

(0.00)

 

0.01

0.01

 

0.01

0.01

 

0.02

0.00

 

0.00

0.00

Working capital (deficit)

9,520,829

8,669,114

10,822,475

(2,363,388)

2,619,715

(1,316,665)

7,392,310

5,594,027

Total assets

64,579,940

62,275,023

62,755,250

56,305,530

53,719,944

53,190,248

46,979,259

42,670,153

Net capital expenditures

6,281,329

10,471,447

5,471,561

6,870,258

4,271,693

2,106,463

4,836,860

2,777,611

Average daily production (boe/d)

2,730

2,666

2,518

2,169

1,635

1,736

1,503

980

 

The Company's oil and natural gas sales have increased 106% in Q1 2024 when compared to Q1 2023 due to increased production in its existing assets and stable commodity prices. The Company's production levels in Colombia continue growing. Trends in the Company's net income are also impacted most significantly by operating expenses, financing costs, income taxes, depletion, depreciation and impairment of oil and gas properties, and other income.

OUTSTANDING SHARE DATA

At May 29, 2024 the Company had the following securities issued and outstanding:

 

Number

Exercise Price

Expiry Date

Common shares


285,864,348


n/a

             

n/a

Stock options


750,000


CAD$ 1.15


October 22, 2028

Stock options


270,000


CAD$ 0.31


May 3, 2029

Stock options


1,200,000


CAD$ 0.05


March 20, 2030

Stock options


1,200,000


CAD$ 0.05


April 13, 2030

Stock options


5,150,002


GBP 0.07625


June 13, 2024 and 2025

Stock options


1,533,335


CAD$0.28


Dec. 9, 2024 and 2025

Stock options


833,334


CAD$0.26


Mar. 7, 2025 and 2026

Stock options


4,951,110


GBP 0.1675


June 21, 2024, 2025 and 2026

Stock options


466,666


GBP 0.1925


July 23, 2024, 2025 and 2026

Stock options


1,000,000


CAD $0.33


Mar. 21, 2025, 2026 and 2027

Stock options


9,843,887


CAD $0.375


Oct. 29 2025, 2026 and 2027

OUTLOOK

The Company has deployed the capital raised at the time of the Admission to AIM on a successful drilling campaigns at Rio Cravo and Carrizales Norte on the Tapir Block. These successful campaigns have translated into production growth and in positive cashflows during 2023 and 2022, providing Arrow with the funds required to continue with its capital program for 2024.

 

During 2024, the Company has drilled six wells at Carrizales Norte, which have increased overall production, and has spud its first horizontal well. This confirms Arrow's commitment to increase production and shareholder value. The Company is able to support its 2024 capital program with current cash on hand and cash flow from operations. 

CRITICAL ACCOUNTING ESTIMATES

A summary of the Company's critical accounting estimates is contained in Note 3 Annual Financial Statements. These accounting policies are subject to estimates and key judgements about future events, many of which are beyond Arrow's control.

 

SUMMARY OF MATERIAL ACCOUNTING POLICIES

A summary of the Company's material accounting policies is included in note 3 of the Annual Financial Statements. These accounting policies are consistent with those of the previous financial year.

 

RISKS AND UNCERTAINTIES

The Company is subject to financial, business and other risks, many of which are beyond its control and which could have a material adverse effect on the business and operations of the Company. Please refer to "Risk Factors" in the MD&A for the year ended December 31, 2022 for a description of the financial, business and other risk factors affecting the Company which are available on SEDAR at www.sedar.com

 

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