CALGARY, Aug. 28, 2019 /CNW/ - ARROW Exploration Corp.
("Arrow" or the "Company") (TSXV: AXL) is pleased to announce the
filing of its 2019 second quarter unaudited Financial Statements
and MD&A and to provide an operational update. The Company's
Financial Statements and MD&A are available on SEDAR
(www.sedar.com). All numbers are expressed in US dollars unless
otherwise noted.
(in United States
dollars (tabular amounts in thousands)
except as otherwise noted)
|
Three months
ended June 30, 2019
|
Six months
ended
June 30, 2019
|
Three months
ended March
31, 2019
|
Total natural gas and
crude oil revenues, net of royalties
|
7,525,728
|
13,534,368
|
6,008,640
|
|
|
|
|
Funds from operations
(1)
|
965,570
|
1,946,522
|
980,952
|
Per share – basic ($)
and diluted ($)
|
0.01
|
0.03
|
0.02
|
|
|
|
|
Net loss
|
(1,776,740)
|
(3,480,920)
|
(1,704,180)
|
Per share – basic ($)
and diluted ($)
|
(0.03)
|
(0.05)
|
(0.02)
|
EBITDA
(1)
|
1,952,816
|
3,340,051
|
1,387,235
|
Weighted average
shares outstanding – basic and diluted
|
68,674,602
|
68,674,602
|
68,674,602
|
Common shares end of
period
|
68,674,602
|
68,674,602
|
68,674,602
|
|
|
|
|
Capital
expenditures
|
4,171,680
|
7,573,045
|
3,401,365
|
|
|
|
|
Cash and cash
equivalents
|
844,983
|
844,983
|
1,434,648
|
Current
Assets
|
10,725,489
|
10,725,489
|
10,553,677
|
Current liabilities
(2)
|
18,800,186
|
18,800,186
|
18,353,525
|
Working capital
(deficit) (1)
|
(8,074,697)
|
(8,074,697)
|
(7,799,848)
|
Long-term portion of
restricted cash (3)
|
368,662
|
368,662
|
3,245,624
|
Total
assets
|
76,333,739
|
76,333,739
|
77,066,582
|
|
|
|
|
Operating
|
|
|
|
|
|
|
|
Natural gas and
crude oil production, before royalties
|
|
|
|
Natural gas
(Mcf/d)
|
677
|
686
|
696
|
Natural gas liquids
(bbl/d)
|
5
|
7
|
6
|
Crude oil
(bbl/d)
|
1,741
|
1,665
|
1,588
|
Total
(boe/d)
|
1,859
|
1,786
|
1,710
|
|
|
|
|
Operating netbacks
($/boe) (1)
|
|
|
|
Natural gas
($/Mcf)
|
($1.19)
|
($0.53)
|
0.10
|
Crude oil
($/bbl)
|
$27.50
|
$23.12
|
18.43
|
Total
($/boe)
|
$25.40
|
$21.43
|
17.29
|
(1)
|
Non-IFRS Measures – see "Non-IFRS Measures"
below
|
(2)
|
Includes $5 million
Canacol promissory note
|
(3)
|
Long-term restricted
cash not included in working capital
|
Second Quarter 2019 Highlights and Subsequent Events
- For the three months ended June 30,
2019, Arrow recorded $7,525,728 in revenues (net of royalties) on
crude oil sales of 148,829 barrels, 616 barrels of NGL's and 61,589
Mcf of natural gas sales.
- EBITDA for the three months ended June
30, 2019 was $1,952,816.
- Production averaged 1,859 boe/d, an increase of 149 boe/d over
the first quarter of 2019.
- Revenue (net of royalties) of $7.5
million represented an increase of approximately
$1.5 million over the previous
quarter. Brent oil prices retraced from highs near $75 achieved in April to the low $60 range to end the second quarter. Higher Brent oil prices in the quarter compared
to the previous quarter had a positive impact on operating netbacks
which were $25.40 per boe vs.
$17.29 per boe, respectively.
- Operating costs were $3,205,137
or $19.02 per produced boe which
represents a reduction of $165,924
versus the first quarter of 2019.
- Working Capital deficit of approximately $8 million includes the $5
million promissory note to Canacol Energy Ltd. ("Canacol")
which was renegotiated subsequent to the quarter end.
- Subsequent to quarter end, Arrow entered into a Second Amended
and Restated Promissory Note (the "Note") with Canacol. The
amendments provide a deferral of principal payments to commence on
October 1, 2020 and which shall be
paid in six monthly instalments such that all Note obligations are
paid in full on or before March 1,
2021. The amendments also provide that the Company will
repay all interest accrued to July 31,
2019 (totaling $628,767) by
December 31, 2019, and that
commencing on September 1, 2019 the
Company will make monthly interest-only payments on the principal
sum then outstanding plus the outstanding accrued interest balance.
Interest payable on the Note remains unchanged at 15% per annum,
and the Note continues to be repayable at any time without
penalty.
Bruce McDonald, CEO of Arrow
commented, "We were pleased to achieve our best revenue and EBITDA
quarter thanks to production increases from the RCE-1 discovery
well drilled in the quarter and a full quarter of production from
the Danes-1 well after replacement of a failed pump. At the same
time, we were able to realize strong realized oil prices and
further reduce operating costs to achieve a best ever quarterly
operating netback of $25.40. Cost
reductions remain a key focus of the Company as we move
forward."
Operational Update
Management remains focused on several initiatives which are
expected to further reduce operating costs including the recent
implementation of an improved water handling solution for the Rio
Cravo Este-1 ("RCE-1") well and purchasing rented oilfield
equipment. The improved water handling solution is expected to
decrease operating costs for the RCE-1 well by approximately 30%
and management has identified over $4
million in oilfield equipment capitalization opportunities
which are expected to have a positive impact on operating costs
once the equipment is purchased in coming months.
Credit Facility
As previously disclosed, Arrow has been working to secure a
credit facility. The Company continues to engage in discussions
with various potential credit facility providers and is evaluating
alternative debt solutions in the event the Company is unable to
close the credit facility as originally contemplated.
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 "believe", "expect", "guidance", "may", "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; long-term credit
facility; and Arrow's ability to service its current
obligations.
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.