Arrow Exploration Corp.'s (AXL:TSX.V; AXL:LSE) current net production is in line with levels achieved in early January, reported Stephane Foucaud, analyst with Auctus Advisors, in an April 10 research note. Auctus reduced its target price on the junior oil and gas company to reflect decreased estimates for full-year 2025 production and for the Brent oil price in Q2/25 and Q3/25.
352% Return Implied
Auctus' new price on Arrow is £0.70 per share, down from £0.80, noted Foucaud. This reduction is due to the wealth advisory firm lowering its FY25 production forecast for Arrow to 6,100,000 barrels of oil equivalent per day (6.1 MMboe/d) from 5.1 MMboe/d and "incorporating current production and a more prudent production buildup during 2025." The new target also is due to Auctus decreasing its Brent price assumption for Q2/25 and Q3/25 to US$60 per barrel (US$60/bbl) from US$75/bbl.
The new target implies a 352% return from where Arrow is trading now, £0.16 per share.
Q1/25 Production Report
Foucaud highlighted that Arrow's current net production is more than 4,500 boe/d (4.5 MMboe/d), consistent with January levels. On March 31 Arrow brought on a new well, CN HZ10 in the northern area of the Carrizales Norte (CN) field. This well delivered 1,183 bbl/d of oil, 591 bbl/d of it net to Arrow, with a 21% water cut from the Ubaque reservoir.
"The well is in the process of cleaning up, with the water cut gradually decreasing," Foucaud wrote.
In the southern area of the CN field, the CN HZ09 well is producing 244 bbl/d of oil, 122 bbl/d net to Arrow, also from the Ubaque reservoir. Initially the well encountered a high water cut of 90% but since has stabilized. Arrow attributes the higher water cut to the well being near the CN4 vertical water injector well, resulting in water coning. Regardless, Foucaud reported, Arrow believes the oil reserves and resources in this area of the field are intact.
Gross production at Alberta Llanos is now 460 bbl/d total and 230 bbl/d net to Arrow, with the recently discovered Guadalupe reservoir now in production.
At quarter's end, Arrow had US$25.1 million (US$25.1M) in cash, US$2.4M more than it had on Feb. 1.
Looking Ahead
According to Foucaud, Arrow now is drilling the directional, low-risk CN11 well targeting the C7 Formation. CN11 is expected to begin production by April's end.
Multiple other wells could be drilled as part of the broader C7 reservoir plan, but the company instead is re-evaluating its 2025 drill program given the recent drop in oil prices. Its plan is to prioritize and move forward with low-risk infill and development wells.
"Notably, Arrow does not have any contractual obligations requiring the use of additional rigs or the drilling of extra wells," Foucaud added.
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