CALGARY, April 8, 2019 /CNW/ - ARROW Exploration
Corp. ("Arrow" or the "Company") (TSXV: AXL) is
pleased to report its year-end 2018 reserves in Colombia and Canada as evaluated by DeGolyer and
MacNaughton ("D&M") of Dallas,
Texas in its report dated effective as of December 31, 2018 (the "D&M Reserves
Report"). This evaluation was prepared using the guidelines
outlined in the Canadian Oil and Gas Evaluation Handbook ("COGE
Handbook") and is in accordance with National Instrument 51-101
– Standards of Disclosure for Oil and Gas Activities ("NI
51-101").
In accordance with the requirements of NI 51-101, the Company
expects to file more detailed disclosure relating to its oil and
gas activities for the year ended December
31, 2018 in its 2018 Annual Information Form, together with
an operational update, audited annual financial statements and
management's discussion and analysis, on or before April 30, 2019.
Year-End 2018 Company Gross Reserves Highlights
- 4.97 MMboe of Proved Reserves
- 10.57 MMboe of Proved plus Probable Reserves
- Proved Reserves estimated net present value before income taxes
of US $56,138,000 calculated at a 10%
discount rate
- Proved plus Probable Reserves estimated net present value
before income taxes of US $114,018,000 calculated at a 10% discount
rate
- Reserve Life Index of 8.1 for Proved Reserves and 17.2 for
Proved plus Probable Reserves based on average fourth quarter 2018
corporate production of 1,683 boe/d
Mr. Gary Wine, Chief Executive
Officer of Arrow, commented, "We're very pleased to have increased
our reserves in 2018 through the acquisition of assets in
Colombia complemented by the
success of our first exploration well in Colombia in Q4 2018. Our long Reserve Life
Index and large under-developed land position in Colombia positions the Company very well for
future growth."
A summary of the Company's Gross Reserves volumes according to
reserve category as at December 31,
2018 is provided in the following table. Numbers in this
table may not add exactly due to rounding.
2018 Year-End
Company Gross Reserves Volumes (1)
|
|
|
|
|
|
|
|
Reserve
Category
|
Light &
Medium
Crude Oil
(Mbbl)
|
Heavy
Oil
(Mbbl)
|
Condensate
(Mbbl)
|
Sales
Gas
(MMcf)
|
NGL
(Mbbl)
|
Total Oil
Equivalent
(Mboe)
|
Proved Developed
Producing
|
1,247
|
254
|
0
|
1,699
|
12
|
1,796
|
Proved Developed
Non-Producing
|
789
|
154
|
35
|
3,366
|
36
|
1,575
|
Proved
Undeveloped
|
0
|
1,598
|
0
|
0
|
0
|
1,598
|
Total
Proved
|
2,036
|
2,006
|
35
|
5,065
|
48
|
4,969
|
Probable
|
1,475
|
3,747
|
13
|
2,053
|
22
|
5,599
|
Total Proved plus
Probable
|
3,511
|
5,753
|
48
|
7,118
|
70
|
10,568
|
Note:
(1) See Oil and Gas Advisories and
Reserves Definitions below.
A summary of the net present value of the Company's estimated
future net revenues associated with the Company's Gross Reserves as
at December 31, 2018 is provided in
the following table. The net present values are estimated based on
the forecast prices set out below and readers should not assume
that the net present values estimated by D&M represent the fair
market value of the Company's Gross Reserves. Numbers in this table
may not add exactly due to rounding.
2018 Year-End
Company Gross Reserves Values (1)
|
|
|
|
Before Income
Taxes Discounted at (% / year)
|
Reserves
Category
|
0% (M
US $)
|
5% (M
US $)
|
10% (M
US $)
|
15% (M
US $)
|
20% (M
US $)
|
Proved Developed
Producing
|
30,767
|
28,406
|
26,422
|
24,729
|
23,278
|
Proved Developed
Non-Producing
|
33,254
|
27,485
|
23,043
|
19,574
|
16,815
|
Proved
Undeveloped
|
12,498
|
9,093
|
6,673
|
4,924
|
3,641
|
Total
Proved
|
76,519
|
64,984
|
56,138
|
49,227
|
43,734
|
Probable
|
104,207
|
76,676
|
57,880
|
44,694
|
35,226
|
Total Proved plus
Probable
|
180,726
|
141,660
|
114,018
|
93,921
|
78,960
|
Note:
(1) The forecast prices used in the
calculations of the present value of future net revenue for
year-end 2018 are shown below.
Forecast Prices,
Cost Escalation Rates and Exchange Rates
|
|
|
|
|
|
|
|
|
Year
|
WTI
Reference
Price
|
AECO Gas
Price
|
Edmonton
Condensate
Price
|
Edmonton
Propane
Price
|
Edmonton
Butane
Price
|
Inflation
Rates
|
Exchange
Rate
|
|
(US $/bbl)
|
(CDN
$/MMBtu)
|
(CDN
$/bbl)
|
(CDN
$/bbl)
|
(CDN
$/bbl)
|
(%/year)
|
(US $/CDN
$)
|
Forecast
|
|
|
|
|
|
|
|
2019
|
58.58
|
1.88
|
70.10
|
26.13
|
27.32
|
2.0
|
0.757
|
2020
|
64.60
|
2.31
|
79.21
|
31.27
|
41.10
|
2.0
|
0.782
|
2021
|
68.20
|
2.74
|
83.33
|
34.58
|
49.28
|
2.0
|
0.797
|
2022
|
71.00
|
3.05
|
86.20
|
37.25
|
55.65
|
2.0
|
0.803
|
2023
|
72.81
|
3.21
|
88.16
|
38.73
|
57.92
|
2.0
|
0.807
|
2024
|
74.59
|
3.31
|
90.20
|
39.75
|
59.27
|
2.0
|
0.808
|
2025
|
76.42
|
3.39
|
92.43
|
40.76
|
60.77
|
2.0
|
0.808
|
2026
|
78.40
|
3.46
|
94.87
|
41.93
|
62.37
|
2.0
|
0.808
|
2027
|
79.98
|
3.54
|
96.80
|
42.84
|
63.65
|
2.0
|
0.808
|
2028
|
81.59
|
3.62
|
98.79
|
43.80
|
64.97
|
2.0
|
0.808
|
2029
|
83.22
|
3.70
|
100.76
|
44.73
|
66.26
|
2.0
|
0.808
|
2030
|
84.87
|
3.78
|
102.77
|
45.64
|
67.56
|
2.0
|
0.808
|
2031
|
86.57
|
3.85
|
104.84
|
46.56
|
68.92
|
2.0
|
0.808
|
2032
|
88.30
|
3.92
|
106.94
|
47.46
|
70.33
|
2.0
|
0.808
|
2033
|
90.08
|
4.00
|
109.10
|
48.44
|
71.72
|
2.0
|
0.808
|
2034 +
|
+2% / yr
|
+2% / yr
|
+2% / yr
|
+2% / yr
|
+2% / yr
|
2.0
|
0.808
|
Discussion of the D&M Reserves Report
On October 1, 2018, the Company
announced it had closed its acquisition of Carrao Energy S.A. from
Canacol Energy Ltd. as well as the asset purchase of a 50%
beneficial interest in the under-developed Tapir Block
(collectively, the "Colombian Assets"), and completed the
reverse takeover transaction with Arrow Exploration Ltd.
During the year ended December 31,
2018, the Company recorded increases in all categories of
reserves due primarily to the acquisition of the Colombian Assets.
Prior to acquiring the Colombian Assets, the Company's reserves
were located entirely in Canada in
the Fir and Pepper Montney Fields. The Company's Gross Proved and
Probable Reserves in these fields constituted approximately 12% of
the Company's Gross Proved and Probable Reserves at year-end 2018.
Subsequent to the acquisition of the Colombian Assets, Arrow
successfully drilled an exploration well, Danes-1, on the LLA-23
Block in the Llanos Basin in Colombia. The Danes-1 well resulted in
recognition of 376 Mbbl of Company Gross Proved Reserves and 509
Mbbl of Company Gross Proved plus Probable Reserves as discoveries
in the D&M Reserves Report.
Year-End 2018 Company Gross Reserves Reconciliation
A reconciliation of the Company's Gross Reserves volumes
according to reserve category as at December
31, 2018 compared to the Company's Gross Reserves volumes at
December 31, 2017 is provided in the
following table. Numbers in this table may not add exactly due to
rounding.
TOTAL
PROVED
|
Light/Medium
Crude Oil
(Mbbl)
|
Heavy Crude
Oil
(Mbbl)
|
Conventional
Natural Gas (MMcf)
|
NGL
(Mbbl)
|
Total Oil
Equivalent
(Mboe)
|
Opening Balance
(December 31, 2017)
|
16
|
-
|
5,371
|
125
|
1,036
|
Extensions
|
-
|
-
|
-
|
-
|
0
|
Improved
Recovery
|
-
|
-
|
-
|
-
|
0
|
Technical
Revisions
|
325
|
(6)
|
(7)
|
(38)
|
280
|
Discoveries
|
376
|
-
|
-
|
-
|
376
|
Acquisitions
|
1,468
|
2,160
|
-
|
-
|
3,628
|
Dispositions
|
(16)
|
(109)
|
(24)
|
(2)
|
(131)
|
Economic
Factors
|
(24)
|
-
|
-
|
-
|
(24)
|
Production
|
(109)
|
(39)
|
(275)
|
(2)
|
(196)
|
Closing Balance
(December 31, 2018)
|
2,036
|
2,006
|
5,065
|
83
|
4,969
|
|
|
|
|
|
|
TOTAL PROVED +
PROBABLE
|
Light/Med
Crude Oil
(Mbbl)
|
Heavy Crude
Oil
(Mbbl)
|
Conventional
Natural Gas (MMcf)
|
NGL
(Mbbl)
|
Total Oil
Equivalent
(Mboe)
|
Opening Balance
(December 31, 2017)
|
23
|
-
|
7,707
|
175
|
1,483
|
Extensions
|
-
|
-
|
-
|
-
|
0
|
Improved
Recovery
|
-
|
-
|
-
|
-
|
0
|
Technical
Revisions
|
(296)
|
136
|
(279)
|
(52)
|
(259)
|
Discoveries
|
509
|
-
|
|
|
509
|
Acquisitions
|
3,452
|
6,240
|
|
|
9,692
|
Dispositions
|
(23)
|
(578)
|
(35)
|
(3)
|
(610)
|
Economic
Factors
|
(45)
|
(6)
|
|
|
(51)
|
Production
|
(109)
|
(39)
|
(275)
|
(2)
|
(196)
|
Closing Balance
(December 31, 2018)
|
3,511
|
5,753
|
7,118
|
118
|
10,568
|
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 Colombian oil assets that are underexploited,
underexplored and may 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 and Putumayo Basin.
The Company's asset base is predominantly operated with high
working interests and typically realizes Brent-linked pricing
exposure. Arrow's management 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".
OIL AND GAS ADVISORIES
D&M Reserves Report
The D&M Reserves Report was prepared using guidelines
outlined in the COGE Handbook and in accordance with NI 51-101.
boe
A boe is determined by converting a volume of natural gas to
barrels using the ratio of 6 Mcf to one barrel. Boes may be
misleading, particularly if used in isolation. A boe 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. Further, a
conversion ratio of 6 Mcf:1 boe assumes that the gas is very dry
without significant natural gas liquids. Given that the value ratio
based on the current price of oil as compared to natural gas is
significantly different from the energy equivalency of 6:1,
utilizing a conversion on a 6:1 basis may be misleading as an
indication of value.
RESERVES DEFINITIONS
With respect to the reserves data contained herein, the
following terms have the meanings indicated:
"Company Gross Reserves" are the Company's working
interest (operating or non-operating) share before deduction of
royalties and without including any royalty interests of the
Company.
"developed" reserves are those reserves that are expected
to be recovered from existing wells and installed facilities or, if
facilities have not been installed, that would involve a low
expenditure (e.g. when compared to the cost of drilling a well) to
put the reserves on production.
"developed producing" reserves are those reserves that
are expected to be recovered from completion intervals open at the
time of the estimate. These reserves may be currently producing or,
if shut-in, they must have previously been on production, and the
date of resumption of production must be known with reasonable
certainty.
"developed non-producing" reserves are those reserves
that either have not been on production, or have previously been on
production, but are shut-in, and the date of resumption of
production is unknown.
"possible" reserves are those additional reserves that
are less certain to be recovered than probable reserves. It is
unlikely that the actual remaining quantities recovered will exceed
the sum of the estimated proved plus probable plus possible
reserves. There is a 10% probability that the quantities actually
recovered will equal or exceed the sum of the estimated proved plus
probable plus possible reserves.
"probable" reserves are those additional reserves that
are less certain to be recovered than proved reserves. It is
equally likely that the actual remaining quantities recovered will
be greater or less than the sum of the estimated proved plus
probable reserves.
"proved" reserves are those reserves that can be
estimated with a high degree of certainty to be recoverable. It is
likely that the actual remaining quantities recovered will exceed
the estimated proved reserves.
"reserves" are estimated remaining quantities of oil and
natural gas and related substances anticipated to be recoverable
from known accumulations, as of a given date, based on: (a)
analysis of drilling, geological, geophysical, and engineering
data; (b) the use of established technology; and (c) specified
economic conditions, which are generally accepted as being
reasonable and shall be disclosed. Reserves are classified
according to the degree of certainty associated with the
estimates.
"undeveloped" reserves are those reserves expected to be
recovered from known accumulations where a significant expenditure
(e.g., when compared to the cost of drilling a well) is required to
render them capable of production. They must fully meet the
requirements of the reserves category (proved, probable, possible)
to which they are assigned.
OTHER DEFINITIONS
bbl means barrel.
boe means barrel of oil equivalent.
boe/d means barrel of oil equivalent per day.
CDN $ means Canadian dollars.
Mbbl means thousand barrels.
Mboe means thousand barrels of oil equivalent.
Mcf means thousand cubic feet.
MMboe means million barrels of oil equivalent.
MMcf means million cubic feet.
MM US $ means million United States dollars.
M US $ means thousand United States dollars.
Reserve Life Index is calculated by dividing the
Company's Gross Reserves by working interest production for the
year, which, in 2018, is based on fourth quarter average working
interest production of 1,683 boe/d. This metric expresses how long
a company's reserves will last at the current production rate with
no additions to reserves.
US $ means United
States dollars.
FORWARD-LOOKING STATEMENTS
This press release contains certain forward-looking statements
within the meaning of applicable securities laws. Forward-looking
statements are frequently characterized by words such as "plan",
"expect", "project", "target", "intend", "believe", "anticipate",
"estimate" and other similar words, or statements that certain
events or conditions "may", "should" or "will" occur. In
particular, this press release contains forward-looking statements
pertaining to, among other things, the following: the timing of the
release, and filing (as applicable), of Arrow's Form 51-101F1,
comprehensive operational update and year-end financial statements;
Arrow's business plan; and Arrow's asset base and price
exposure.
Statements relating to "reserves" are also deemed to be
forward-looking statements, as they involve the implied assessment,
based on certain estimates and assumptions, that the reserves
described exist in the quantities predicted or estimated and that
the reserves can be profitably produced in the future. Actual
reserve values may be greater than or less than the estimates
provided herein.
All forward-looking statements are based on Arrow's beliefs and
assumptions based on information available at the time the
assumption was made. Arrow believes that the expectations reflected
in these forward-looking statements are reasonable but no assurance
can be given that these expectations will prove to be correct and
such forward-looking statements included in this press release
should not be unduly relied upon. By their nature, such
forward-looking statements are subject to a number of risks,
uncertainties and assumptions, which could cause actual results or
other expectations to differ materially from those anticipated,
expressed or implied by such statements, including those material
risks and assumptions discussed in the Company's Management's
Discussion and Analysis for the three months ended September 30, 2018, under the headings "Risks
and Uncertainties" and "Forward-Looking Statements". The
impact of any one risk, uncertainty or factor on a particular
forward-looking statement is not determinable with certainty as
these are interdependent and Arrow's future course of action
depends on management's assessment of all information available at
the relevant time.
Any "financial outlook" or "future oriented financial
information" in this press release, as defined by applicable
securities legislation has been approved by management of Arrow.
Such financial outlook or future oriented financial information is
provided for the purpose of providing information about
management's current expectations and plans relating to the future.
Readers are cautioned that reliance on such information may not be
appropriate for other purposes.
Additional information on these and other factors that could
affect Arrow's operations or financial results are included in
Arrow's reports on file with Canadian securities regulatory
authorities. Readers are cautioned not to place undue reliance on
this forward-looking information, which is given as of the date it
is expressed herein or otherwise. Arrow undertakes no obligation to
update publicly or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, unless
required to do so pursuant to applicable law. All subsequent
forward-looking statements, whether written or oral, attributable
to Arrow or persons acting on the Company's behalf are expressly
qualified in their entirety by these cautionary statements.
RESERVES AND DRILLING DATA
This press release contains oil and gas metrics that are
commonly used in the oil and gas industry such as "reserve life
index". These metrics have been prepared by management of the
Company and do not have standardized meanings or standardized
methods of calculation and therefore such measures may not be
comparable to similar measures presented by other companies and
should not be used to make comparisons. Such metrics have been
included herein to provide readers with additional measures to
evaluate the Company's performance; however, such measures are not
reliable indicators of the future performance of the Company, and
future performance may not compare to the performance in prior
periods and therefore such metrics should not be unduly relied
upon. The Company uses these oil and gas metrics for its own
performance measurements and to provide shareholders with measures
to compare the Company's operations over time. Readers are
cautioned that the information provided by these metrics, or that
can be derived from the metrics presented herein, should not be
relied upon for investment purposes.
There are numerous uncertainties inherent in estimating
quantities of crude oil, natural gas and NGL reserves and the
future cash flows attributed to such reserves. The reserves and
associated cash flow information set forth above are estimates
only. In general, estimates of economically recoverable crude oil,
natural gas and NGL reserves and the future net cash flows
therefrom are based upon a number of variable factors and
assumptions, such as historical production from the properties,
production rates, ultimate reserve recovery, timing and amount of
capital expenditures, marketability of oil and natural gas, royalty
rates, the assumed effects of regulation by governmental agencies
and future operating costs, all of which may vary materially. For
these reasons, estimates of the economically recoverable crude oil,
natural gas and NGL reserves attributable to any particular group
of properties, classification of such reserves based on risk of
recovery and estimates of future net revenues associated with
reserves prepared by different engineers, or by the same engineers
at different times, may vary. The Company's actual production,
revenues, taxes and development and operating expenditures with
respect to its reserves will vary from estimates thereof and such
variations could be material.
Individual properties may not reflect the same confidence level
as estimates of reserves for all properties due to the effects of
aggregation. This press release contains estimates of the net
present value of the Company's future net revenue from our
reserves. Such amounts do not represent the fair market value of
the Company's reserves. The recovery and reserve estimates of the
Company's reserves provided herein are estimates only and there is
no guarantee that the estimated reserves will be recovered.
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.
SOURCE ARROW Exploration Corp.