“The offering was very well received, and we had participation from institutional and high net worth investors alike,” said Max Satel, EVP Corporate Development & Investor Relations at Arrow Exploration
Proactive caught up with Max Satel, EVP Corporate Development & Investor Relations at Arrow Exploration to find out how the past few months have gone for the company.
Proactive: A big event for Arrow this second half of 2021 has been its AIM listing. How has that gone?
Max Satel: Yes, the AIM listing was an important catalyst for the company. We completed the listing on October 25th of this year, we closed and became listed on the AIM under the symbol AXL, which is the same as our TSX-V symbol. And we raised gross proceeds of US12.1 million which will be applied towards our drilling program in Colombia beginning in the first quarter of 2022.
The offering was very well received, and we had participation from institutional and high net worth investors alike. It was a broadly subscribed order book for the financing and the placing was actually done at 6.25p per share and we’re trading at approximately 7.50p today, give or take, so we’re well above the offering price. The stock has performed nicely, so we’re very pleased.
Has the company’s performance continued to plan?
It has. When we set up the path during the placing and listing process, we envisioned that the next well in the company’s inventory, the West Pepper well would be tied in and on stream in December. We still expect that to happen this month. In fact, we expect to make an announcement in the coming week on that. So we’ll be glad to see that on production. And that will significantly increase our production base from approximately 550 boe (barrels of oil equivalent) per day currently. It has the potential to approximately triple our existing production in the near term.
With respect to Columbia, we have a well inventory that we’re going to pursue and will be drilling a number of wells in 2022, beginning with the RCE 2 (Rio Cravo Este 2) well on the Tapir block in the first quarter of next year. So the performance is on track.
How has the strong oil price impacted the company?
Like many of our peers, or competitors, we’ve continued to benefit from the strong Brent crude pricing, the recent modest pullback notwithstanding. But the oil price still remains at a significantly higher level than it was, pre- and during the worst of the pandemic, so we’ve continued to enjoy strong cash flow from our production in Colombia as a result of the strong Brent oil price. In Colombia, we receive Brent minus the best Vasconia discount, which is currently about $3 to $4 a barrel, which is entirely manageable. So we’ve had the benefit of continued strong Brent pricing throughout, and we continue to enjoy that. Overall, the near-to-medium-term outlook for the oil price remains robust.
So what should investors expect in the near term?
As I mentioned, there are several near-term catalysts. One would be the tie-in of the West Pepper gas well in Western Canada which will add significant production and cash flow as well. The drilling of the RCE 2 well on the Tapir block in the first quarter, and the drilling of the RCE 3 well also in the first half of next year, with the exact timing to be determined. We are also continuing to work on the previously announced dispossession of our 10% working interest in the Ombu block (Capella heavy oil field), which is non-core. And we hope to be able to make an announcement on that in the near future but we don’t have an exact date for that.
We continue to operate very efficiently in Colombia. And concurrent with the placing and London listing process, we also addressed approximately half of the debt that we had outstanding with Canacol, so that we only have approximately US$3.1 million of debt left on that promissory note to Canacol and we have flexibility on repayment. One-half of that is due by the end of December 2022, and the balance will be due by the end of June 2023. So we’ve gone quite a long way to deal with that and we feel like we have the cash flow and the balance sheet flexibility to address that debt. So that move has strengthened our balance sheet.
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