Arrow Exploration Share Discussion Threads

[mount teide] 15/3/2024 10:38

KS - 'how did you spot the opportunity at Arrow so early?'

As a New Issue on the LSE website.

Thought the value and low cost organic growth on offer was very interesting and not being recognised by the market......found immediately post the London IPO, AXL was a $20m market cap O&G company with $12.5m of cash, generating $10m of free cashflow a year, with a self financed low risk route to double production within 18 months.

Particularly liked the impressive industry track record/MO of the management in previously taking over a total of 8 small cap O&G companies and, growing them ALL into much more valuable businesses for subsequent trade sale........Place a very high investment weighting on this.

Prior to the London IPO, despite the impact of Covid, the management in less than 18 months after taking over had totally transformed Arrow Exp.......by wiping out the $12m of debt, generating 1,550 boed of high margin production and, providing an organic, low cost, low risk growth route to take production up to 3,000 boed within 18 months.

It was interesting to learn that although Arrow's highly prized Tapir Block was located in a prime location of Colombia's most important onshore O&G basin - The Llanos Basin - and that the operating license had previously been long held by Canacol Energy, a leading independent.......Canacol subsequently elected to focus entirely on Nat Gas E&P in-country and so never got around to properly exploring/developing the Tapir Black acreage in any meaningful way.

Thought this Investor Presentation Video of the Company, made at that time by the management, was both impressive and very useful - on recently reviewing, it certainly stands the test of time. The management then were very excited at drilling the CN prospect, which they considered the 'Jewel in the Crown' of the Tapir Block - some two years later they must be very pleased at how both the CN and Rio Bravo Exploration and Production/Infill drilling programmes have progressed.

Investor Meet The Company Video - 51m 13s long - Nov 2021


AIMHO/DYOR

[rockyride] 15/3/2024 10:08

It wont allow the text but basically the 3m sterling has to be even higher than that AND i think we are going to be in for very nice surprises when we see the 2023 finals in June and even nicer surprises when we see the 2024 interims a few months later.GLA

[rockyride] 15/3/2024 10:07

This bloody system keeps clipping my last sentence, so there is is again:-Now the market cap cant be wrong and if we are trading at

[rockyride] 15/3/2024 10:05

As you know I always see MA as a glass VERY half full and tents to be a lot more up-beat than the average CEO. however, I do feel that he is massively low-balling 2 numbers. Namely to only double production TY to 6.4k and the US$2.5m monthly cashflow number he regularly repeats. Based on recent interviews, here is my logic behind both:-Firstly, let's deal with the easy one. If we out-turned 2023 at 3.2k (and I suspect it was a decent chunk higher than this as he terms it as NORTH of 3.2k) we are shooting for 6.4k. We are drilling 15 wells, 3 of which are FC to give us net 3k. So even with 20% decline and another 12 wells to add in we simply have to smash 6.4k if we have an expected successful drilling program TY.Now for the $2.5m FCF pcm. MA is quoting us to be way below 2x multiple and is using the P/CF calculation. I'll keep this all in US$ until the end and use fx 1.27 throughout the calculations.With 286m shares at US$32.4c (25.5p) we have a market cap of US$92.7m and we have an annual FCF of $30m (12 x US2.5m)So US$92.7m / US$30m gives a multiple of 3.09.Now the market cap cant be wrong and if we are trading at

[rockyride] 15/3/2024 10:00

As you know I always see MA as a glass VERY half full and tents to be a lot more up-beat than the average CEO. however, I do feel that he is massively low-balling 2 numbers. Namely to only double production TY to 6.4k and the US$2.5m monthly cashflow number he regularly repeats. Based on recent interviews, here is my logic behind both:-Firstly, let's deal with the easy one. If we out-turned 2023 at 3.2k (and I suspect it was a decent chunk higher than this as he terms it as NORTH of 3.2k) we are shooting for 6.4k. We are drilling 15 wells, 3 of which are FC to give us net 3k. So even with 20% decline and another 12 wells to add in we simply have to smash 6.4k if we have an expected successful drilling program TY.Now for the $2.5m FCF pcm. MA is quoting us to be way below 2x multiple and is using the P/CF calculation. I'll keep this all in US$ until the end and use fx 1.27 throughout the calculations.With 286m shares at US$32.4c (25.5p) we have a market cap of US$92.7m and we have an annual FCF of $30m (12 x US2.5m)So US$92.7m / US$30m gives a multiple of 3.09.Now the market cap cant be wrong and if we are trading at

[here and there] 15/3/2024 08:52

'We have room for upwards of 10 horizontals just in this little portion of the block, and there are multiple other anomolies that provide scope and repeatability of the same kind of play throughout the Tapir block.'

The running room on just the Ubaque is huge.

[eaglehaslanded] 15/3/2024 08:47

We met with the new ANH President when we were in Bogota last month. This is the 3rd ANH President in the last two years.He is very supportive and said he would help us with the process. The ANH wants the process to move forward because the extension will create jobs for the community in the Oso Pardo area.The hold up continues to be ConocoPhillips. So far they have been unable/unwilling to write a letter stating that our shallow oil project will not interfere with their deep La Luna rights. ConocoPhillips has told us that they are waiting for the anti fracking legislation to be passed by congress so they can best understand their options in regards to their La Luna mineral rights.Our Director, who is a member of the Canacol executive team, seems to be making progress in his discussions with ConocoPhillips. Canacol is a partner with ConocoPhillips in the VMM2 block La Luna project.We are still expecting a positive conclusion to the process but can not confidently put a time line on receiving the extension approval.If news does come out of recent discussions we will let investors know.ThanksJoe

[king suarez] 15/3/2024 08:30

MA did say 'when' we get OP extension, not 'if' - which was quite bullish language - suggests discussions might have advanced?

MT - how did you spot the opportunity at Arrow so early?

[eaglehaslanded] 15/3/2024 08:24

M3I sent a question for Joe The IG interview was positive. Can't wait for the HZ wells to come online!

[moonshot3] 15/3/2024 08:14

Hi EagleIs Joe able to provide any up to date info on status of Oso Pardo extension application? What do the Authorities need from Arrow / other parties to grant the extension and is there a time limit in which the application must be approved? Feels like about 2 years since Arrow made the request?

[rockyride] 15/3/2024 08:04

QuoteWhen we look at forward looking cashflow multiples, we are trading at far less than 2 x cashflow, which in the context of my career is probably one of the lowest valuations I've ever had with the most success I've ever had. We think this is a very convenient entry point (26p) for individuals who are looking for a value play.

[mount teide] 15/3/2024 00:08

T11 - thanks. "CN may have upwards of 40m bbls of oil in place.....And the potential for at least 10 horizontal wells.........with an expected average drill/completion time of 21 days per well, net production of circa 1,000 bopd and, a payback time of less than 3 months (at $75 oil)."

RCK1 - Following the London IPO there was little interest here in the stock and, a volume seller about, willing to take between 7.0p and 7.5p/share, for up to a 250,000 transaction size....presumably, for a quick 15%-20% profit, assuming the stock had been acquired for 6.25p/share in the London IPO.

I built an initial 1.0m holding then at an average price of 7.1p in about 15 minutes without moving the share-price.

Such was the general lack of market interest in the stock, shortly after was able to add a second 1.0m at an average price of circa 7.6p. Averaged up significantly for the next 2.0m, which were bought at various intervals over the following 18 months as the investment case/value continued to strengthen, at prices between 9.0p and 18.5p.

Capital Growth to date: £563k
+243% - First 2.0m
+66% - Second 2.0m

[pogue] 14/3/2024 22:01

Lol yes I managed to get 2 in, the waiter knows me well now lol

[king suarez] 14/3/2024 21:49

Not Arrow paying for the drinks! It's Proactive..

[rockyride] 14/3/2024 21:47

Looking after the pennies to drill more HZ wells mate.

[king suarez] 14/3/2024 21:29

Hi pogue - no, decided to give it a miss this time as had no pressing questions to ask and having met MA last time felt I got a good meausre of the guy in person, which was one of the reasons for going. Will likely go to the next one though as could be a very different company/proposition by then!

Hope you managed to get nab a few drinks yourself?! The cheek of them rationing the free drinks ;)

[royalalbert] 14/3/2024 21:24

Pogue "big crowd" bodes well I assume.

[pogue] 14/3/2024 21:17

Good presentation very positive nothing that isn't really known I feel. Only got a few words after with him as he had to go sadly, not sure the presentation is going to come out well as he was very soft spoken very hard to hear.
KS I was looking for u take it u didn't make it was a big crowd they rationed the drinks!!!

Edit
Was asked how to improve Investor Comms said more Q&A after shorter online presentations.

[rckillco1] 14/3/2024 21:12

Marshall sure does a great interview. I remember the first interview I watched and after some dd was buying on the TSX back when it was trading with such low volume it took me 30 buys to secure a comfortable position without moving the needle. There were days the MM and I were shaving fractions for just 15-20k trades and that was it for the day. 2024-25 are shaping up to be very profitable.

[dcarn] 14/3/2024 20:52

So 51 days to get the first horizontal on stream, around about 4th May.

[thomas11] 14/3/2024 20:35

An IG interview with MA

[rockyride] 14/3/2024 19:10

I did a few a few years ago when people like James Parsons, David Lenigas and Neil Ritson were on the scene. They are worth going to if you end up getting 1 to 1 time with any of the directors if they turn out to be 'chatty!'

[king suarez] 14/3/2024 18:51

It's a presentation in front of a room of investors - with a short Q&A aftewards - then hopefully the presenters stay behind after to answer questions 'off the cuff' to investors (that bit is not filmed!). Same event I went to last year and spoke to MA at.

[eaglehaslanded] 14/3/2024 18:15

Thanks RR, one to one

[rockyride] 14/3/2024 18:14

https://www.proactiveinvestors.co.uk/events