Proven Operator Arrow Exploration Geared to Unlock High-Value Oil in Colombia’s Llanos Basin

• Arrow Exploration is an active oil and gas explorer/producer in the Llanos Basin in Colombia
• They doubled 2023 production to 3,280 barrels per day and plan to double again in 2024
• Drilled 11 successful wells out of 11 attempts in the Llanos Basin last year
• Have a $45 million capital budget to drill 15 wells in 2024, focused on development
• Plan to add horizontal wells that can produce over 1,000 barrels per day

Arrow Exploration Ramping Up Colombia Production

Arrow Exploration is an oil and gas company focused on the prolific Llanos Basin in Colombia. With oil prices rebounding and undersupply predicted, Arrow offers leverage to higher prices and expanding production.

"We have doubled production from the beginning of last year to now and we feel we're on a path to double production again by the end of 2024," stated Arrow CEO Marshall Abbott. After exiting 2023 with 3,280 barrels of oil equivalent per day production, the company plans to replicate its success.

Arrow holds a 50% interest in the Llanos Block, operated in partnership with local company Petrol Co. The region contains "amazing hydrocarbon density" with stacked reservoirs down to 10,000 feet, according to Abbott. Arrow sells its oil at the wellhead, avoiding transport risk, and benefits from a 12% average royalty rate.

Interview with Chief Executive Officer, Marshall Abbott

Prolific Drilling Success

The company drilled 11 successful wells in the Llanos Basin in 2023, establishing reliable production and cash flow. "We intended to end the year at 18 million cash," Abbott said. "I think the latest estimate is we were around 15 million."

The quick drilling tempo will continue, with a $45 million budget funding 15 wells in 2024. Abbott emphasized pursuing lower-risk development wells but noted "We do have a couple of exciting exploration prospects that will pursue towards the end of the year."

Horizontal Wells Unlock Higher Production

Most impactfully, Arrow will add horizontal drilling, with over 1,000 barrels per day predicted per well. Abbott brings horizontal experience from Canada and beyond. "The technology is fabulous and geo-steering is a fun part of the game," he remarked.

The company's land position resides in a hydrocarbon "sweet spot" of the Llanos Basin. An extensive 3D seismic program further de-risks drilling locations by pinpointing structures with an 80% chance of being oil-filled.

Financial Position

Arrow exited 2023 with approximately $15 million in cash and no debt. The 2024 drilling campaign is expected to self-fund through operating cash flows projected at $2.5-3 million per month. "From a financial perspective we're very healthy," Abbott said. Arrow aims to conclude 2024 with over $15 million in cash.

Compelling Valuation

Trading at only 2x cash flow, Arrow remains undervalued relative to production and reserves. Once horizontal wells come online, catalyzing rapid output gains, the market should re-rate shares higher. "We're certainly going to enjoy production out of the two reservoirs in a vertical sense and then at the end of the first quarter we're going to see production impact from these horizontal wells that are going to be quite material," explained Abbott.

Investment Thesis for Arrow Exploration

• Oil prices seen strengthening as global investment declines - Arrow leveraged to higher prices
• Track record of consistent execution de-risking outlook
• Trading at a discounted valuation of 2x cash flow
• Near-term doubling of production growth
• Horizontal wells adding material volumes during 2024
• Funded growth plan with no debt and cash accumulation

With oil supply tightness foreseen amid disciplined investment, Arrow Exploration provides leveraged exposure to rising prices. The company exhibits consistent operational delivery that establishes confidence for achieving aggressive production growth. Trading at favorable valuations, Arrow progress in unlocking the potential of Colombia's Llanos Basin warrants investor attention.