Arrow Exploration Corp. (C1JT.F) Earnings Call Transcript & Summary

As this meeting is held virtually via live audiocast, we note the following procedures for the orderly conduct of the meeting. One, questions in respect of a motion can be submitted by any registered shareholder or duly appointed proxy holder using the instant messaging service of the virtual interface for the audio cast. Please note that there will be a slight delay in [Audio Gap] formal portion of this meeting. Two, when asking a question regarding a motion, please indicate your name, which entity you represent, if any, and confirm that you are a registered shareholder or duly appointed proxy holder. Three, questions will generally appear shortly after they are submitted, but will only be addressed during the question period at the end of the meeting. Although questions regarding procedural matters or directly related to the motion before the meeting may be addressed during the meeting. Four, for those attending the meeting by virtual audio cast, voting [Audio Gap].

I direct that the proof of mailing of the notice and other documents sent to shareholders as well as proof of filing of the notice be kept with the minutes of this meeting. The Secretary has confirmed that a quorum of shareholders is present, either represented in person or by proxy. I now declare this meeting to be duly called and properly constituted for the transaction of business. The first item of business is to receive the audited consolidated financial statements of the corporation for the year ended December 31, 2024, which have been approved by the Board of Directors and together with the auditor's report thereon, have been sent to the registered shareholders and supplemental mailing list, and it is not proposed to read them to the meeting, which is good because they're very long. Additional copies of the financial statements are available upon request or can be accessed online in the company's portal. No action is required to be taken by the shareholders on these financial statements. I now declare that the audited consolidated financial statements of Arrow Exploration Corp. For the final -- for the fiscal year ended December 31, 2024, and the auditor's report thereon, have been received by the shareholders as submitted to this meeting. The second item of business is to approve and adopt an ordinary resolution to fix the number of directors to be elected at the meeting at 5 members. I will now ask someone to make a motion in this regard.

Mr. Chairman, I so move.

Thank you, Joe.

I second the motion.

Thank you, Marshall. Is there any discussion of the motion? Hearing no further discussion -- hearing no discussion at all, I will move to the next item of business, election of directors. It is now in order to proceed with the election of directors. In accordance with our articles and bylaws, the Board of Directors has determined that the Board shall consist of 5 members this year. The names of those persons have been -- who have been nominated for election as Directors of Arrow Exploration Corporation until the next date -- sorry until the date of the next Annual Meeting of Shareholders or until their successors are elected or appointed or myself, Gage Jull, G. Marshall Abbott, Grant M. Carnie, Ian Langley and Ravi Sharma. I will now entertain a motion nominating these persons as directors of the corporation for the ensuing year.

I move that G. Marshall Abbott, Grant M. Carnie, Gage Jull, Ian Langley, Ravi Sharma, be elected as directors of the corporation to hold our office until the close of business of the next Annual Meeting of Shareholders or until their successors are duly elected or appointed.

Thank you, Joe.

Mr. Chairman, I second the motion.

Thank you, Marshall. As voting on the election of nominees will occur together with other matters, I will now move on to the next item of business, appointment of auditors. The next item of business is the appointment of auditors. May I now have a motion to appoint Ernst & Young LLP as auditor of the corporation until the close of the next Annual Meeting of Shareholders as such remuneration as may be fixed by the Board of Directors and that the directors be and are hereby authorized to fix such remuneration.

Mr. Chairman, I so move.

Thank you, Joe.

I second the motion.

Thank you, Marshall. Is there any discussion of the motion? Hearing no discussion, I will move on to the next item of business. The next item of business is the approval of an ordinary resolution approving the corporation's amended and restated stock option plan. Shareholders are asked to consider and if thought fit, to approve with or without variation an ordinary resolution approving the corporation's amended and restated stock option plan. The full text of the resolution is set out on Page 14 of the corporation's Management Information Circular. May I now have a motion to approve the corporation's amended and restated stock option plan as set out on Page 14 of the corporation's Management Information Circular.

Mr. Chairman, I so move.

Thank you, Joe.

I second the motion.

Thank you, Marshall. Is there any discussion of the motion? Hearing no discussion, we will now move on to vote on the matters today. As mentioned earlier, voting for all matters before the meeting today will be conducted by ballot. I will now take a moment to ask the balloting be opened to registered shareholders and appointed proxy holders. I will once again ask to the operator to provide instructions on voting through the electronic platform.

The polls are now open, and at this point, our registered shareholders and duly appointed proxy holders attending by virtual audio cast who have properly logged in with their control numbers or user names and which the vote will be able to see on the screen, all motions being brought forth at this meeting. Please register your votes by accessing the Voting tab and selecting your voting direction from the options shown. We will provide registered shareholders and duly appointed proxy holders approximately 1 more minute to complete the ballots. Once the electronic balloting closes, the voting page will disappear and your votes will be automatically submitted. [Voting]

I would ask the scrutineers complete the report regarding the results of voting on all business matters.

I've been advised by the scrutineers that the ballots and proxies deposited for the meeting have been voted in favor of all resolutions. One, the number of directors to be elected at this meeting was 6 to 5. Two, each of the 5 nominees has been elected as directors of the company and all nominees received more than -- more [ four ] votes than [ withold ]votes. Three, the appointment of Ernst & Young LLP as auditors of the company has been approved; and four, Arrow's amended and restated option plan has been approved. Therefore -- I therefore declare that all motions have been carried and direct that the results of the poll be included with the minutes of the meeting. The formal items of business as set out in the notice of meeting have now been dealt with. As there is no further business to come before the meeting, I declare the formal part of the meeting to be concluded. Thank you for attending. I will now turn the meeting over to Mr. Abbott to provide a presentation regarding Arrow's business and answer any questions you may have. [Operator Instructions] Take it away, Marshall.

Okay. So thank you for attending, everybody. I will place you through the value proposition that we have at Arrow Exploration. So who we are? So we've had 3 material discoveries since we started this company 4 years ago, and that is spa 39 development wells, which is an indicator of the value that we've added to the company by drilling in the Llanos Basin in Colombia. We've also shown 3 large 3D seismic projects over 200 square kilometers of seismic has been acquired. We are developers, 39 wells drilled, 37 kilometers of road built, 5 well pads. Each well pad can handle up to 10 individual wells. We drilled 14 wells in 2024, which is one of the more active operators in Colombia. We're multi-zone exploiters. We drill down to 10,000 feet in the space of about 10 days, and we can intercept 5 separate Hydrocarbon bearing zones with multiple bypass pay opportunities. And we'll get into that in a minute on the technical detail. We're socially responsible. We have a very sound ESG platform. We operate to a Canadian standard, always have. We've employed over 5,000 people from Colombia and local communities, and we have multiple environmental initiatives and of course, a big focus on HS&E. So in 2020, the new management team took over. We listed on the AIM exchange in 2021, USD 15 million was raised at that time. We enjoyed Exploration success at the RCE platform, and we've been actively developing that platform ever since. In 2023, we showed a very large 3D seismic program on the West Tapir block, which I'll show you a map up in a second. We also enjoyed a very significant material discovery at the Carrizales Norte pool. In 2024, we started drilling our first horizontals at Carrizales Norte. These are some of the more successful horizontal wells in the basin. We also added a material discovery at the Alberta Llanos -- Llanos prospect. And then in 2025, we showed another 3D seismic program on the Southeast Tapir block, which I'll show you in a second. We hope to have 3 to 4 wells drilled by the end of the year. The first well, Mateguafa Oeste, we should have total depth reached by Friday of this week with indicator of logs that will represent every horizon we've intercepted. So here's a snapshot of the share price and the ups and downs. All our initial investors are still in the money, and we look forward to better results as we proceed through the year. We have institutional representation of 33% retail of about 20%, high net worth individuals, just under 20% and Askar Alshinbayev owns 16.8%. And just for context, Arrow was a spin-off of the oil asset of Canacol. Canacol retained a 20% interest and ultimately sold that to Askar Alshinbayev. Today, we have a market cap of about USD 70 million. Our core NAV is about USD 1 per share. Joe is sitting on about $13 million of cash, 4,800 barrels a day, plus or minus. Our netbacks at today's price are about $33 a barrel, which really underlies the fiscal regime that we enjoy in Colombia, where our royalties are between 8% and 12%. And we trade at less than 1x cash flow, which in my career is the lowest cash flow multiple on a well -- on a company that is this healthy. We have no debt, $13 million in the bank, and we're cash flowing $2 million to $3 million a month. This is a comparison of other Latin American competitors. So by any measure, we are the cheapest on the board, and we aim to change that with results and aggressive marketing. So we spent the last 2 weeks effectively in Europe and the U.K., and we look to expand that in Canada and the United States as we progress through the year. From a reserve addition perspective, we've had good results year-on-year. We expect to have that this year as well. We'll report on that probably more in the end of the fourth -- first quarter, pardon me. So what have we got planned for this year? We've got high-growth development plan funded through cash balance and operations cash flow. We drilled the step-out well at the Alberta Llanos prospect. We drilled 2 horizontal wells at Carrizales Norte, another vertical well at Carrizales Norte. We signed with our 50% partner contract operating agreement with Ecopetrol. We have -- we had a new rig commissioned. So we had an initial rig that drilled 17 wells for us. We have since excused them and brought in a more modern rig, pardon me. We've built the Mateguafa Oeste road and pad. We've also enjoyed the study of the Mateguafa Oeste pad and the first well and the Carrizales Norte horizontal development continues. $14 million is spent on seismic roads and pads for future development. $10 million is being spent to keep production flat through 2024. And $26 million is being spent on growth and exploration opportunities. We've executed to date 10 wells drilled and put on production, the seismic acquisition in the South Tapir block, road and pad development is ongoing, the operator contract signed with our 50% partner, Petrolco in efforts to get Ecopetrol Recognition. We drilled 2 water injector conversions. We have one successful recompletion at Alberta Llanos 3. For the remainder of the year, we're looking to have 3 potentially 4 wells drilled, Mateguafa Attic, Mateguafa Oeste and follow-up wells with progress at Icaco and the South Tapir. Further horizontal and vertical development at Alberta, CN and RCE are planned for the year as well. Here's a snapshot of the production profile that we've enjoyed as a company. Peaking at about 5,000 barrel a day. Today, we're about 4,800 barrels a day, and we've done that without having any debt. And today, we have no debt, and we intend to continue that profile with protecting our balance sheet. So part of the production profile that we enjoy drilling horizontal wells, specifically at Carrizales Norte is really depicted by this slide. So we got very high production rates initially upwards of 3,000 barrels a day on any given horizontal well. And then we have about 80% decline in the first year. And then after that, it declines at approximately 15% to 20% for the life of the well. And these wells will still be producing in 25 years. So that has provided us with the foundation of cash flow and production that we intend to build upon. And to give you a sense for the economics on drilling horizontal wells into the Carrizales Norte formation, we get 500% rates of return on the bulk of the wells. So the best well came on at 3,200 barrels a day. That's going to ultimately produce about 1 million barrels. So it gives you a sense of the value proposition that we have. And what we're going to really display now is the scope and repeatability of what we've had success on in the last 3 or 4 years. You can see 2 of the poorest performing wells are still on their way to cumulative production of 100,000 barrels, and they will also pay out over the course of time. Our best well actually paid out in 37 days. So we'll give you a sense of what we're pursuing in the Llanos Basin. But before we do that, Joe McFarlane is going to lead you through the Tapir contract.

So the Tapir contract is a contract we have with Ecopetrol. It is -- it expires in February 2028. Embedded in the contract are 2 5-year extension terms. We're currently working with Ecopetrol right now to get those extension terms required in the contract is the block must be producing, is producing. We must have met all of our commitments. We have met all our commitments, and we must be working with the communities, and we're definitely doing that. Marshall will go into that and like that a little bit later. So we feel very, very strongly that we will get these extensions. It is working with a government organization. So it will take time. But when we have further indications, we'll definitely release that to public.

Thanks, Joe. Here's a snapshot of the Llanos Basin in Colombia. Llanos produces about 600,000 barrels a day. Surprisingly, there's a series of Canadian companies that produce about 50,000 barrels a day. So it's very hydrocarbon dense, excellent prospectivity and underdrilled as well, there's not much 3D seismic shot on the Llanos Basin as a whole. So 3D is really the key to the animals. What you can see in the trends of some of these pools and blocks is that we're up against faults that were created by Plate tectonics. We're up against the fault, you get 3-way closure and that 3-way closure typically will be filled with oil 80% of the time. So most of these blocks have a single fault system that course through their property. Our block, which is 102 square miles is at right angles to that prevailing trend, and we intercept 6 separate fault blocks. We've exploited 2. We're on our way to exploiting 3. So that gives you a sense of the prospectivity and the value proposition that we have here. So once again, we're going to display scope and repeatability and the success we've had to date. Here's a cartoon of the block that we have. Of course, it's shaped like a Canadian hockey stick. But this shows you where we shot 3D on the Northern Tapir block and on the Southern Tapir block over here. Our initial discovery at Rio Cravo Este, our subsequent discovery at Carrizales Norte and at the Alberta Llanos. And we are exploring now up against these faults. We have 3-way closure at Mateguafa Oeste. We'll have results towards the end of the week. Mateguafa Attic will talk about each one of these in isolation in detail. But it gives you a sense for the number of faults that we have coursing through the property that need to be explored. And at the southern block, we have a very large prospect up against the fault, 3-way closure, scope and repeatability. So that 3D seismic program really is worth its way to gold. So one of the things you have to deal with in the Tapir or pardon me, in the Llanos Basin is water production. Water is both your enemy and your friend. So the water production profile in Llanos is really an indicator of the strength of the aquifer that is the pressure support mechanism for the formation that we produce oil out of. So we have today capacity to put away 110,000 barrels of water a day. Today, we're doing about 60,000 barrels a day. But the value that is added by the strength of that aquifer is you have increased recovery of your oil in place upwards of 35% to 40% of original oil in place is recovered. Typically, in reservoirs that we are using, you get 10% to 15% of original oil in place with solution gas right. So that aquifer is really the driver for the production profile that we enjoy. So let's talk about these prospects in isolation. So here we go, scope and repeatability here is the fault, 3-way closure up against the fault. That is the Mateguafa Oeste prospect that is today at about 5,000 feet. We expect to be at 10,000 feet by Friday. We'll then move over to the Capullo Prospect, which once again, up against the fault, 3-way closure up against that fault, very high chance of success on these wells being successful. This is the Mateguafa Attic's Prospect. Once again, we've got that fault closure, 3-way closure up against the fault. And that well will be drilled after we drill Mateguafa Oeste. Interestingly, 2 wells that were drilled in the 1990s produced about 600,000 barrels between them. So we know we've got well presence in the reservoir. We're gaining quite a bit of structure over those 2 wells, and this is a very low-risk exploration. The Icaco prospect, just for an indicator at the south end of the block on the seismic that we just shot has the same character to it, scope and repeatability up against the fault, 3-way closure, significant amount it really looks [indiscernible]fault extent. And this is the seismic section that we see. This is the reservoir that we can actually image directly in white. You can see it's quite a broad plateau. So we're pretty excited in getting the Icaco drilled. We hope to have this drilled by year-end, but at least in the first quarter. So it gives you a sense of the prospectivity we have in Llanos, and we're a long ways from being completed on this effort. Here's a sense of the terrain that we're dealing with. So we're in the plains of Colombia in the Llanos Basin, primarily large, large ranches. And this is an indicator of the business that we have in each one of our pads. So there's a drilling operation and then a production operation at the north end of that pad and then water disposal at the south end. We have trucks, probably 20 trucks a day delivering oil. And then we have a 100 band camp that houses about 110 people as well as feed from. The Llanos discovery, again, is an indicator of a fault bounded closure, 3-way closure up against the fault. The initial discovery was very exciting for the company. We intersected 6 -- pardon me, 5 hydrocarbon-bearing zones down to 10,000 feet to get a sense for the structure on the seismic. So we have the fault as indicated, this large hump, and we drill as close as we can to that fault and 80% is done, it will be oil-bearing, pretty straightforward. Here's the Carrizales Norte pad. You get a better sense of the business that we have on this pad with the road that we constructed to get there. So road and pad construction are best done outside of the rainy season, and we've been pretty good at doing that. We make these pads and roads weatherproof through the balance of the year. So we've never really had a material result on road closures or weather closures in the Llanos Basin. Here's the depiction of the well -- horizontal well program that we pursued at Carrizales Norte. So we've drilled upwards of 11 horizontal wells into their formation. This cartoon shows you the well path and trajectory staying in zone 100% of the time using the latest and greatest in sensory technology. We can actually see in front of the bit upwards of 60 inches, which really guides you to staying in the zone. You don't want to pop out of the zone. So we've been very efficient. These wells originally were AFE at about 6 million days -- $6 million, pardon me. We have that down to about $4.2 million. So not only are we one of the more active operators with horizontal wells, we're one of the cheapest operators in the United States. Now this is Carrizales Norte as well showing a different horizon and showing the development potential that we have in the scope and repeatability. So up against that fault, again, on a much shallower horizon, we have 3-way closure. We have 13 wells that we can drill from a development perspective to pursue the C7 reservoir that is much shallower. It's lighter crude, and it comes on anywhere between 400 and 600 barrels a day, but still very economic. So we have quite a bit of drilling potential in our portfolio that will take another 2.5 years to pursue. The RCE field was our first discovery. You get a sense for the terrain here. We're close to the Rio Cravo River. And again, we've got a pad development where the sellers are, where we drill those wells. We've got water disposal and water -- pardon me, oil storage and very active on a daily basis. So we've drilled most of the wells at RCE from a single pad, upwards of 11 wells from a single pad, pursuing the C7 reservoir. These are very successful wells. And once again, we've got that fault, 3-way closure up against the fault. You can see the northern lobe of that reservoir has not been exploited by us, and that just adds additional development potential on the C7 reservoir at RCE. We have significant secondary zones available to us at RCE as well that we'll pursue probably towards the end of next year. Joe is going to walk you back now to the Buy Back Program.

Sure. We've filed for a share Buy Back Program. It's been approved by both the TSX and the London Stock Exchange. We can buy back up to 14.3 million shares in the next 12 months. We have not initiated that at this time. We still feel that we can drill and get production per share and reserves per share cheaper by drilling than by buying back our own shares right now. And we are focused on growth of the company. The Prepayment Facility, Marshall mentioned, we have a $20 million Prepayment Facility with [ BP ]-- we can use that for really anything. However, it's our focus to use that for potential acquisitions. It's really just dry powder, so we can act very, very quickly on acquisitions that we come across that we think are accretive to shareholders. We have 0 drawn down on that facility right now, and it's just being held in reserve. The other side of it is BP is buying our production from us. We're very happy to have BP as a partner. They're offering us great market prices. They're picking up our oil right at our tanks and using their trucks to bring their oil down to pipelines and their own mixing facilities and then onwards into tankers and on to refineries around the world. So BP has been a great partner so far. We feel we have very low credit risk with BP. They're paying us at the beginning of the month and halfway through the month for the upcoming production. So we're getting paid ahead of producing the oil. So really 0 credit risk in our mind.

Thanks, Joe. So from a near-term catalyst perspective, again, scope and repeatability is our mantra in the Llanos Basin. So the 2025 plan that we've executed, the 3D seismic in South Tapir, the RCE development, Alberta Llanos development, Carrizales Norte horizontal development, the Mateguafa Oeste well that is currently drilling, Mateguafa Attic, very low risk, the Icaco well, again. And we're also looking at opportunities in the basin as a whole. Some of these companies are decanting assets that they can't really produce economically. We're much more nimble and efficient. So we are looking at multiple opportunities in the Llanos Basin. We have 3 major discoveries to date at RCE, CN and Alberta Llanos that spawn 39 development wells. We've got a fully financed CapEx program for the balance of the year with a strong balance sheet that we will protect experienced team. We have 10 people in Calgary, 40 people in Bogota, and they're all engaged. Our near-term exploration prospects at Oeste, at Attic, Icaco and Capullo really represent significant value growth through the balance of the year, and we're looking forward to very profitable 2026. So thank you for your time. We look forward to any questions.

No questions online at this time.

Just a small question. I mean this is a wonderful story. You seem to be doing everything right, and you're generating quite a bit of money. But why the stock is trading at 50% what it was trading a year ago?

I think there's a few answers to that question. One is the decline profile of the oil wells. So the initial decline of 80% it's very, very difficult to overcome in the initial stages. But I think we've mastered that by volume additions with number of wells. Secondly, I think it's a contract extension that is scaring some investors. We've got 2 years really to get that extension in place. And believe me, we're working on it as hard as we possibly can. Ecopetrol really recognizes us as one of the more active operators on the Llanos Basin. Collectively with our partner, we've spent $100 million in the basin. So that is being recognized by Ecopetrol, and we look forward to getting this extension of product. And we think that's the biggest burden on the share price.

The other answer might be actual oil price of Brent itself, which last year at this time, we were looking at $80. Today, we're looking at $65. If you look at a lot of small caps similar to us, they've experienced a similar profile with their share price.

But the typical stock should trade 3, 4x cash flow. And that put through like $0.80, $0.40 I don't know brokers are sleeping or I don't know what the problem is.

Well, it's a great buying opportunity. There's no doubt we've got forecast.

Okay, I thought.

Well, we own some too, all 3 of us are investors in this.

I mean you talk to any broker, major brokers tell them that a typical stock should trade 4x or 3.5x cash flow. And you have no debt. So when you do the multiplication, it should be like 5x. And if you add $0.07, is it USD 0.07 per share that you have in cash?

That's CAD 0.10...

And trading at $0.25, that is 40% anyway.

We're working hard to getting the story out for sure, that will continue. There's really 2 phases to operating a company like this. There's one, the operational technical side, which we have to stay on top of. We're good at that. And there's the marketing side. And we've been quiet for a little while, but for the last 2 weeks, we put on the air miles and we're getting the story out there. And I think once we demonstrate production and getting this extension granted, we're going to enjoy multiple expansion.

So do you get a Brent price or WTI?

No, we are -- our prices benchmarked at Brent. Less the Vasconia differential. It's a quality differential for a location actually in Colombia. Right now, it's about $1.85. It has been as wide as $5 this year. We've also seen it as narrow as $1 this year. And then also less a logistics fee. The logistics fee is really the cost of BP bringing their trucks to our facility and then a slight quality difference as well. So we are priced off to Brent at a $65 Brent price. Our netbacks are in that $35 area. So very, very healthy netbacks still.

Is it USD 32, the netback?

You're correct. All our numbers U.S.

yes,[indiscernible] is that differential U.S.

Canadian.

Yes. What's a good story. I just don't see. Why is this $0.26, I think, today. Again, it is -- you're right, small company people in Colombia.

Well, we view the aboveground risk as being quite minimal. In fact, the left government to a large degree has left the oil business alone, and that's been a good thing. I think they recognize it's the cash register for the company

You were trading at $0.60 at one point...

Close 55, okay.

Yes. Colombia is going through a new presidential election, I believe, in May or August elections in May. So right now, in the polls, conservative or right leading side is leading, and they're usually a little bit more business friendly, reducing taxes, trying to get investments in the country. So we'll see what happens over the next 6, 8 months in Colombia.

Well, Guyana, the country next door to you is their production keeps going up and Exxon is pumping more money in it. So I mean, is it pretty much the same kind of deposit -- oil deposit environment.

It's a little different.

Oh it's different?

Yes. So it's going to be Exxon's #1 money generator. And those wells are drilled at 20,000 feet, super high pressure, super high temperature. They're turbidite deposits, but those wells individually can come on at 200,000 to 500,000 barrels a day each. So yes, it's an entirely different regime from a geological perspective.

I think the oil -- offshore oil drill cost $100,000, $200,000 a day.

I am sorry.

A single well, that will be.

Yes, okay.

Yes, $100 million. Yes, those are $100 million wells plus.

Okay. Just kidding.

Well, a competitor of ours drilled 2 wells into that same regime and came up with none. So it's definitely risky. But Exxon did a wonderful job in discovering that. And now it's up and down that whole coast of South America, it's the same play that is being pursued offshore. So it's for the big boys. It's not something that we don't pursue. But your point is well taken. I mean, we actually view it as an opportunity because many of our competitors have taken their eye off the Colombian ball, if you will, soccer ball, if you will. And they've focused on -- they're focusing on other places. They're trying to get into Africa. They're trying to go heavily into Argentina, for example. And we view that as an opportunity for us because as Marshall has indicated, some of them are starting to decant some of their even producing assets within Colombia because they're sort of -- their attitude is that these are too small, they're going after bigger opportunities. And we think that, that's an opportunity for us to step forward. As Marshall also indicated, we're one of the few companies that's investing in drilling wells, and it's not gone unnoticed by Ecopetrol and the ANH in Colombia. So all of those are, in our view, good -- and the [ left discover ] has been relatively benign.

It is hard to invest in a company with high risk, high reward. It is not for the average investor like me. What you are doing is bread and butter more than anything else.

Absolutely.

And it doesn't cost too much to drill the well. And God forbid, it is dry, it's no big deal. But I mean I know it is water -- a lot of water, but that advantage is it maintains pressure.

That's something actually we're very, very proud of is the cost of wells, as you just mentioned. The very first well drilled at RCD was more than $6.5 million. We're now drilling vertical wells for $3 million to $3.2 million. And the horizontal wells, our first AFP was $6.5 million, as Marshall mentioned, and we're now drilling those for $4 million to $4.3 million. So we have some experts in place who have drilled over 500 wells in Alberta, horizontal wells in Alberta. We're bringing that same technology and that same programs to Colombia. We are the lowest cost driller of horizontal wells in Colombia right now, and we think we can bring these prices down, these costs down even more. So that's what we're focused on operationally.

So you mentioned that the reserve you have would be $1 a share worth...

Yes. If you look at our 2P for me.

Yes. Net asset value of $1 a share.

Okay.

Sorry, there's a really fine print there, but it's basically 2P reserves plus cash divided by the number of shares.

I'm sorry, what's the 2P?

2P?

Like how much still?

But it doesn't break it out, but that's the [ $14 ].

Dollar share, it's that plus cash.

Yes. Our 2P reserves at December 2024 were approximately $71 million.

And the IP?

This is available on our website.

Okay. I would go.

But no, we'll show you right now.

Perfect. So sorry, PDP reserves, $71 million, 1P reserves, $150 million and 2P reserves, $285 million at December 31, 2024.

Okay. So the 1P would make the stock worth $0.50 for sure.

Yes. Yes.

I mean that's usually you add a little bit of that, and that's what the stock should be traded at. Yes, should be again $0.60. I run an oil company. So I should know successfully.

Sir, if you have a question?

Yes, I have several actually. First one is you mentioned BP are using trucks to pick up the oil. Are any of your production facilities in there a pipeline because using a truck to ship oil is very expensive.

Yes. You're absolutely correct. We're not close to any pipelines right now. BP is using their trucks to bring the oil to their own mixing facility. Frontera also has a small amount of our oil. They're bringing it to their mixing facility, getting their oil into pipeline spec and then injecting into the pipeline. We're not close enough to pipeline to do anything at these volumes. If the field is to get much bigger, then that is definitely a potential opportunity. The other opportunity we have when we get a little bit bigger is to get our own mixing facility and get our own oil pipeline spec and really pick out the middleman, take out the pennies that they're making on our barrels and make those ourselves. Right now, our focus is getting bigger. Once we get bigger, those kind of projects can be looked at.

To answer your question in another way, sir, the pipeline isn't far away. So the trucking distance from our facility to the pipeline is not that far. And could you be more specific I don't have the actual mileage.

50 kilometers.

I not sort of terrain typical.

Just like we showed you, some of that is great.

All weather roads, they're trucking oil 365 days a year.

Right. Assuming that all your plans work out as indicated, at what point and how far down the road would you be interested in moving towards a pipeline situation, not necessarily built by themselves by a partner or a pipeline specialty company?

That's a great question. Someone building a pipeline for us is going to look at our reserves. And so really, they're looking at how long is this pipeline running as we're discovering -- Marshall went over the 4 prospects, as those prospects are defined and the reserves are understood more, we may be getting closer to that. But we haven't been in any talks with anyone at this time. That's definitely an opportunity for us.

Within 5 years.

Honestly.

Next question. Why did Canacol sell its oil asset to you or to a potential buyer [indiscernible] to be.

They have pivoted to natural gas production. That was their focus. They weren't getting value in the stock market from their oil exposure. So they hope to get that and spinning the assets out into a vehicle into a shell and having significant ownership in Shell. They also have had significant debt with them at one point, Joe. As part of the acquisition of assets. So yes, they were just trying to show the market that their single focus is gas.

Price is down 80%...

In a short period. They're still the largest onshore gas producer in Colombia.

And what's your previous experience prior to Arrow?

Prior to Arrow. So I was born in Alberta, third-generation oil man. I started at Texaco and I've started, built and sold 8 companies to date. This is #9. So from a technical capacity, I'm a geologist and the geophysicist. And just for background at Texaco, they taught me how to drill dry holes.

I'm sorry, I didn't hear that.

They taught me how to drill dry hole. So I know not to drill those.

Experience?

So 39 wells, we haven't drilled a dry hole yet.

And how did you become aware of the opportunity? Did you -- any of you have experience in Colombia prior to that.

Well, [indiscernible] is a bit of a pirate. So he came across that particular asset. You saw the tail sign somewhat.

PIt wasn't for sale, but a colleague said, can you take a look at this and figure out what the hell is going wrong with it? And I said, sure, I can do that. And then he said, can you fix it? And I said, well, I'm going to have to change everything. I have to make a lot of changes. They were -- it's actively going over a cliff, but I think we can fix it. So I got this guy and this guy as my #1 and only choice as management, and they agreed to come on board, and we've turned it all around. So when we came on board, there was 0 production. We had USD $12 million in payables and another $6.5 million in debt to Canacol. Those payables were 2 years old. They were very unhappy. Our partner was very unhappy. And we went out to those payable people who held -- who were our service providers and said, we're going to fix this. We're going to sell an asset. We'll be able to pay you roughly $0.50 on the dollar. If you want to get paid today, you'll get nothing. So if you're willing to ride with us, we're going to turn this thing around, and that's exactly what happened.

We end up paying more than...

Roughly 50...

Joe and I are on the phone every day with these guys. It was a lot of fun.

And he still working with you?

Yes. And we're still using most of them as service providers. So yes, it's been a wonderful turnaround. And I'm very lucky to have these 2 gentlemen as my partner.

So the Colombian oil industry has really been spearheaded by a lot of Canadian companies. And the taxation system in Colombia oil and gas companies is modeled after the Canadian taxation system of oil and gas companies and the regulations, the ANH regulations are modeled after our own Alberta energy regulators -- regulations. So it's -- there's a lot of similarities between operating a company in Alberta and operating a company in Colombia based on tax and regulations. And and what you need to really go through. Saying that, you feel that we are one of the best operators in Colombia because we're sticking with these Alberta regulations and we operate to Canadian standards.

How desperate of [indiscernible] extra revenue? If the company [indiscernible] [Audio Gap].

Oil and gas fiscal regime, and they take great pride in that. In fact, they point out that Canada changes the fiscal regime a lot. And they've never done that in Colombia.

Which is accurate, by the way. They're #1 cash generator for sure. Percentage of government revenues do oil and gas represent roughly?

I think from a GDP perspective, it's 32%...

So they don't want to do -- sorry, they don't want to do a Venezuela and cut.

No, I look at deals in Venezuela as Joe pronounce it. And the fiscal regime is very difficult. It was like an 85-15 split going in the wrong direction. Ton of oil in Venezuela, no doubt. But part of the problem may be when you have a state-owned oil company rather than a private market-driven company [ Edvisa ] has some very talented people, but I think the leftist government is really [indiscernible] the country.

Any more questions either online or in the room?

You have a Canadian property up in the -- okay. I worked in that area. I mean, I sat on a well there. So again, we encounter gas in 3, 4 different horizons. And we had a leak in the casing and gas constantly from 1,100 meters, I remember that. So is any other zones that you can drill into it?

Well, that's a really good question. Sadly, the shallow rights and the deep rights are held by other companies. And there's probably been 30 wells drilled around our property, which is Montney only. We only have that one zone. We have a reserve -- contingent reserve report that there's 1 Tcf of gas on our stuff, but the economics just aren't there to develop. Those are very expensive wells. And the gas is dry, it's not liquids rich.

The Canadian gas today is like [indiscernible]money...

Negative today.

Negative.

Negative today. AECO is obviously hampered by being an Alberta product. It's very difficult to get our gas out. The United States NYMEX this morning was $2.88. AECO is minus $0.45. There's a ton of supply out there and just nowhere to put it. Storage is full. Pipelines are going through a bunch of renovations right now. As LNG, as we see more and more LNG facilities and approvals going on in Canada, we could see that being reduced. I mean in Japan right now, an MMcf gas is going for $8. It's going for $6 over in Europe, and that goes -- that gets higher as we see the winter months coming on. So there is a ton of opportunity for Canada. Unfortunately, we're way behind the United States in getting these LNG facilities, LNG pipelines to the coast. But you just...

I agree.

Seem to be making the right noises and there has been a new LNG [indiscernible].

All right. Well, thank you all for coming, and thank you for your time and attention. We appreciate your participation and coming here. We'll be here if anyone wants to ask us any more questions, we're around for a while. So with that, I will terminate the informal part of our AGM. Operator, you can terminate the call accordingly. Thank you all.

Well, thank you for your presentation, and thank you for your work today.

This concludes today's meeting. You may now disconnect.