Oil price, Arrow. And finally…

WTI (Oct) $102.43 -$3.40, Brent (Nov) $105.83 -$2.92, Diff -$3.40 +48c.

USNG (Oct) $2.89 -3c, UKNG (Oct) 192.87p -8.39p, TTF (Oct) €77.78 -€3.32.

Oil price

Oil is off again today as the Saudis are saying that they can move cargoes through Oman with ship-to-ship crude transfers. With the East/West pipe still being repaired they need all the markets they can find, in the meantime missile attacks between them and the Houthis continue, odd the might of the Saudi military machine against a rag bag of troops funded by Iran and who else…?

I can’t see it making much of a difference but Trump is scheduled to meet Gulf leaders at a summit next week. Elsewhere Libya is back. which eases pressure slightly and Russia has extende the ban on diesel exports through October.

The EIA stats revealed a better position than the API, crude drew by 640/- barrels against a forecast of -1.6m but not as bad as the API’s +7.1m b’s. products both built modestly but nothing meaningful…

Arrow Exploration

Arrow has given an operations update and announce the results of its Mid-Year 2026 Reserves evaluation report prepared by Boury Global Energy Consultants Ltd.  All reserves volume figures stated below are on a Working Interest Gross Reserve basis. Currency amounts are in United States dollars (unless otherwise indicated) and comparisons refer to December 31, 2025.

Highlights

• Proved Developed Producing (“PDP”) reserves:
  • Increased by 62% to 2.9 million barrels of oil equivalent (“MMboe”), driven principally by the acquisition of the Thorsby asset in Canada, the Icaco discovery, and the encouraging development of the Mateguafa field in the Tapir block in Colombia.
  • Net present value before tax, discounted at 10% (“Before Tax NPV-10”) is $59.3 million for PDP reserves.
• Proved (“1P”) reserves:
  • Increased by 110% to 11.4 MMboe, driven principally through the discovery of the Icaco field and the acquisition of the Thorsby asset in Canada.
  • Before Tax NPV-10 is $193 million.
• Proved plus Probable (“2P”) reserves:
  • Increased by 82% to 21.4 MMboe; 
  • Before Tax NPV-10 is $410 million.
• Proved plus Probable plus Possible (“3P”) reserves:
  • Increased by 71% to 34.4 MMboe.
  • Before Tax NPV-10 is $731 million.
• Strong well performance has translated into higher reserves volumes in comparison with the year-end 2025
• Reserve value before Tax NPV-10 per share of $0.21/share, $0.68/share, $1.43/share, and $2.56/share for PDP, 1P, 2P, and 3P reserve categories, respectively
• Reserves Recycle Ratios of 18.1 for 1P, 27.6 for 2P and 39.7 for 3P
• Reserves Replacement Ratios (“RRR”) of 6.51 for 1P, 9.91 for 2P and 14.27 for 3P
• Excluding the Thorsby acquisition the RRR is: 1.3 for 1P, 2.1 for 2P and 3.0 for 3P

Operational Update

Current Drilling Schedule

The Icaco field was discovered in Q2 2026 with the drilling of the Icaco-1 well. Three oil-bearing formations were found and have been tested with reserves booked to all three formations. Up to the effective date of the reserves evaluation, August 15, 2026, six wells have been drilled, three of them producing from the Carbonera formation, two from the Ubaque formation and one water disposal well.

The Company proposes that the next phase of the development of the Icaco field will comprise 5 additional wells, with, depending on results, a 5 further contingent well program thereafter.  This would result in a total of 15 oil wells and one water disposal well on the Icaco pad.  Arrow has completed drilling the Icaco-7 well and expects to bring it on production shortly.

Arrow continues discussions on the Tapir license extension with regulatory authorities.  Management believes these discussions are positive and beneficial to all parties and that the extension will ultimately be awarded to Arrow and its partner.

Production

Corporate production is over 6,000 boe/d. Arrow expects to increase this production with the completion of Icaco-7, Icaco-8, Icao-9 and Icaco-10 wells.

Further details of the Thorsby Acquisition

On August 14, 2026, Arrow announced the acquisition of the Thorsby property in Alberta, Canada.

Certain reserves were referred to in that press release.  The evaluation of the reserves had been prepared by McDaniel and Associates (“McDaniel”)21, an independent, qualified reserve evaluator.  The effective date of the evaluation was December 31, 2025, and it had been undertaken for the purposes of the vendor’s 2025 year-end reporting obligations.  The report was prepared in accordance with NI 51-101 and in accordance with the Canadian Oil and Gas Evaluation Handbook (the “COGEH”). 

Arrow is pleased to provide the following additional information on the reserves as reported by McDaniel:

• 1P reserves were reported at 4.973 MMboe which consisted of 52% oil, 3% natural gas liquids and 45% natural gas.
• 2P reserves were reported at 7.537 MMboe which consisted of 52% oil, 3% natural gas liquids and 45% natural gas. 

At the time of the acquisition, the property was producing 550 boe/d, which consisted of 24% oil, 3% natural gas liquids and 73% natural gas. 

For the purposes of the reserves evaluation referred to in the August 14, 2026, press release, the Company had not modified, adjusted or updated the reserves estimates reported by McDaniel. 

2026 Mid-Year Reserve Overview

The Reserves Report shows improved performance with Arrow’s produced volumes having been more than replaced by the discovery of the Icaco field in the Llanos Basin in Colombia and the acquisition of the Thorsby asset in Canada.

When reviewing the Reserves Report it is important to understand the assumptions used by the reserves engineers when producing it.  In particular, the 1P reserves have been prepared assuming the Tapir block expires with the contract in February 2028.  The 2P reserves assume the first 5-year extension period embedded in the Tapir contract is granted.  The 3P reserves assume the second 5-year extension period embedded in the Tapir contract is granted.  Management continues to work with the regulators and believes that the extensions will be granted to the partnership.

Discovery and successful development at Icaco continue to provide both production and reserves growth to the Company. Additional drilling in the Mateguafa field also determines the extension of the reservoirs and new development plans are reflected in the final reserves’ volumes. The BouryGEC reserves evaluation reinforces the significant value Arrow has generated in its Colombian assets, and the Company remains enthused by the further potential value in its prospect portfolio.

CEO Commentary

“Marshall Abbott, CEO of Arrow, commented: 

“Our midyear reserves update shows the significant value that has been added through our focused and successful drilling campaign in the first half of the year. As well, Arrow has been successful in the M&A front, adding reserves accretively. This represents a significant component of our overall corporate strategy that looks to take advantage of our strong balance sheet. Looking out to the remainder of 2026, Arrow’s prospect inventory is multifaceted and demonstrates the hydrocarbon density of the Tapir block in the fertile Llanos Basin. Over the rest of the year, we look forward to a successful drilling campaign that is development weighted in light of the areal extent of the Icaco discovery. Arrow also will be pursuing low risk exploration opportunities in the Tapir Block.”

This exceptionally positive reserves update should come as no surprise to the market following, as it does, the highly successful drilling campaign at the Icaco and of course the excellent Thorsby deal. With 1P reserves of 11.4mmboe and 2P of 21.4mmboe showing a 62% increase on December 2025 and with so much more to come in both geographies shareholders are reaping the rewards of such success.

This more than replaces production at the Icaco field and also the Thorsby deal and obviously there is way more in the portfolio. It should be noted that the 1P number assumes that the Tapir block ‘expires in February 2028’ whilst the 2P number includes the next 5 years and the 3P number for another 5 years after that. 

The company have again stated that discussions regarding the Tapir licence ‘and are positive’ and have announced an operational update which ‘proposes that the next phase of the development of the Icaco field will comprise 5 additional wells, with, depending on results, a 5 further contingent well program thereafter’.  

To put the success of the Icaco into perspective it is worth noting that they say in the update that ‘this would result in a total of 15 oil wells and one water disposal well on the Icaco pad.  Arrow has completed drilling the Icaco-7 well and expects to bring it on production shortly’.

Arrow shares have reflected this success, at 35p today they are up 35% over 1 month, +70% on 6 and have risen 170% year on year. I recently upped my target price to 60p which all being well is still conservative given the prospects for the company which retains its slot in the Bucket List.

Mid-Year 2026 Reserves Detailed Summary

Management has presented below a summary of Arrow’s reserves on a working interest gross reserves basis, which have been estimated by BouryGEC, an independent qualified reserves evaluator, in a reserves report with an effective date of August 15, 2026.  The figures in the following tables have been prepared in accordance with the standards contained in the most recent publication of the COGEH and the reserves definitions contained in National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”). In addition to the summary information disclosed in this announcement, more detailed information will be included in Arrow’s Mid-Year Reserves evaluation for the period ended August 15, 2026, to be filed on SEDAR (www.sedar.com) and posted on Arrow’s website (www.arrowexploration.ca).

After tax values have been calculated without taking into account the tax shelter created by capital spending on projects that do not have reserve values associated with them, such as the Tapir 3D seismic project, drilling at Carrizales Norte and annual G&A. Spending on these projects will provide a tax shelter and result in a reduction in future income tax payments.

Brent Crude Oil Price and AECO Gas Price Forecasts in BouryGEC Reserves Report

August 15, 2026 Working Interest Gross Reserves – Breakdown by Category and Country (Mboe) 

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

1.       “Core” assets include Arrow’s share of reserves in the Tapir Block and the Santa Isabel Block (Oso Pardo). Arrow’s 50% interest in the Tapir Block is contingent on the assignment by Ecopetrol SA of such interest to Arrow.
2.       “Non-core” assets include the Ombu Block (which includes the Capella Field)
3.       “Canada” assets include Thorsby, Fir and Pepper

August 15, 2026 Net Present Value at 10% – Before Tax ($ Thousands)

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

August 15, 2026 Net Present Value at 10% – After Tax ($ Thousands)

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

Forecast Revenues and Costs – Undiscounted ($ millions)

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

1.        BT = Before Taxes and AT = After Taxes
2.       Operating Cost less processing and other income
3.       Revenue includes Petrolco Income

August 15, 2026 Working Interest Gross Reserves Reconciliation (Mboe)

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

And finally…

Last night in the Haribo Cup there were wins for the Toffees, the Fishermen, Villa and the Seagulls. Tonight the Noisy Neighbours host the Canaries.

Tonight at 18:30 England play Sri Lanka in Cardiff, the second T20 of the three match series, it’s 1-0 to Harry’s boys after game 1.