Arrow Exploration 2025 results explained – more barrels, less profit, still plenty to work with
Arrow Exploration has delivered a classic oil producer update: operations were busy and production grew, but weaker prices, higher costs and asset write-downs took a bite out of profits. For retail investors, the headline is mixed rather than bad.
The company grew average production by 13% to 4,012 boe/d. A boe/d is barrels of oil equivalent per day, a standard way of combining oil and gas volumes. But despite that growth, net income dropped to $1.4 million from $13.2 million, mainly because 2025 was a tougher pricing year and Arrow booked a $7.6 million impairment charge.
Key Arrow Exploration 2025 numbers investors should focus on
| Metric | 2025 | 2024 |
|---|---|---|
| Net income | $1.4 million | $13.2 million |
| Oil and gas revenue, net of royalties | $70.5 million | $73.7 million |
| Adjusted EBITDA | $35.0 million | $48.1 million |
| Funds flow from operations | $32.4 million | $35.6 million |
| Average production | 4,012 boe/d | 3,542 boe/d |
| Capital expenditure | $43.2 million | $31.1 million |
| Cash at year end | $11.2 million | $18.8 million |
| Debt | Nil | Nil |
Adjusted EBITDA and funds flow from operations are non-IFRS measures, which means they are company-used measures rather than standard accounting profit numbers. In plain English, they are meant to show the cash-generating strength of the business before some of the noisier accounting items.
Why Arrow Exploration made less money in 2025 despite higher production
The short answer is margin pressure. Brent oil averaged $69.05 per barrel in 2025 versus $78.42 in 2024, and Arrow’s realised crude oil price, net of transportation, fell to $57.26 per barrel from $65.40.
At the same time, operating costs went the wrong way. Corporate operating expenses rose to $14.45 per boe from $9.09 per boe, while corporate operating netback – essentially revenue left after royalties and operating costs – fell to $33.52 per boe from $47.33.
That is a meaningful squeeze. Arrow was producing more, but earning less on each barrel, which is why EBITDA and cash flow dipped even though output increased.
Impairment charges were a big drag on reported profit
The company recorded a $7.6 million impairment loss. That was driven by problems at Keho in Canada and by the Santa Isabel asset in Colombia, where reserve revisions and lower forecast commodity prices hurt value.
That matters because impairments are non-cash, but they are still a signal. They tell investors some parts of the portfolio are worth less than previously thought. So while the balance sheet remains solid, not every asset is pulling its weight.
Canada remains a sideshow, and not a very profitable one
Arrow’s core business is clearly Colombia. In 2025, Colombia generated $78.6 million of oil and gas revenue, while Canada brought in just $820,490 and posted a net loss of $4.6 million at the segment level.
That is not disastrous because Canada is small, but it does reinforce the point that investors are really backing the Tapir block story. If Colombia performs, Arrow performs. If it stumbles, the rest of the portfolio is not big enough to cover for it.
Tapir block drilling success is the real engine behind the Arrow Exploration story
The operational side of the update is better than the profit line suggests. Arrow drilled 14 development wells across Rio Cravo Este, Carrizales Norte and Alberta Llanos in the Tapir block, plus a successful exploration well at Mateguafa Attic followed by three development wells including one horizontal well, M-HZ7.
That activity helped maintain and grow production through the year. Alberta Llanos averaged 474 boe/d in 2025 versus just 7 boe/d in 2024, while Mateguafa contributed 127 boe/d on average after not producing in 2024. Those are meaningful additions.
There was a softer finish, though. Q4 2025 production was 3,975 boe/d, down from 4,738 boe/d in Q4 2024 and below Q3 2025. So the year ended with less momentum than the full-year average suggests.
2026 has already started with more drilling
Post period end, Arrow said it had already drilled four development wells at Mateguafa Attic, including the Mateguafa 12 horizontal well, and that M-HZ12 is on production and cleaning up. It is also moving the rig to drill the Icaco-1 exploration well.
That tells you management is not sitting still. The programme is active, and that tends to be what the market wants from a growth-focused junior producer.
Arrow Exploration reserves report – valuation support, but not a clean sweep
The reserves report adds some useful backing to the investment case. Arrow ended 2025 with 5,415 Mboe of 1P reserves, 11,775 Mboe of 2P reserves and 20,102 Mboe of 3P reserves. 1P means proved reserves, while 2P includes proved plus probable.
The estimated net present value before tax, discounted at 10%, was $96 million for 1P, $245 million for 2P and $473 million for 3P. On the face of it, that gives investors a sense that the asset base still holds meaningful value against the current equity story.
But there is a catch. The company’s own MD&A says PDP reserves were down 24%, 1P reserves were down 7% and 2P reserves were down 14% year on year. So yes, the reserve base is valuable, but it was not a bumper reserve year.
Arrow Exploration 2026 outlook – fully funded, no debt, but Tapir extension is the big one
The best part of this RNS is probably the balance sheet and funding position. Arrow ended 2025 with $11.2 million of cash, no outstanding debt and a fully funded 2026 work programme of $24 million targeting up to nine new wells in the Tapir block.
There is also a nice bonus from the termination of the COR-39 contract. The company received ANH authorisation to terminate it, which released a $12 million commitment. That removes a funding overhang and gives management more flexibility.
One more positive: Arrow has access to a crude oil prepayment facility of up to $20 million until June 2026 and $15 million until June 2027, and it had drawn nothing as at 31 December 2025. That is not the same as cash in the bank, but it is a useful back-up option.
The Tapir contract extension is the key watchpoint
Management said discussions on extending the Tapir block have been constructive and that it is very confident the extension will be granted. That is encouraging, but until it is formally done, it remains a genuine risk item because Tapir is the centre of the whole growth plan.
My take is simple: this was a decent operational update wrapped inside weaker financial results. If you are bullish on Arrow, you are really betting that successful drilling at Tapir keeps converting into production growth and cash flow, while oil prices behave and the contract extension lands.
The positives are clear – production growth, no debt, active drilling, fully funded 2026 plans and the removal of the $12 million COR-39 commitment. The negatives are just as real – lower margins, lower cash, reserve declines in key categories and a business that depends heavily on one core area. That makes Arrow interesting, but not exactly a sleepy, low-risk income stock.
Still, for investors comfortable with junior oil producers, this RNS suggests Arrow remains very much in growth mode rather than repair mode. That is usually a better place to be.
