Asset A&D

COG Energy to Acquire Arrow's 100% Interest in Llanos Basin Block LLA-23

By Isha Makkar
August 25, 2020
2 minutes read
Colombian Flag on Building

TSX-V listed Arrow Exploration Corp. has entered into an agreement with privately-held COG Energy Ltd. for the sale of its 100% interest in the LLA-23 block in the Llanos basin in Colombia, in exchange for an initial cash consideration of US$11.75 million, plus an additional contingent payment of up to US$250,000.

The transaction is subject to the outcome of certain conditions, including the timing of Arrow’s decommissioning liabilities and the transfer of work obligations under various letters of credit in place to guarantee work commitments on the block.

LLA-23 covers an area of 115,100 acres in the Llanos basin in Casanare Department, situated approximately 245 km north-east of Bogota. The block includes the Labrador, Leono, Pantro, Tigro, and Danes fields, and also contains a flowline and a processing facility with a fluid handling capacity of 30,000 barrels per day (bbl/d) and a water disposal capacity of 22,000 bbl/d. Average daily production associated with the block during Q1-2020 was approximately 655 bbl/d.

Calgary-based Arrow currently owns a portfolio of interests located across the Caguan-Putumayo, Middle and Upper Magdalena Valley, and Llanos basins. In November last year, the company’s board of directors had formed a special committee to evaluate strategic alternatives to improve the company’s balance sheet, including the sale, merger, or disposition of all or certain assets of the company.

“The sale of Arrow’s LLA-23 block marks a significant step forward for the Company. We ultimately chose to sell LLA-23 to COG based on the strength of their offer, their proven track record as oil & gas operators in Colombia, and their desire to transact quickly and efficiently, all of which are to the benefit of Arrow and its stakeholders,” said Marshall Abbott, Arrow’s CEO.

COG Energy is backed by funds managed by private equity group Carlyle International Energy Partners and Denham Capital Management LP. The company is focused on the acquisition and development of oil & gas assets in Colombia.

The transaction is subject to customary closing conditions, including approval from Colombia’s Agencia Nacional de Hidrocarburos (ANH) for the transfer of interests, rights and obligations associated with LLA-23.

Stifel Nicolaus Canada is acting as the financial advisor to Arrow on the transaction.

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