01:36:12 EDT Wed 22 May 2024
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Arrow Exploration Corp
Symbol AXL
Shares Issued 285,864,348
Close 2024-02-16 C$ 0.34
Market Cap C$ 97,193,878
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Arrow Exploration's CN-4 well producing at 478 bopd

2024-02-20 09:20 ET - News Release

Mr. Marshall Abbott reports


Arrow Exploration Corp. has provided an update on activity on the Tapir block in the Llanos basin of Colombia, in which the company has a 50-per-cent beneficial working interest.

CN-4 well

The CN-4 well was spudded on Jan. 17, 2024, and reached target depth on Jan. 27, 2024. The well was drilled to a total measured depth of 9,552 feet (8,613 feet true vertical depth) and targeted the Ubaque formation.

Arrow completed the well in the Ubaque formation, which has 29 feet of true vertical depth net oil pay. The pay zone is a clean sandstone exhibiting consistent 26 per cent porosity, 5 Darcy permeability and high resistivities from top of sand to base of sand. An electric submersible pump (ESP) was inserted in the well after perforating.

The well confirms Arrow's understanding of the large Ubaque resource base and commensurate horizontal drilling opportunities it provides.

Specific data for the initial production from the Ubaque formation are as follows:

  • The well initiated production with a flow rate of 780 barrels of fluid per day.
  • After recovery of the drilling and completion fluids, in a 12-hour production period, the well produced 758 bopd (barrels of oil per day) gross (379 bopd net) with a 7 per cent average water cut.
  • Measured oil from the Ubaque formation shows an API (American Petroleum Institute) gravity of 13 degrees.

To efficiently manage the reservoir, the ESP is currently running at 42 Hz (hertz), minimum optimum pump frequency, and a 128/128 choke size is being used. The CN-4 well is currently on production, producing from the Ubaque formation at 478 bopd gross (239 bopd net). Management's intention is to produce the well conservatively, at current rates, to ensure the highest estimated ultimate recovery (EUR). This approach will provide significant operational flexibility.

The CN-4 well did not test the C7 or Gacheta formations. The Ubaque production and reserves potential are considered the first priority for the company. C7 and Gacheta potential will be unlocked with future wells and recompletions.

Initial production results are not necessarily indicative of long-term performance or ultimate recovery.

CN-5 well

The CN-5 well was spudded on Feb. 8, 2024, to test the Carrizales Noroeste prospect and reached total depth of 9,050 feet true vertical depth on Feb. 14, 2024. Initial interpretation of the logging of this well, drilled to the west of the known pool boundary, shows 45 feet of Ubaque oil pay to base of sand. The reservoir demonstrates consistent 25 per cent porosity and 5 Darcy permeability. CN-5 has confirmed that there is a stratigraphic component to the trapping mechanism in the Ubaque reservoir as it extends to the west and is therefore expected to add significantly to the existing Ubaque oil reserves. The company expects to complete the well for production over the next few weeks.

Operations update:

  • The CN-6 well will spud once the CN-5 well is on production and will target the C7 Carbonara formation in a structurally high location. Three-dimensional seismic shows considerable running room for C7 development drilling within the sizable primary Carrizales Norte structure.
  • Work continues on the construction of the Carrizales Norte horizontal pad (CN B), the Matteguafa Attic pad, and the Baquiano road and pad. The company expects to bring in a second rig for deployment at the CN B pad and a third rig for use at the Matteguafa Attic pad. The company expects the first horizontal well at the CN B pad will be spudded in Q2.
  • Preliminary interpretation of the recently acquired Tapir 3-D seismic program has further established the presence of an appreciable number of low-risk prospects in this fertile part of the Llanos basin. Analysis of the 3-D data is continuing, with expectations that additional prospects will be developed. These data have provided considerably more detail over the northern portion of the Tapir block.
  • The company continues to have a strong balance sheet, with no debt and over $13-million (U.S.) in the bank at Feb. 15, 2024.
  • Capella production remains shut-in, waiting on government and operator meetings with communities in the area.
  • The stimulation design for OP-3 and OP-4 are being reviewed internally. Expectations are that the operations will commence in Q2.

Marshall Abbott, chief executive officer of Arrow, commented:

"The thick pay zones encountered in the CN-4 and CN-5 wells underpins the step change in value that has been created. The company expects material reserves additions and production from further development of the multizone potential at Carrizales Norte. The defined Ubaque reservoir has set the stage for conventional horizontal exploitation, which we expect to lead to material production, cash flow and reserves growth. Additional pay zones currently behind pipe provide further opportunities for production and reserves increases in the future.

"The CN-4 and CN-5 well results have helped determine the size of the Ubaque pool at Carrizales Norte, and there are strong indications that the reserves additions will transform Arrow into a much larger company. Multiple development locations are anticipated based on current results.

"With both the RCE and CN fields, management plans to control pump speed and choke wells back to efficiently manage the reservoir and discourage premature water production. Arrow believes this is in the best long-term interest of the reservoir and will maximize recovery from both fields.

"There is strong momentum at Arrow, as we continue with our fully funded, low-risk drilling program across our extensive portfolio. The CN-4 and CN-5 wells have successfully increased production and are expected to add materially to reserves. Alongside this, we are encouraged by the number of prospects the Tapir 3-D seismic has outlined and the drilling inventory it has provided.

"I would like to recognize the professionalism and work ethic that our entire team has dedicated to our continued success."

About Arrow Exploration Corp.

Arrow Exploration (operating in Colombia via a branch of its 100-per-cent-owned subsidiary, Carrao Energy SA) is a publicly traded company with a portfolio of premier Colombian oil assets that are underexploited, underexplored and offer high-potential growth. The company's business plan is to expand oil production from some of Colombia's most active basins, including the Llanos, Middle Magdalena Valley (MMV) and Putumayo basin. The asset base is predominantly operated with high working interests, and the Brent-linked light oil pricing exposure combines with low royalties to yield attractive potential operating margins. Arrow's 50-per-cent interest in the Tapir block is contingent on the assignment by Ecopetrol SA of such interest to Arrow. Arrow's seasoned team is led by a hands-on executive team supported by an experienced board. Arrow is listed on the Alternative Investment Market of the London Stock Exchange and on the TSX Venture Exchange under the symbol AXL.

Qualified person's statement

The technical information contained in this announcement has been reviewed and approved by Grant Carnie, senior non-executive director of Arrow Exploration. Mr. Carnie a past member of the Canadian Society of Petroleum Engineers, holds a BSc in geology from the University of Alberta, and has over 40 years of experience in the oil and gas industry.

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