Analysts at Canaccord Genuity (TSX:CF, LSE:CF) Group Inc noted that Arrow Exploration Corp (TSX-V:AXL, AIM:AXL, OTC:CSTPF) has kicked off its busy operational program positively as its first development well of 2023 finds hydrocarbons.
The Calgary, Alberta-based company with a portfolio of premier Colombian oil assets, has said its Rio Cravo Este-3 (RCE-3) appraisal well on the Tapir Block in Colombia’s Llanos Basin has reached target depth.
“RCE-3, Arrow's first well in 2023, drilled on the Rio Cravo Este field (RCE) in the Tapir licence (Arrow 50% WI) in the Llanos Basin of Colombia, has found multiple oil-bearing intervals,” Canaccord’s analysts said in a note to clients.
READ: Arrow Exploration reaches target depth on its RCE-3 well as it provides an operations update
The RCE-3 well, which is located within the Rio Cravo Este oil field, reached total depth on February 16, 2023. The well was drilled to a total measured depth of 8,880 feet (8,087 feet true vertical depth) and encountered seven hydrocarbon-bearing intervals totaling 58 net feet of oil pay at measured depth, said Arrow.
“Tie-in of RCE-3 to facilities is expected over the next couple of weeks with production due to start in early March,” noted the analysts.
“This is the fourth well to be drilled by Arrow on RCE, and as such it is no surprise that the well has encountered hydrocarbons, but it starts the busy operational program positively.”
Meanwhile, Canaccord observed that as always it is the production delivery that “matters most,” and the company plans to start oil flow gently from RCE-3 and manage the production ramp-up to maximize the overall well recovery and value.
Canaccord maintained its “Buy” rating and target price of C$0.65 on Arrow shares. Arrow stock jumped 3.33% to C$0.31 in morning trade on the TSX Venture Exchange.
Operational details
According to Canaccord, the going forward plan is to “complete the C7 reservoir, bring it into production early in March, and ramp-up production gradually.”
“Arrow previously indicated net additional production of 300-500 barrels of oil per day (bopd) from the three RCE development wells, RCE-3, 4, and 5,” said the analysts. “Drilling of RCE-4 will start very shortly after first oil from RCE-3.”
There are six planned wells on the Tapir licence in 2023, with three development wells on the producing RCE field, and three exploration and development wells on the Carrizales Norte (CN) prospect.
“All the wells are to be drilled back-to back, with approximately a one-month spud-to-production anticipated timetable plus extra time for rig mobilisation between RCE and Carrizales Norte,” noted the analysts.
Meanwhile, Arrow has said that surveying operations are ongoing within the 134 square kilometer 3D seismic project on the Tapir block.
With regard to Carrizales Norte, Tapir, construction of the access road, well pad and cellar for the three-well drilling program has been completed, noted Canaccord.
“The planned wells will follow well RCE-5 and rig mobilization to CN,” the analysts added.
Meanwhile, data acquisition is expected to start in early March and be done in April.
The Capella field, in which Arrow has a 10% interest in, has been shut in since February 7, 2023, due to roadblocks and protests in the immediate area, the company said. Arrow's share of the Capella field production is approximately 280 barrels per day (bbls/d).
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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