Arrow Exploration Corp (TSX-V:AXL, AIM:AXL, OTC:CSTPF) told investors that the Carrizales Norte 3 (CN-3) well has become its eighth well in a row to prove commercial hydrocarbons.
CN-3 was spudded in July and encountered multiple hydrocarbon-bearing intervals – in the C7, Gacheta and Ubaque formations – and within the latter two, “very thick” pay zones were identified and subsequently production tested.
The Lower Ubaque zone, with 50 feet of net pay, flowed at 593 barrels of oil per day in testing with a 30% water-cut (which increased by the 11th day of the tests). In the Upper Ubaque, the company used an electric submersible pump though the testing revealed a ‘cleaned up’ rate of 154 barrels of oil per day and a 92% water cut.
The company determined that “both high quality zones were adversely impacted by compromised cement bond”, which the premature water production confirmed. According to Arrow, the Lower Ubaque zone had some 65 feet of pay above water contact.
It highlighted, meanwhile, that wells drilled at Carrizales Norte have shown that the Ubaque reservoir is ideally suited for horizontal well exploitation, whilst noting its team’s experience using horizontal methods, which can achieve a 3x improvement in production volumes for an additional 50% of cost compared to vertical wells.
"The CN-3 well is the eighth well in a row where the company has proven commercial production," said Marshall Abbott, CEO of Arrow.
“The thick pay zone and production from the CN-3 well provides additional evidence of the potential in the Ubaque formation.”
Abbott added: “The CN-3 well results have helped determine the size of the Ubaque pool at Carrizales Norte and there are firm indications that the reserves additions will transform Arrow into a much more significant company. Multiple development locations are anticipated based on current results.
“The CN-3 well has also shown the potential for horizontal drill technology in the Ubaque reservoir. Horizontal wells typically produce at higher rates making the field more economic.”
The Arrow CEO, meanwhile, also pointed to management expectations for “material reserve additions and production” from the Ubaque at the CN field, whilst noting its “pay zones currently behind pipe” which hold “opportunities for production and reserve increases in the future.”
Arrow is now preparing a test of CN-3’s C7’s formation and it expects the results by "mid September". The Gacheta formation won’t be tested in CN-3.
After CN-3, Arrow intends to move the rig and team to the company’s RCE field where it plans to further exploit the multi-zone RCE structure, with two dedicated Gacheta wells and a follow up to the RCE-6 C7 producer.
The rig will return to the CN field for more Ubaque-targeting wells thereafter.
"With both the RCE and CN fields, management plans to control pump speed and choke wells back to efficiently manage the reservoir efficiently and discourage premature water production,” Abbott said.
“Arrow believes this is in the best long-term interest of the reservoir and will result in maximum recovery from both fields.”
He added: “Arrow's fully funded, low risk drilling program continues to build momentum across our extensive portfolio, with the spudding of two wells at the RCE structure targeting the Gacheta formation to follow CN-3 being brought into production.
“Alongside this we are encouraged by the initial interpretation of the Tapir 3D seismic and look forward to providing further updates in due course."