Arrow Exploration Corp (TSX-V:AXL, AIM:AXL, OTC:CSTPF) this week reported impressive results from the first horizontal well on the Ubaque formation at the Carrizales Norte field in the Tapir block in Colombia that exceeded expectations.
On the Carrizales Norte "B" pad, the new well, CNB HZ-1, is flowing at a restricted rate of 3,150 barrels a day gross and 1,575 net to Arrow with less than 1% water cut while still recovering load fluid.
CEO Marshall Abbott sat down with Proactive to discuss the achievement, highlighting that the payout period of just four to six weeks will allow the company to accelerate its drilling program, with the drilling of another three wells anticipated by the year-end.
Proactive: Your first horizontal well results are coming out, and they’re doing very well, in fact. So, tell me a bit about it.
Marshall Abbott: Well, we turned the well on four or five days ago, and it's been cleaning up. It seems to have stabilized at around 3,200 barrels a day of oil. No water cut. And we have the perfect balance between production and reserve exploitation on this particular wellbore. So we're excited. It's a step change for us.
Absolutely. And you’re, in fact, following a number of other wells in that particular site also. Is that right?
We've primarily focused on drilling vertical wells, which are great, and they all pay out. But none of them can measure up to drilling a horizontal where the likely payout is in a month to six weeks.
Why is that horizontal so important in that particular area, Marshall?
We're dealing with a very thick reservoir that has excellent reservoir characteristics. Vertical wells really communicate with about 10 feet of the reservoir. The reservoir itself is 60 to 70 feet thick. A horizontal well will communicate with the reservoir over 2,000 feet of lateral length. So, you get to produce a bunch of oil without having to suck in any kind of water prematurely.
Is this doing better than you had anticipated? Because it seems like, right from the very beginning, it's been going exactly the way you were hoping it was going to go.
It is. That's a good point. So, you know, expectations, I think, have been met and exceeded, actually. We had three wellbores into the zone. We had 3D seismic. We did a complicated reservoir model indicating that we could produce this well as much higher. But we're cautious and conservative with respect to being stewards of the reservoir. We don't want to pull on it too hard. It's rather intoxicating, of course, but this reservoir is delivering. We're excited.
I can imagine. What does this do for the company? As far as the balance sheet is concerned, the company is doing extremely well. So this obviously would add a lot to that balance sheet and really take you another step up the tier, so to speak.
Absolutely. So as I mentioned, the payout on the horizontal well is four to six weeks, which is fabulous. In terms of my career, it's difficult to match that. But what this allows us to do is really accelerate our program. So we've already spud a disposal well right next door to take care of any water that we're producing. So far, we're producing none. And it allows us to accelerate the horizontal program in this reservoir. So we'll have another three wells down by year-end on this particular reservoir. I think we've got room for 10 more. All in the reservoir is that broad and that thick, which is exciting to us.
And then we have some very exciting low-risk exploration prospects. And it's along the same structure trend that we've enjoyed with Ubaque in the Carrizales Norte area.
Going into the summer and into the fall as well, you mentioned that you've got more wells to drill in that particular area. Is that going to be the focus of the company, drilling and exploring?
Of course, we're going to focus on drilling additional horizontals, but ultimately, we see very significant upside potential on the same trend and not far away, probably 2 or 3 kilometers away. So, we call that low-risk exploration. We've got 3D seismic support. We've got enough wellbore to really model how we think this reservoir is going to behave.
Quotes have been edited for clarity and style