Arrow Exploration Corp (TSX-V:AXL, AIM:AXL, OTC:CSTPF) has been tipped as a ‘buy’ as it confirmed a successful result in its latest horizontal well, CNB HZ-6.
Zeus Capital, in a note, repeated its recommendation and highlighted a price target of 48.8p, suggesting the dual-listed firm’s value could double from the current price of 24.05p.
In this morning’s statement, Arrow told investors that CNB HZ-6 had come online and had was yielding close to 2,000 barrels of oil per day.
The well initially produced 2,250 bopd gross, 1,125 bopd) before being fitted with an electric submersible pump, which has since helped sustain production at over 1,900 bopd gross (960 bopd net) with a 31% water cut.
Chief executive Marshall Abbott described it as a very encouraging result, and, that the firm’s horizontal wells had exceeded expectations.
“Arrow's focus for the remainder of 2024 will be the completion of the sixth horizontal well in our program, CNB HZ-7 at Carrizales Norte, after which we will move to drill a low-risk exploration well at the Alberta Llanos prospect,” Abbott said.
Also, Arrow reported that the field’s new water disposal facility was installed and has been operating since 2 November, and, will support an increase in pump rates across existing wells.
Looking ahead, Abbott said planning for the 2025 capital program is well underway including the development of roads, pads and other civil works in the Tapir block.
“The 2025 work programme is yet to be fully confirmed, but Arrow plans to deploy two rigs on Tapir, targeting development wells on Alberta Llanos (on exploration success) and the Rio Cravo Este and Carrizales Norte fields, as well as drilling of the Mateguafa Oeste, Mateguafa Attic, and Capullo exploration prospects,” Zeus analyst Daniel Slater said in a note.
“Alongside continuing a full work programme, we envisage this also allowing Arrow to support and grow its production profile.
Slater added: “Overall, the CNB HZ-6 well result is another step forward for Arrow, adding further production volumes, delivering another well which should have fast payback, and further demonstrating the efficacy of horizontal drilling at Carrizales Norte.
“The completion of the water disposal facilities is also good to see, supporting future production volumes, and hopefully driving an upcoming increase from existing wells.
“We also look for further details on the 2025 programme, likely in the new year, to give a firmer steer on forward activity and potential additional production growth on top of what will have been a very successful year in 2024.”