Arrow Exploration Corp (TSX-V:AXL, AIM:AXL, OTC:CSTPF) has said that its Rio Cravo Este-2 (RCE-2) well was brought into production on May 23, 2022, as it also reported a rise in first-quarter 2022 revenue.
The company said it also successfully spudded the next well, RCS-1 (Rio Cravo Sur-1) on the same day in the Tapir Block of its Rio Cravo Este 2 area, located in the Llanos Basin of Colombia.
"We are encouraged with the results of the RCE-2 well, which add materially to our production, reserves and cashflow. Building on this momentum, we have successfully spud the RCS-1 well, and look forward to providing the results of the zone testing once drilling is complete,” Marshall Abbott, CEO of Arrow said in a statement. “We expect that this new well will further increase our production rates, producing additional positive cashflow and reserves for Arrow during an ongoing high commodity price environment."
The RCE-2 initially produced clean oil at high rates but has developed a water cut, Arrow said. The well is currently being managed at reduced rates of 1,000 barrels of oil per day (BOPD), exceeding forecast pre-drill rates of 360 BOPD and the water cut has stabilized at less than 20%. The company said it will produce oil rates around the current level over the intermediate-term and the well is expected to pay out in less than six months.
WATCH: Arrow Exploration announces positive test results from RCE-2 as they look to start production
The RCS-1 well is expected to reach a total depth of 8,700 feet on or about June 7, 2022. The well is targeting 6 separate hydrocarbon-bearing reservoirs, it added.
The company said it is proceeding with a full field development plan to be submitted to Colombia’s regulators for approval, including plans for additional wells targeting the Carbonera C-7, the Middle Gacheta and the Lower Gacheta, all of which tested commercial rates in the RCE-2 well. The company anticipates full field development will be internally funded by cash flow.
“Continued strong production rates from existing tied-in wells combined with additional and expected production from the RCE-2 well and RCS-1 wells support the company's objective of achieving a production rate of 3,000 boe/d (barrels of oil equivalent per day) within 18 months of its AIM listing,” the company added.
Turning to its financial results, the company said it continued to realize good oil and gas prices, with total natural gas and crude oil revenues, net of royalties, coming in at $3.4 million in the quarter ended March 31, 2022, up from $847,432 in the corresponding quarter of 2021.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $562,284 in the quarter, compared with a loss of $172,417 in the year-ago period.
The company's first-quarter 2022 average corporate production increased by 61% to 1,144 boe/d, compared to the fourth quarter 2021 average production of 712 boe/d, largely due to the Canadian operation's tie-in of the West Pepper well in Alberta, Canada, which was brought on production in December 2021.
Arrow Exploration operates in Colombia via a branch of its 100% owned subsidiary Carrao Energy S.A., which has a portfolio of premier Colombian oil assets that are under-exploited, under-explored and offer high potential growth.
Contact the author at jon.hopkins@proactiveinvestors.com