Arrow Exploration Corp has provided an operations update and announced the results of the 2022 mid-year oil reserves evaluation as of June 30, 2022, by Boury Energy Consultants Ltd.
The company said its NPV-10 (Net Present Value discounted by 10%) grew by 67% to US$223.6 million from US$133.9 million as of December 31, 2021, as oil prices and new hydrocarbon accumulations resulted in positive additions in reserves in all categories.
In a statement, Marshall Abbott, CEO of Arrow Exploration commented: "Arrow delivered an increase in volumes and values in all reserve categories. We are pleased with the results of the BouryGEC independent reserves evaluation, which reinforces the significant value of our Colombian and Canadian assets."
READ: Arrow Exploration says encouraged by results of the Rio Cravo Sur-1 (RCS-1) well testing on the Tapir Block in Colombia
Evaluation highlights:
Proved (1P) Reserves:
- PDP reserves increased by 25% to 1.292 MMBls (million barrels) mainly from the Tapir Block.
- 1P reserves also increased by 17% to 3.567 MMBls reflecting the positive results from the recent drilling campaign.
- 1P NPV-10 significantly higher with an increase of 164% to US$ 77.7 million.
Proved plus Probable (2P reserves):
- 2P reserves increased to 7.864 MMBls of oil.
- NPV-10 increased to US$ 150.4 million from US$ 84.1 million as of December 31, 2021, a 79% increase.
Proved plus Probable plus Possible (3P reserves):
- 3P reserves volume increased to 11.759 MMBls.
The company said additional drilling targets have been identified as a result of its H1 2022 drilling campaign. A five-well program will initiate in Q4 2022 with two wells in pursuit of further low-risk exploitation on the RCE structure. As well, two wells are planned to develop the Carizales Norte structure A downdip well will also be drilled at RCE to test the stratigraphic nature of the oil accumulation. This well will also serve as a water disposal well, the company added.
Operational Update
Arrow Exploration said its corporate production as of August 15, 2022, was approximately 1,450 barrels of oil equivalent per day (boe/d). Production from the RCE-2 well is approximately 540 barrels per day (bbls/d) net - 1,080 bbls/d gross - producing from the C7A and C7 stringer zones. Production from the RCS-1 well is approximately 190 bbls/d net - 380 bbls/d gross - producing only from the new C7B zone at this time.
In addition, the company said organic growth opportunities are advancing, with the RCE-3 and RCE-4 wells on the Tapir Block in Colombia expected to commence drilling in Q4 2022. Additional completions will be performed in Q4 on the RCE-1 and RCS-1 wells to further exploit known hydrocarbon accumulations. Current production from the RCE 1 and RCS 1 wells is ahead of forecast in aggregate.
Arrow said it expects to re-complete the RCE-1 well, in the C7 stringer zone. It is currently just producing from the C7B zone at RCS-1 and plans to re-complete this well, expecting to open the C7A and C7 stringer zones in Q4 2022. This will have a material impact on overall RCE production, the company said.
The West Pepper well, owned 100% by Arrow and located in Canada, is producing at 240 boe/d currently, with production curtailed due to third party facility constraints. Expectations are that production will return to approximately 450 boe/d in September 2022. In Q3 2022, Arrow expects to tie-in the East Pepper gas well in Canada (100% owned by Arrow). This second well, along with continuing and expected robust natural gas prices in North America, is expected to further enhance the value of the Pepper field.
In addition to the 3D seismic survey Arrow purchased earlier this year, the company said it intends to execute on a 130 square kilometer 3D seismic survey on the northwest section of the Tapir block in Colombia. This will further delineate low-risk exploration fault structures that have been identified on 2-D seismic data. The shooting of this seismic survey is expected to begin in Q1 2023.
The recent drilling campaign in Rio Cravo (Tapir Block, Colombia) was very successful, Arrow added, resulting in the company finding four more hydrocarbon accumulations and increasing its 1P oil reserves from 236 MBbls to 853 MBbls of oil. The company said these results allow it to better understand the continuity of the reservoirs in RCE and provide a foundation for the next phase of exploitation and material reserve additions at RCE.
Under the mid-year reserves exercise, Arrow's total reserves increased from 3.04 MMBOE to 3.56 MMBOE for 1P, and from 7.42 MMBOE to 7.86 MMBOE for 2P.
Arrow Exploration, operating in Colombia via a branch of its 100% owned subsidiary Carrao Energy SA, has a portfolio of premier Colombian oil assets that are underexploited, under-explored and offer high potential growth.
The company's business plan is to expand oil production from some of Colombia's most active basins, including the Llanos, Middle Magdalena Valley (MMV) and Putumayo Basin. The asset base is predominantly operated with high working interests, and the Brent-linked light oil pricing exposure combines with low royalties to yield attractive potential operating margins.
Arrow's 50% interest in the Tapir Block is contingent on the assignment by Ecopetrol SA of such interest to Arrow. Arrow's seasoned team is led by a hands-on executive team supported by an experienced board.
Contact the author at jon.hopkins@proactiveinvestors.com