Arrow Exploration Corp (TSX-V:AXL, AIM:AXL, OTC:CSTPF) has provided an operations update, noting that rigs and equipment are currently moving into place for its Q4 tie-in, workover, and drilling program in Columbia and Canada.
In a statement, Marshall Abbott, CEO of Arrow Exploration commented: "Arrow is excited about the upcoming capital program and expects material production and reserve additions. The Arrow team continues to execute our strategy to increase shareholder value."
The West Pepper well, owned 100% by Arrow and located in Canada, is producing 280 barrels of oil equivalent per day (boe/d) currently, with production curtailed due to third-party facility constraints. Management expects that production will return to approximately 400 boe/d in early Q4 2022.
Arrow is currently working on the tie-in for 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.
READ: Arrow Exploration announces better than expected results from testing at the East Pepper well on the Pepper Block in Canada
Looking at the individual operations program:
East Pepper tie-in
- All licences and approvals have been received
- Tie-in work began on September 28
- Production expected to begin by the end of October
- Expected IP rate of 1,000 boe/d and the company expects typical production declines thereafter
RCS-1 and RCE-1 Workovers:
- Workover rig began mobilization on October 11
- The rig expected is to arrive at the Rio Cravo field by the end of this week
- Workover program on RCS-1 and RCE-1 expected to begin shortly thereafter and be completed by early November
- The workover program will add production from the C7 stringer and C7A units at RCS-1 and the C7 stringer at RCE-1. This program is expected to have a material impact on overall RCE production
- Management expects the two workovers to add in excess of 500 boe/d
RCE-3 and RCE-4 Development Drilling:
- Rig mobilization to the Rio Cravo field expected to begin mid-November, as the rig has been delayed by the previous operator
- RCE-3 expected to spud in December. Expect drilling and completion to take circa one month with first production anticipated in early 2023
- RCE-4 will follow immediately after completion of RCE-3
- RCE-3 and RCE-4 are infill development wells with initial productivity rates estimated to be similar to the C7 and C7 Stringer production at RCE-2
Carrizales Norte
- Drilling at Carrizales-1 and -2 is anticipated to begin in Q1 2023
- Corporate production as of October 11, 2022, is approximately 1,500 boe/d. Production from the RCE-2 well is approximately 550 barrels per day (bbls/d net) - 1,100 bbls/d gross - producing from the C7A and C7 stringer zones. Production from the RCS-1 well is approximately 170 bbls/d net (340 bbls/d gross) from the C7B zone. As set out above, organic production growth is expected from the workovers of RCE-1 and RCS-1, and the development drilling of RCE-3 and RCE-4 wells to further exploit known hydrocarbon accumulations. Current production from the RCE-1 and RCS-1 wells is ahead of forecast in aggregate.
In addition to the 3D seismic survey Arrow purchased earlier this year, the company 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 2D seismic data and, if successful, will provide material running room through 2023 onwards. The shooting of this seismic survey is expected to begin in Q1 2023.
Exercise of warrants
The company also announced that under the receipt of notices for the exercise of warrants issued in October 2022, it has issued 400,000 new common shares of no par value. Application has been made for the 400,000 new common shares to be admitted to trading on London's AIM.
Arrow Exploration - operating in Colombia via a branch of its 100% owned subsidiary Carrao Energy S.A. - is a publicly traded company with 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