Arrow Exploration, the high-growth operator with a portfolio of assets across key Colombian hydrocarbon basins, has provided an update on operational activity for the three and six months ended June 30, 2024.
CNB HZ-4
The third horizontal well on the Carrizales Norte 'B' pad (CNB HZ-4) is now on production and exceeding expectations. The well has a current flow rate exceeding 2,500 BOPD gross (1,250 BOPD net to Arrow) and production is continuing to increase. Currently the well has an 8% water cut while still recovering load fluid. Management's expectations are that the CNB HZ-4 well will reach IP production rates similar to the Company's first two horizontal wells. Please note initial production flows are not necessarily indicative of long-term performance or ultimate recovery and a stabilized production rate will be determined in the first few weeks of operations, in keeping with conservative reservoir management. Further updates will be provided in due course.
CNB HZ-4 was spud on July 28, 2024, and reached a target depth of 8,452 feet (true vertical depth) on August 12, 2024. The well was drilled to a total measured depth of 13,335 feet with a horizontal section of approximately 3,940 feet. CNB HZ-4 came on production on August 26, 2024, with the use of an electric submersible pump (ESP) and, based on initial results, has displayed comparable reservoir characteristics as CNB HZ-1.
CNB HZ-3
The CNB HZ-3 is continuing to perform above expectations and is being restricted to a current flow rate of 1,920 BOPD gross (960 BOPD net) with approximately 31% water cut. CNB HZ-3 average production for the first 30 days of production (IP30) was 2,212 BOPD gross (1,106 BOPD net). The well is being restricted to optimize reservoir performance and ultimate recovery.
CNB HZ-1
The CNB HZ-1 is continuing to perform above expectations and is being restricted to a current flow rate of 2,090 BOPD gross (1,045 BOPD net) with approximately 41% water cut. CNB HZ-1 average production for the first 60 days of production (IP60) was 2,375 BOPD gross (1,188 BOPD net).
Drilling Technology
Drilling metrics continue to improve in the horizontal program regarding both time and cost. The improvements reflect the learnings taken from CNB HZ-1 and CNB HZ-3 as the operations team continues to focus on improving capital and operating costs and creating further shareholder value.
The CNB HZ-4 is the first Arrow well to use Autonomous Inflow Control Devices (AICDs) which are designed to limit the water cut in horizontal wells. The results of CNB HZ-4 will be closely monitored to determine if these technologies or others will enhance production and ultimate recovery in the Ubaque reservoir.
Upcoming Drilling
The rig has been moved to the fifth cellar on the Carrizales Norte B Pad where the Company spud the fourth horizontal well (CNB HZ-5) on August 22. Thereafter, the Company expects to drill two more horizontal wells on the B pad, followed by the Chorreron-1 (formerly known as Baquiano-1) exploration well, which is on trend with the Carrizales Norte field.
Corporate Update
Current net corporate production is approximately 5,000 BOE/D, inclusive of CNB HZ-1, CNB-3 and CNB HZ-4.
Arrow's cash position was approximately $12 million on August 1, 2024. Arrow has maintained a healthy balance sheet with no debt.
Q2 2024 Highlights:
- Successfully drilled three development Carrizales Norte (CN) wells, including the first horizontal well.
- Recorded $15.1 million of total oil and natural gas revenue, net of royalties, representing a 47% increase when compared to the same period in 2023 (Q2 2023: $10.3 million).
- Net income of $1.2 million (Q2 2023: loss of $0.8 million).
- Adjusted EBITDA(1) of $8.9 million, a 53% increase when compared to 2023 (Q2 2023: $5.8 million).
- Average corporate production of 2,546 boe/d (Q2 2023: 2,169 boe/d).
- Realized corporate oil operating netbacks(1) of $51.21/bbl.
- Cash position of $10.8 million at the end of Q2 2024.
- Generated H1 2024 operating cashflows of $15.7 million (H1 2023: $7.4 million).
- Recognized an impairment in its Canadian oil & gas properties for $1.5 million due to low natural gas prices.
(1)Non-IFRS measures - see 'Non-IFRS Measures' section within the MD&A
Post Period End Highlights:
- Drilled three additional CN wells, including two horizontal wells and one disposal well.
- Spud the CNB HZ-5 from the CNB pad. The Company expects to be able to provide an update on the production figures for CNB HZ-5 in the coming weeks.
Outlook:
- Continuing with the balanced delivery of the 2024 capital program, the majority of which will be focused on the Carrizales Norte field and will include additional horizontal wells.
- Low risk exploration well planned at the Chorreron prospect.
- The remaining 2024 capital program will be self-funded by a combination of cash flow from operations and cash reserves.
Marshall Abbott, CEO of Arrow Exploration Corp., commented:
'The horizontal well program at the CNB pad continues to exceed expectations, and the Company now plans to drill two additional horizontal wells before moving to the Chorreron prospect (formerly named Baquiano). This will result in a total of six horizontal wells at Carrizales Norte in 2024 with additional horizontal wells being planned for 2025. The Arrow team continues to reduce the time and costs needed to drill horizontal and vertical wells, using internally generated development drilling and completion strategies.'
'Arrow experienced material growth in production, revenue and earnings in Q2 2024 compared to Q2 2023. This growth was achieved while preparing for the highly successful horizontal well program at Carrizales Norte. This included the Q1 and Q2 Carrizales Norte vertical well program to delineate the Ubaque reservoir, as well as preparing pads, roads, oil transportation and water disposal infrastructure.'
'Arrow's focus for the remainder of 2024 will be the completion of the six well horizontal well program at Carrizales Norte as well as a low-risk exploration well at the Chorreron prospect. A second rig is being evaluated to begin development drilling at the RCE field towards the end of 2024.'
'In 2025, Arrow plans another aggressive capital program focused on production growth and exploration. Arrow plans to drill low risk exploration wells at Mateguafa Oeste, Capullo, and Mateguafa Attic. The Company is also targeting further horizontal Ubaque and vertical C7 development drilling at Carrizales Norte, and Chorreron, if successful, and the drilling of development vertical wells at Rio Cravo Este in 2025.'
'This enhanced capital program underlies the prolific setting of the Tapir Block in the Llanos Basin in Colombia. The block displays significant hydrocarbon density in multiple oil-bearing zones down to 10,000 feet total depth.'
Source: Arrow Exploration
