(Sharecast News) - Colombia-focussed hydrocarbon developer Arrow Exploration updated the market on activities in the Tapir Block on Tuesday, situated in the Llanos Basin, where it holds a 50% beneficial working interest.
The AIM-traded firm said the CN-4 well, spud on 17 January and reaching target depth on 27 January, had yielded promising results.
Drilled to a total measured depth of 9,552 feet, with 29 feet of true vertical depth net oil pay in the Ubaque formation, the well showed desirable characteristics with consistent porosity, permeability, and resistivities.
Initial production from the Ubaque formation had begun, with a flow rate of 780 barrels of fluid per day, indicating a potential for significant reserves.
After recovering drilling and completion fluids, the CN-4 well produced 758 barrels per day gross, or 379 daily barrels net, in a 12-hour period, with a manageable 7% average water cut.
The API gravity of the oil from the Ubaque formation was measured at 13 degrees.
To ensure efficient reservoir management, an electric submersible pump was currently operational, running at a frequency of 42 hertz.
The company said the well was currently producing from the Ubaque formation at 478 barrels of oil per day gross, or 239 net daily barrels, with management adopting a conservative production strategy to optimise the estimated ultimate recovery.
While the CN-4 well did not explore the C7 or Gacheta formations, Arrow said it was prioritising the Ubaque production and reserves potential, with plans to unlock further potential through future wells and recompletions.
The company said its strategic focus remained on maximising returns from existing resources while pursuing opportunities for expansion.
It added that the CN-5 well, spud on 8 February, had confirmed additional oil pay in the Ubaque formation, further bolstering Arrow's confidence in the reservoir's potential.
Operations continued with plans for the CN-6 well targeting the C7 Carbonara formation and ongoing construction work on various pads and infrastructure projects.
Preliminary interpretation of seismic data indicated promising prospects for future development within the Tapir Block.
Arrow said it maintained a robust balance sheet, with no debt and ample liquidity.
While the Capella production remained shut-in pending community engagements, the company said it was committed to responsible operations and environmental stewardship, evident in ongoing reviews of stimulation designs for upcoming operations.
"The thick pay zones encountered in the CN-4 and CN-5 wells underpins the step change in value that has been created," said chief executive officer Marshall Abbott.
"The company expects material reserves additions and production from further development of the multi-zone potential at Carrizales Norte.
"The defined Ubaque reservoir has set the stage for conventional horizontal exploitation which we expect to lead to material production, cash flow and reserves growth."
Abbott said additional pay zones currently behind pipe provided further opportunities for production and reserve increases in the future.
"The CN-4 and CN-5 well results have helped determine the size of the Ubaque pool at Carrizales Norte and there are strong indications that the reserves additions will transform Arrow into a much larger company.
"Multiple development locations are anticipated based on current results.
"With both the RCE and CN fields, management plans to control pump speed and choke wells back to efficiently manage the reservoir and discourage premature water production."
Marshall Abbott said Arrow believed that was in the best long-term interest of the reservoir, and would maximise recovery from both fields.
"There is strong momentum at Arrow, as we continue with our fully funded, low risk drilling program across our extensive portfolio.
"The CN-4 and CN-5 wells have successfully increased production and are expected to add materially to reserves.
"Alongside this, we are encouraged by the number of prospects the Tapir 3D seismic has outlined and the drilling inventory it has provided."
At 1425 GMT, shares in Arrow Exploration were up 4.62% at 20.92p.
Reporting by Josh White for Sharecast.com.
Arrow Explor. (AXL)