Arrow upbeat as Tapir appraisal well enters production

(Sharecast News) - Arrow Exploration said on Friday that its Mateguafa HZ12 appraisal well on the Tapir Block in Colombia had been successfully drilled and brought on production, while its first Icaco exploration well had now been spudded. The AIM-traded company, which holds a 50% beneficial interest in the Tapir Block in the Llanos Basin, said M-HZ12 was spudded on 27 March and reached target depth on 7 April.

The well was drilled on time and under budget to a total measured depth of 13,824 feet, or 8,455 feet true vertical depth, and encountered multiple hydrocarbon-bearing intervals.

Arrow put the well on production on 16 April from the Carbonera C9 formation, where it encountered about 30 feet of net oil pay.

The pay zone was described as a clean sandstone with average porosity of 24% and high resistivities.

During clean-up, M-HZ12 reached a maximum rate of 668 barrels of oil per day gross, or 334 barrels net, before settling into its current stable production rate.

The well was currently producing at a heavily restricted rate of about 564 barrels per day gross, or 282 barrels net, on a 33/128 choke and 36 Hz pump frequency.

The company said oil quality was 32 degrees API and the well had a 60% water cut, comprising completion fluid and formation water. It also encountered about 15 feet of net oil pay in the Carbonera C7 formation.

Arrow said testing indicated the well was capable of higher rates, with the ultimate flow rate to be determined over the coming weeks.

It cautioned that initial production results were not necessarily indicative of long-term performance or ultimate recovery.

The Mateguafa pad now had seven wells on production, including M-HZ7 at 1,850 barrels per day gross, M-HZ9 at 948 barrels per day gross and M-HZ12 at 564 barrels per day gross.

Arrow said the rig was now at the Icaco pad, where the Icaco 1 exploration well was spudded on 5 May.

If the well was successful, the company plans a development programme at the Icaco location.

The company is also contracting a workover rig for several recompletions on the Tapir Block, with workovers expected to begin late in the second quarter.

Including restricted output from M-HZ12, total gross corporate production is about 5,000 barrels of oil equivalent per day.

Arrow said the CN-HZ12 well was offline awaiting a workover, having been producing about 330 barrels per day gross when shut in, while the Pepper gas field in Alberta had been shut in due to low natural gas prices after producing about 130 barrels of oil equivalent per day.

It said realised oil field prices averaged $87 per barrel in March and $90 per barrel in April, reflecting the rise in Brent crude prices linked to unrest in the Middle East.

Brent averaged $103.13 and $103.91 during March and April, respectively.

The company had a cash balance of $24.2m as of 1 May and said it remained debt-free.

Arrow also said it and its partner remained in discussions with regulatory officials over an extension of the Tapir Block.

It described the dialogue as constructive and said management remained confident the extension would be granted, although it expected the process to regain focus after Colombia's federal election.

"The continued success of the Mateguafa wells reinforces the materiality of the Mateguafa field to Arrow," said chief executive officer Marshall Abbott.

"Future work at Mateguafa will include both horizontal and vertical development wells, workovers and co-mingling."

Abbott said the Icaco prospect had been developed using 2D seismic and a more recent 3D seismic programme, adding that it showed "the same technical scope and repeatability of the play type" that had been successful for Arrow elsewhere on the Tapir Block.

At 1511 BST, shares in Arrow Exploration Corporation were up 6.33% at 21p.

Reporting by Josh White for Sharecast.com.

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