ARROW Exploration Corp. (Arrow) (AXL) is pleased to announce test results of the Rio Cravo Este-1 (RCE-1) exploration well located on the Tapir Block in the Llanos Basin of Colombia. RCE-1 was spud on April 25, 2019 and reached a total depth of 10,000 feet measured depth (ft md) within the Ubaque Formation. As announced on
May 15th, the well encountered 103 feet of net oil pay (true vertical depth) with most of the pay indicated
on logs within the C7, Gacheta, and Ubaque formations. The RCE-1 exploration well was perforated
and tested over a 12-foot interval (true vertical depth) in the ‘C7 A’ Sand. An 11-day clean-up and
production test period commenced May 30 at 09:00 hours and was concluded June 9 at 08:00 hours.
Oil production over the test period averaged 613 barrels per day (bbl/d) of 28.3 API oil at a 46.5%
water cut over a range of choke sizes. A peak oil rate of 1,172 bbl/d was recorded and the well did not
produce any natural gas during the production test.
Jack Scott, Chief Operating Officer, stated, “We’re very pleased with our RCE-1 test results. Arrow has now gone two for two on exploration wells since forming the company with our success on Danes-1 late last year and current success on RCE-1. RCE-1 was an earn-in commitment well with an accelerated payback provision which means we’re able to recover $3 million of the cost of the well from 50% of our partner’s working interest barrels. Next steps include carrying out a pressure build-up test and putting the well on continuous production from the C7 Sand.”
Tapir Block Forward Plans
After the drilling and completion of RCE-1, Arrow has fulfilled its commitment to earn a 50% working
interest in the Tapir Block, which has no further work commitments or land expiries for 20 years.
However, given the amount of net pay encountered in RCE-1 and the mapped extent of the
accumulation, testing the Gacheta and Ubaque formations in the RCE-1 well and drilling up to two
development locations and a water disposal well are currently being evaluated. The water disposal well
and one development drilling location are currently licensed. In addition, multiple leads and fault trends
have been identified on the Tapir Block with existing 2D seismic data. These leads and trends will be
more clearly defined with the completion of an extensive new 3D seismic survey which Arrow plans to
acquire over the next 12 months.
The Company is currently sharing the RCE-1 test results with its reserve evaluator (DeGolyer &
MacNaughton of Dallas, TX) for the purpose of procuring an updated reserve report which is anticipated
to be completed prior to October 1, 2019. Arrow does not currently have any reserves booked on the
Tapir Block, therefore, any reserves which may be ascribed to the RCE-1 discovery would represent
incremental upside to Arrow’s corporate reserves.
Bruce McDonald, President & CEO, commented, “We remain focused on our business plan to add
production, reduce commitments and protect downside for our shareholders. We’ve now grown
corporate production by approximately 100% per share net of dispositions with our success at RCE-1
without compromising our balance sheet. We continue to work diligently towards closing a credit facility
and we look forward to updating the market on this item in the near-term. The combination of our recent
Brent crude oil hedge and the expected incremental cash flow from RCE-1 puts Arrow in an excellent
position to continue our production growth for the balance of this year and into next.”