Arrow Exploration Share Discussion Threads

[here and there] 03/4/2024 17:55

Memories are very short here.

Does anyone remember the RCE drilling? We got more granularity on those wells as they were early wells and moved the dial a greater percentage. One of them got too much of a water cut as they perforated too low. The next well they perforated higher up and had a lower water cut.
CN drilling is a learning experience aka RCE.
Water drives production and has to be dealt with. It looks like a couple of wells are shut in whilst they convert a well in CN (and maybe RCE...this has been flagged for a long time) to be water injectors. If you look at the aerial photographs of RCE you will see that they are spraying water onto adjacent fields...it is that clean! They have done this from day 1. But there is only so much they can put on those fields hence the need to convert one of the older poorer producers into a water injector at some stage.

“We are going to do our best to drill 5 horizontals this year in to the Ubaque reservoir which will propel us on our way towards 10kBOPD net to the company”

If this quote is accurate the key word is 'towards' and he has always suggested 2/3 years to get there.

FWIW I have suggested 4500 low by year end but with a big potential higher number.....that wasn't v popular! It really depends on the horizontals, restarting production on the shut in wells, re-completions, decline rates etc.

The first flush seems to pay for the wells then the production settles post declines and increasing water cuts ( I believe one well at RCE grew production..if my memory serves me correctly). All the production from then on is pure profit with the capex costs already paid out.

If the horizontals averaged 500 bopd net to AXL after 3 months I would be quite happy. Combine that with verticals and some shut in production and that 6000 bopd by year end is feasible. Who knows? I don't and nor does anybody else but guestimating is always good fun!

We are in good hands, they know what they are doing. I do wish they had done an interview post that RNS explaining the water cut, shut ins, what they are doing to remedy it and how long it will take. It will get resolved I'm sure and the oil is still there waiting to come out. Amazing we lose 20% of MC on a temporary dip in production

[rockyride] 03/4/2024 17:49

Just had my call back from Henry Fitzgerald-O'Connor (NOMAD from Canaccord) and had a very good call. Of course we agreed that the public record (RNS) is correct, but Henry absolutely agrees that there have been numerous disconnects between MAs language and whats issued on the public record. Henry had already spoken to MA prior to his call with me today and post our call will be speaking to him again. MA will be asked to understand his numbers better before any future interviews and also asked to be more balanced with regards some of the downward pressures (pardon the pun) on production. Henry also agreed that the rise to 27p was to some extent due to MAs language and the fall to 20p was due to the reality of last weeks RNS. Canaccord will now be monitoring future media far more than before. Let's see what happens!

[mount teide] 03/4/2024 16:39

swanvesta - posted a week before the 28th March update"

'....would be entirely happy with a further doubling of production in 2024. However, should the high impact horizontal well programme deliver initial production results remotely close to that achieved elsewhere across the Llanos Basin - circa three times that of vertical wells - then AXL could well be closer to 10k bopd by year end than 6,400 bopd.'

Post the update, and since the first horizontal well of potentially five this year is yet to be drilled i see no reason yet to review the comment - as it's accuracy will mostly be proved or otherwise by whether the management deliver the forecast 1,000 bopd net to Arrow, that the leading independents achieve and, from AXL's own modelling of the Ubaque with horizontal wells.

My research suggests the Independents and their rig suppliers/operators have found horizontal drilling in the Llanos Basin relatively straightforward and remarkably quick, even at considerably greater vertical depths than the Ubaque, presumably because the rock onshore Colombia is young/relatively soft - deepest I've found Colombian onshore horizontal wells successfully drilled to date is circa 16,900ft.

[dunns_river_falls] 03/4/2024 15:54

From the most recent Proactive event
C.17 mins 25 seconds
Direct quote from Marshall Abbott

“We are going to do our best to drill 5 horizontals this year in to the Ubaque reservoir which will propel us on our way towards 10kBOPD net to the company”

[rockyride] 03/4/2024 15:29

Wonder what the potential new IIs & HNWs (the ones MA has been trying to invest in the company) think after his presentations in the UK, EU & Canada?If you were one of those who saw the presentations and then read the RNS last week, would you be initiating a position?Worse still if you were an II or HNWI and invested at 26p - 28p based on his pitch, how would you feel right now? Does duped come to mind?

[swanvesta] 03/4/2024 15:04

I don't think it's just management that need to be wary of painting an over-optimistic picture. We recently had a raft of posts here ignoring MA's 3500-6000 boepd 2024 exit range (suggestive to me of a fair degree of risk ahead!) and projecting something more like 8000. Or even 10000.

[joey52] 03/4/2024 14:35

Didn't expect it to pull back so much, topped up

[royalalbert] 03/4/2024 14:23

Some people really do like to talk their own book, HG spot on.

[highly geared] 03/4/2024 14:01

Buying opportunity if you’re here for 2 years rather than 2 minutes….

[mount teide] 03/4/2024 13:56

Today's short term trader driven markets largely rely on companies delivering an endless supply of positive news - despite the reality of running businesses being quite different.

For high growth companies, encountering operational hurdles on route is not only to be expected but is par for the course - long market history shows, how the management deals with these challenges can have a significant short term impact on the share-price, since investment(trading) money today is a very fickle mistress.

As evidenced in H2/2022, after the AXL management poorly communicated the failure to drill any of the infill development wells scheduled for H2 in their 2023 production development plan.

Therefore, to then publicly put out in January 2024 a target of a further doubling of production this year to 6,400 boe/d, and then report a snapshot production update at the end of March of 2,900 boe/d, some 300 boe/d lower than the 2023 exit production figure, was always likely to raise questions........which the management should have expected.

A failure to adequately explain this snapshot production drop in the update, predictably resulted in many short term traders voting with their feet.......and disproportionately impacting the share price of a relatively thinly traded company with a large, sticky, long term shareholder base.

For long term investors the very high growth story remains intact although, it does now increasingly rely on the horizontal well drilling plan for the large scale development of the huge Ubaque discovery.......to deliver on the management's production forecast of an average of 2-3 times that achieved from a vertical well for just a $2.5m net drilling cost, recently revised down by $1m from $3.5m, from improved drilling efficiencies and more competitive rig hire rates.

A horizontal well production forecast that I believe, on the balance of probabilities is very likely to be achieved, if the average performance of horizontal(and vertical) wells drilled by leading independents on multiple blocks across the Llanos Basin is a reliable guide.

AIMHO/DYOR

ps: After proving up the high impact horizontal well concept the leading independents are now rapidly expanding their use, as in addition to increasing production by an average of three fold over vertical wells and slowing the progression of water cut, they have been able to prove that horizontal wells raise recovery rates to the extent they are now materially adding to field P2 reserves.

[taurusthebear] 03/4/2024 12:49

Buffy - the worm has turned, as it always does with pump and dump merchants.

[dunns_river_falls] 03/4/2024 12:14

An approximation of the offline production figures would be useful

[eaglehaslanded] 03/4/2024 11:55

11%Can you form some good questions I can send Joe about the reduction in production and water issue?

[buffythebuffoon] 03/4/2024 11:45

I’d say if he was happy to take your entire holding that he was showing how cheap the shares are.

I haven’t checked on the official definition of a numpty, but if you put your CV next to his I doubt he’d be the one who more accurately fulfilled whatever it was.

Buffy

[rockyride] 03/4/2024 11:34

Oh and forgot to say, MA was clearly ruffled on his last email as he offered to buy my complete holding to take me out of the company. What a numpty!

[rockyride] 03/4/2024 11:32

I have taken significant profit whilst also retaining enough to be more than happy upon HZ successes. However, should HZ1 not succeed along with the 'official' documented issues with verticals (the OP promises are another story), I would not be surprised to see either a trimmed back drilling program or some sort of funding initiated.

[buffythebuffoon] 03/4/2024 11:32

P.S. I once spent one hour at a business conference with a sub surface engineer. He had been roped in to man the company stand and was visibly bored. He was desperate to get away from potential investors asking stupid questions about drilling for hydrocarbons. All but ten minutes was spent discussing drilling fluids and mud weighting. I still have his business card somewhere….

I’ve since learnt that everything he told me was spot on. One thing I’ll never forget was how he had to account for the drilling fluid mix at results meetings which is far more complex than most will realise. That and the fact that whether the water drive is via a natural aquifer or water flood eventually water will be produced. Having a high water cut makes you address the issue earlier. I didn’t really get what he was saying at the time but put on my ‘interested217; face anyway.

Buffy

[dunns_river_falls] 03/4/2024 11:29

It will all feel a bit more positive once that shut in production gets back on stream. Add in a successful hz well and it might end up being a decent qtr here.

[buffythebuffoon] 03/4/2024 11:18

Ah, the love in has ended as it was always going to at some point.

MT highlighted how the company failed miserably to drill the wells they had declared in 2022-3 and he called them out on it. That’s perfectly reasonable, but he didn’t throw the baby out with the bathwater.

Would you rather he screamed ‘Don’t panic Mr Mainwaring, don’t panic!’

Operations are complex and it must be a right pain to have to deal with needy bulletin board posters wanting weekly, even daily updates. Let the man do the job. He’s earnt that right.

I have long experience of high water cuts. The reservoir is there; horizontals enable you to choose a safe place to get the hydrocarbons into the well bore. If the HZ wells aren’t a roaring success I’ll be very very surprised.

We all have a right to call out any outright lies, but omitting to share information is not a heinous crime.

Buffy

[jailbird] 03/4/2024 11:14

I had feeling you were selling since you have been quiet recently But that's fine as one is allowed to change their opinion if the news changes or fails to deliver expectations There will always be risks but over a long term view I still expect production to near double end of this year , I am going to be conservative and pencil in 5k+ which will justify a higher price than today

[rockyride] 03/4/2024 10:52

Since last weeks RNS I have reduced by 50% to lock some profit in and to lower my somewhat over exposure in Arrow.In my opinion I saw some very concerning disconnects between Marshalls media videos this year and the actual detail in the RNS.Prior to there RNS I saw success of the HZ drilling program to be the icing on the cake to a very successful vertical drilling company. I now see the HZ wells to be more of cake ingredients than icing.Without successful HZ wells is now see Arrow as a jumping up and down on the spot (probably with a small intermittent jog forward) company and not the company MA has been portraying. I also think that MA is too confident in making out that just because hes been successful with HZ wells before that the new ones in Columbia are a done deal.On Friday I had a very Frank 6 email exchange with MA and he said he'd call me but as of today hes not yet called.He knows that I had a long detailed conversation with the NOMAD on Thursday questioning MAs videos vs RNS facts. They said they will investigate my complaint with the company and they also asked me to document my views and send a complaint to AIM regulation which I have now done. I've completely analysed every media video this year with RNS detail and concisely listed the areas which I perceive to be of disconnect.I genuinely feel misled by Marshall and I think he sees being listed on AIM as a free for all. He regularly say AIM have been very kind to him since listing and thats probably because in the past they have left him alone and let him say what he says.I'll be very interested to see if he continues with his loose tongue in future videos!As you all know, i have always considered MA to be liberal with the truth (Chat GPT definition:- "Being liberal with the truth" typically means someone is prone to exaggeration or bending the truth to suit their narrative or agenda, often implying that they're not entirely honest or trustworthy in their communications.) but i have always stuck with what he's said due to my perceived success of the drill bit.In summary, i see far more dependence of the success of the company being down to HZ successes. And having not used a rig or drilling team in Columbia to do this before I have decided to adjust my holding accordingly.

[henley2] 03/4/2024 09:55

That’s what happens when you conduct your investor relations program via a single contributor on a bulletin board. Completely pathetic.
I have raised this issue before.
The FD needs to instigate a proper investor relations program with all investors, not just answering questions on an ad hoc basis from one person.
The CEO made no mention of “temporary production issues” at the recent Proactive meeting and didn’t stick around for questions afterwards.
Perhaps he’ll be a bit less smug at the next meeting.

[here and there] 03/4/2024 09:45

'Both RCE and CN fields are very busy right now. CN-7 is in the completion phase, and the rig moves to CN-8 afterwards. We will then be converting a well on the CN pad into a water injector. At the RCE pad we are moving oil and water tanks, VSDs, flow lines, etc, in order to set up the three surface pumps for the RCE-1 conversion into a water disposal well.'

Some production locked in whilst the above adjustments are made, once sorted the production comes back on line. As usual the team are managing the reservoir, production and water disposal as efficiently as possible. I do wish they had come out and explained the above in an interview post the RNS. It would have helped.

Edale chipping out a few on the 22nd March doesn't help sentiment but, I gather, they are still strong supporters and believers. Even the big boys need to top slice!

Well result news soon,alongside the horizontal well spudding and CN-8 spudding. I suspect they will provide some colour on the water issues in the next RNS

[11_percent] 03/4/2024 08:59

AXL need to get their act together - give a clear well by well performance update, keep market updated as to issues etc.

=================

Its all about water cut.....which from Joes reply they are trying to fix.

They bring on a well and if has a high water they choke back or reduce the downhole electric pump speed to give them a flow rate and water cut that they can handle.

They are shortly going to have Water Injection Wells at both RCE and CN.....so will be able to ramp the downhole pumps up to give a greater flow......separate the oil/water and.......inject the water downhole.....and get more oil.

At the moment we are try to control the total water produced by cutting back on flow rate from the well.

[11_percent] 03/4/2024 08:47

Gap not closed.

High on Monday 19th Feb = 20.00
Low today = 20.25


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