Arrow Exploration Share Discussion Threads

[jailbird] 17/5/2024 21:23

Production results will be known first week of June, with release to market 2nd week.
3:30 in

Exciting 3-4 weeks coming, fingers crossed all goes well, be a big step change for the company if it comes in as MA is expecting

[eaglehaslanded] 17/5/2024 18:28

New proactive interview:https://m.youtube.com/watch?v=28XoGjzry84

[pogue] 17/5/2024 16:03

Proactive interview 'Arrow Exploration says first horizontal drilling at Tapir marks 'a step change' in production'

[mrscruff] 17/5/2024 14:55

After the 5 well campaign that would take us upto a base case of 8000bopd for all production in 2024 net right?, just need 2000 more. But the cash flow even then would be superb set up for 2025.

[desha] 17/5/2024 14:36

Note from memory, management expect there will likely be a significant decline after the initial 'flush' production on CNB HZ1, so really should achieve in excess of 1k bopd net (2k gross). I hope they report IP30 / post flush figures as a follow up.

[mount teide] 17/5/2024 14:17

Horizontal drilling onshore Colombia - when trialed a decade ago on a large mature field before the use of modern horizontal drilling technology, still produced a similar production rate increase per well compared to vertical wells(even in a very shallow reservoir where vertical wells were no longer economic), to that generated today using the latest horizontal drilling equipment:

Geological Challenges in the Development of a Colombian Waterflood Using Horizontal Wells - AAPG / Online Journal of E&P Geoscientists / May 2017



'La Cira Infantas Field is a mature field undergoing waterflood to increase the reservoir pressure and oil recovery factor. In 2013 and 2014, horizontal wells were proposed to develop the C zone (Mugrosa Formation) in the lower part of the structure, where the thickness of the pay zone is reduced due to its proximity to the oil/water contact.

The geological complexity, which includes lateral variations due to the fluvial environment, azimuth variations, a high formation dip of nearly 35°, a thin target zone, and low resistivity contrast between sandstones and mudstones, proved to be a big challenge during the planning and drilling of these horizontal wells.......

......The horizontal wells were steered through 8-15 ft TVD of net pay thickness for distances of 2,500 to 2,800 ft, resulting in a productivity index 3-5 times greater than a vertical well in the same sandstone.......

.......La Cira Infantas Field is a mature field with high potential in the lowest
part of the structure, although the pay zone is thinner there due to its proximity to the oil/water contact; therefore, it is necessary to implement technologies to optimize the oil extraction process and make it economically viable......

......Drilling horizontal wells emerged as a good alternative to drain oil in thin pay zones where vertical wells are not economically attractive.

....Horizontal wells could increase the drainage area, productivity index, and recovery factor. The preliminary assessment was that one horizontal well could recover the equivalent reserves of three vertical wells.

The selected area to implement horizontal drilling technology in La Cira Infantas Field had a significant oil volume potential according to the analytical volumetric calculations. In addition, the sand bodies selected have good quality rock, and a water injection process was in its initial phase.

However, the high structural complexity and the stratigraphic heterogeneity due to the fluvial depositional environment were the biggest challenges for horizontal well placement'

[mount teide] 17/5/2024 14:00

Hi Buffy - yes, the mean figure. Difficult to shed much light on the mode since horizontal drilling onshore Colombia with modern drilling technology is still in its infancy, and most of the independents carrying it out tend to publish the total production result for the entire horizontal drilling programme rather than individual results.

Having said that, the max and min production outliers to date that I've come across are circa 3,000 bopd and 1,500 bopd.

Some examples:

Llanos Basin - 'Parex has successfully substituted vertical wells for horizontal:
LLA-34 (55% W.I.): In Q1 2023, the first ever horizontal well was drilled at LLA-34 to a vertical depth of roughly 14,000 feet and a horizontal lateral of approximately 1,300 feet. Currently the well is producing approximately 3,000 boe/d gross of heavy crude oil, with Parex and the operator evaluating drilling additional horizontal wells on the block.

Continued high performance from the first horizontal wells at Cabrestero (100% W.I.) and LLA-34 (55% W.I.); a second horizontal well at LLA-34 was recently completed and put on production; horizontal wells in the Southern Llanos represent new development opportunities for Parex to efficiently maximize recovery and production rates.

Southern Llanos - After successfully substituting traditional vertical wells for horizontal wells at both Cabrestero and LLA-34 (55% W.I.), Parex has identified a multi-year inventory of horizontal drilling locations across the Llanos basin to increase recovery factors.'

'GeoPark is another leading Colombian independent with average 2023 production of 36,563 boepd (24,147 boepd from Llanos Basin) that has successfully trialed horizontal drilling in the Llanos Basin during 2023.

A total of five horizontal wells were drilled and put on production in full-year 2023 and are currently producing approximately 10,060 bopd gross in aggregate.' .....Geopark/17th Jan 24 Update - (This is a mean production rate of 2,012 bopd for each of the five wells after producing for an average of 5-6 months per well).

GeoPark quickly learned from experience how to drill at much greater speed and lower cost these far more productive horizontal wells - the 'third well was drilled 36% faster, with 18% lower drilling costs, and a 172% longer lateral length compared to the first horizontal well.

The "successful horizontal well drilling campaign in 2023" has seen GeoPark retain the rig on site and extend the drilling programme by a further 2-3 horizontal wells in Q1/2024.

From an Arrow shareholders perspective, it's very pleasing to see that two of Colombia's largest independents have successfully trialled horizontal drilling in the Llanos Basin in 2023. As its always a good move to let others with much deeper pockets prove up a previously untested concept, however high impact, before spending your own shareholders funds!'

The Margin of Safety / downside protection at even 1,000 b/d gross is outstanding for a horizontal well with an estimated drilling and net completion cost of $2.5m to $3.0m, and an OPEX/bbl of less than $5:

500 bopd net x 365 = 182,500 bbls/yr

At an average oil sales price at the wellhead of $85, the well would generate $15.5m of annual sales revenue - 5-6 times the cost of the well.

The economic success rate for horizontally drilled wells in sandstone reservoirs onshore Colombia, has increased from 88% (16 wells) up to 2002, to 100% from the trials conducted in 2022/23 with modern horizontal drilling technology.

As the O&G companies have found across the Llanos Basin following the recent proving up of the concept of horizontal drilling - Arrow's Ubaque HZ drilling programme, even at 50% of the expected rate of initial production/mean of wells drilled to date by the leading independents, has the potential to deliver a huge step change increase in the production growth rate and FCF during H2/2024 and beyond.

AIMHO/DYOR

[buffythebuffoon] 17/5/2024 10:02

Hi MT,

‘MrS - most horizontal drilling I've researched, both in light and heavy oil reservoirs, carried out by leading Colombian independents across the Llanos Basin, has seen initial production rates averaging circa 2,000 bop/d per well with a circa 500-600 metre lateral length.‘

I presume by average you refer to the mean (I decided to use ‘refer to’ rather than mean…). What would be of more interest is what the mode is; although I guess even the lowest outlier would be much higher, even if not a multiple, of a vertical wells output.

Buffy

[king suarez] 17/5/2024 08:02

Thanks, Rocky.

[rockyride] 16/5/2024 22:30

Forgot to say they have confirmed there will be a remote access link to the AGM

[rockyride] 16/5/2024 21:44

Q - Are you proposing for somebody to take us through the investor presentation slides at the AGM? I'm no geologist and can't fathom out from the slides why CN4 should be the preferred well to be converted to water disposal. The slide deck looks very exciting and powerful but I think it needs bringing to life with a shareholder presentation.A - Good idea, we will put a presentation together for the AGM

[dunns_river_falls] 16/5/2024 20:15

Not sure how to post a screenshot - but looking at the recent presentation (see page 21) - does that give a clue as to why CN-4 was chosen as the water disposal well?

[jailbird] 16/5/2024 18:20

MT

"However, this is something that the leading independents have achieved elsewhere across the Llanos Basin - yet to come across one that failed to achieve at least 3 times the production performance of vertical wells drilled on the same acreage....and with materially slower decline rates."

Expectations are high and I expect the share price to start moving higher as we get closer to the date
Lets hope Arrow deliver the same, , we will all be very happy investors

[buffinman] 16/5/2024 18:03

Malcy of course is positive.

This is indeed a significant milestone in Arrow’s development plan, over recent months I have watched Arrow very carefully and in the next few days I hope to comment about how well they have done and how the recent period of success has set them on their horizontal journey.

The success of drilling in the last 15 months or more has meant that Arrow has achieved a great deal of success and in particular that has opened up opportunities in this case in the Ubaque formation. There are significant advantages of the horizontal play, in this case a vertical well costing say $3-4m would expect to produce around 700 b/d whereas a horizontal well should cost say $5-7m and might deliver some 2000b/d.

These numbers, should they be confirmed next month, will be the highlight of the 2024 drilling campaign, after this the company expect to drill three more wells from this pad which was being completed when I visited Bogota recently. Finally, water disposal will be a necessary measure and such a well will be ready on the pad, further water disposal wells are planned.

I am expecting significant interest in this, the next phase of Arrow’s drilling campaign here in the CN field in the Tapir Block in the Llanos Basin. Recently the Canacol overhang has been cleared away and with such a formidable operational success rate I’m convinced that my 50 Target Price will be achieved.

[mount teide] 16/5/2024 17:28

MrS - most horizontal drilling I've researched, both in light and heavy oil reservoirs, carried out by leading Colombian independents across the Llanos Basin, has seen initial production rates averaging circa 2,000 bop/d per well with a circa 500-600 metre lateral length.

Following the incredible success of horizontal well technology in raising field production compared to the performance of vertical wells, without exception, these independents have in subsequent market communications stated they plan to extend the use of horizontal drilling technology to wherever they can.

As previously posted - when running the numbers for horizontal drilling - even a production performance of just 50% of that achieved by the leading independents to date would deliver a completely transformational result for Arrow shareholders at $80 Brent, compared to vertical wells.

AIMHO/DYOR

[eaglehaslanded] 16/5/2024 17:21

RAI Can not know this. HZ better be darn good

[mount teide] 16/5/2024 17:12

JB - a 10k 2025 exit rate would clearly require a high level of execution success with the CN Horizontal drilling programme.

However, this is something that the leading independents have achieved elsewhere across the Llanos Basin - yet to come across one that failed to achieve at least 3 times the production performance of vertical wells drilled on the same acreage....and with materially slower decline rates.

Interesting that Arrow stated today they believe the Horizontal technology will be effective in other prospects on the Tapir Block:

'Arrow believes the horizontal wells at Carrizales Norte will be transformative for the Company, resulting in a step change in production, and that the technology will be effective in other prospects on the Tapir block." '

Begs the question - which prospects and target reservoirs?

[mrscruff] 16/5/2024 16:57

I bet insiders knew of CN-4, probably between the 27th April and those March highs. It would be nice to have under promised. In the grand scheme of things greed will drive this share price up given the drilling campaign.

Whats the average these horizontals can do?

[rockyride] 16/5/2024 16:42

Put simply MA will not answer right messages down on paper unless he is forced to by the NOMAD. And how they can say the first HZ well will be producing in June is quite unbelievable. Surely at very best they should be saying ANTICIPATED. I just don't like his permanent spin!

[jailbird] 16/5/2024 16:42

i think the realisation that to achieve the lofty expectations some were hoping for here are not going to be straight forward anymore

Unless all the HZ wells being drilled are successful, i cannot see any chance of 10K by end of 2025

It will all be about increasing the reserves to sell the asset at some point

[mount teide] 16/5/2024 16:34

RA - indeed, the art of good management of a listed company is surely to anticipate likely market reaction to the content of your statements and how they relate to previous statements, and craft your communications accordingly.

[royalalbert] 16/5/2024 16:15

EHL, Hmmm, why didn't they state that earlier?

[eaglehaslanded] 16/5/2024 15:24

From Joe:CN4 discovered oil and was producing when it was discontinued. It also extended the CN field to the south and will assist in booking new reserves.CN4's position related to the planned HZ wells is the most important reason for the conversion