RE:RE:RE:Feom Auctus Advisors' report - All good!We have a few options to sell the Ubaque crude at Carrizales Norte, blending the crude is one of the options, however, it will take some time to get the proper blending equipment in place. We are running the economics to determine if that is the most advantageous to Arrow.
Currently we are selling the Ubaque crude by truck on its own. We have negotiated a very good price for the Ubaque crude. Keep in mind that with the 13.6 degree API we receive a 2% royalty break (royalties reduce from 12% to 10% total). The logistics fee (trucking and quality) for the C7 crude at Carrizales Norte is $1.00 per bbl. The price we have negotiated for the Ubaque crude is $9.00 per bbl. The $8 differential offset by the royalties works out to about a $6 discount from C7 crude.
We are unsure if cement was a problem or now as the logs are not clear, however, the C7 did not perform as we expected. We are doing some further science to determine why the C7 acted as it did. However, the Ubaque reserves could be huge for the company. Our attention has moved to unlocking the Ubaque potential at Carrizales Norte.
No problems with the Gacheta in the well, we simply did not test it as we had such great results with the Ubaque. The logs showed 36 feet of oil charged formation. We do expect that we will be able to target the Gacheta with new wells or as recompletion opportunities.
There was a delay in getting the Ubaque on production as we needed to bring in new tanks, boilers, heating equipment, separators, etc. As the crude is heavier, this additional equipment was required. Also, it is the rainy season in the Llanos basin so we did experience some weather delays, however, the Team did a fantastic job of overcoming the obstacles and sourcing the equipment.
We will be releasing total corporate production in a future release.
We did note that some investors were concerned with the perceived lack of information from the CN-2 well. Our NOMAD suggested that we move from 3 press releases for each well to 1 as we are a larger company now and each event is not as material to the company. I hope that has not caused any concern.
Thanks for your continued support, Ron. I hope my responses above are clear. We are very happy with the results of the CN-2 well and the potential reserves the Ubaque could hold. This is very material to the company.
Joe