The well penetrated the Lisama sandstones as anticipated at 3,390 ft md with good oil and gas shows while drilling, and drilled through the Umir Formation with similarly good oil and gas shows in two separate oil filled sandstone intervals at 3,665 and 3,800 ft md respectively. Petrophysical evaluation of the openhole logs acquired indicate 88 feet of oil pay with these Tertiary sandstones: 60 ft of oil pay within the Lisama sandstones with an average porosity of 25%, and 28 ft of oil pay within two separate Umir sandstones with an average porosity of 16%. However, while drilling the Tertiary section, the Corporation encountered technical problems that compromised the integrity of the wellbore. The appropriate corrective measures were taken but it was decided not to proceed with the drilling of the deeper Cretaceous shales. The Corporation subsequently exercised its option to continue shallow operations at Oso Pardo €“ 1 on a 100% cost basis, with the objective of conducting a series of cased hole production tests of the Umir and Lisama sandstones
Oso Pardo is a conventional play: "The wells have produced far more oil (650,000 bbls) to date than was originally expected if you just applied a volumetric factor to them, indicating there is a much bigger oil pool in place. The oil column is 150ft thick, and after entering production in 2013 has not yet tested for water or seen a pressure drop. The 3D, which is exclusive to Arrow, clearly shows the trapping mechanism and we assess it as being very low risk." - Marshall Abbott
'Securing a licence expansion at Oso Pardo in the Middle Magdalena Velley could add 14 mmbbl of oil reserves to Arrow (unrisked NAV of circa £0.75 per share).'...Auctus Note
This is a huge opportunity for Arrow.
Marshall believe's an extension to Arrow's existing license to cover the entire Oso Pardo field may be achieved by the end of 2022. Canacol (20% Arrow shareholder), who has a long professional relationship with the Colombian regulator, is assisting Arrow to obtain the extension.
Santa Isabel Block - Oso Pardo Field (100% Working Interest)
20% Arrow shareholder Canacol drilled the discovery well and two appraisals in 2013.
Future Opportunity Not Factored Into Production Forecast:
€¢ Based on P50 development size of 20 wells, Oso Pardo could contain 9.6 MMbls gross
€¢ Potential capex of $2.6M per well
€¢ Overall development has been modelled by Gaffney Cline as reaching as
much as 4,000 bbls/d, gross, in the P50 case
€¢ Opportunity for Arrow to develop at 100%
The Santa Isabel Oso Pardo Field extends into the VMM 2 E&P Contract - a gross 73,056 acre unconventional exploration asset owned by Conoco Philips(80%) and Canacol (20%).
As of March 2020 - According to Canacol's Annual Information Release:
'Located in the Middle Magdalena Basin, the VMM 2 E&P Contract is one of three adjacent contracts that expose Canacol to a potentially large, unconventional shale oil fairway in the thick Cretaceous La Luna and Rosablanca formations analogous to the Eagle Ford formation.
The VMM 2 E&P Contract is currently in phase 1 (duration 36 months), which is currently suspended until the ANLA issues an environmental license.'
Arrow are looking to secure the extension acreage of the Oso Pardo light oil field into the V-MM2 asset - much less than 1% of the V-MM2 block's acreage. Oso Pardo is a conventional play - the V-MM2 block was awarded to Conoco on the basis of an Unconventional Shale oil exploration contract type.
From an ESG perspective, Colombian oil production has an average Carbon Intensity similar to the UK, some 20% below the global average, largely the result of the production being weighted heavily towards light sweet crude, extracted from relatively shallow pools.