Auctus update from todayVery encouraging drilling results at Colombia well • The RCE-2 well has encountered a total net pay of ~80’ across five separate known horizons.
Importantly the C7 sand (the primary target) was encountered 10’ higher than expected and 25’ higher than in the RCE-1 well. Overall 30’ of pay was encountered in the C7 sand. This suggests larger volumes than expected.
• The well also encountered a total ~50’ of pay in the Gacheta sands, including 16’ in the C sand and 25’ in new zones that were not encountered in the RCE-1 well. This also suggests potentially larger volumes than initially anticipated.
• The quality of the sands is very high with ~30% porosity.
• The Gacheta sands will now be tested and will potentially be put in production (assuming a good result). If the Gacheta does not deliver high flow rates, the shallower C7 sand (the primary target) will be tested and put in production.
• This is a very good start for the drilling campaign and, pending the results of the flow tests, we re-iterate our £0.45 per share target price. We continue to forecast that Arrow could produce ~1,500 bbl/d of oil in 4Q22. Securing a licence expansion at Oso Pardo in the Middle Magdalena Velley could add 14 mmbbl of oil reserves to Arrow (unrisked NAV of ~£0.90 per share).