This reserves report was as good as it was expected to be, Arrow is in a very strong position with its outstanding portfolio in Colombia. The 11/11 last year has given up ‘material reserve increases’ in this report and from both the Carrizales Norte and the Rio Cravo Este which is not only highly encouraging but also ‘exceeded expectations’.
Perhaps the most telling figures, amongst many on show today are of reserves replacement ratios of 343% for 1P and 624% for 2P. It should also be remembered that this report does not include any of the wells in thew highly successful ongoing drilling campaign at Carrizales Norte including the CN-5, CN-6 and CN-7 as well as the upcoming CN-8. And given the encouraging results to date, the market should ‘expect further reclassifications and increases in reserves’.
Given that the company may well publish an interim update which will include the wells above, there is much to be confident about for ongoing valuations and with these flow rates already announced numbers will continue to rise. And the 15 well drilling campaign for this year, budgeted and board approved is fully funded from cash and revenues and there is much to look forward to.
There is another particularly exciting prospect to add to the Arrow story which is about to unfold and that is the prospect of a horizontal drilling campaign in the Ubaque which is ‘tailor made for such drilling’ and where a made to measure pad is being built and nearly ready for action. It goes without saying that whilst the cost of drilling these wells is higher, the reward is even greater and I would expect at least two horizontals to be drilled starting in Q2.
I was very lucky that a few weeks ago I spent a week in Bogota as a guest of the Arrow board, the best news about this announcement today is that I can now go ahead and publish the second part of of the time I had in Bogota.
Arrow has had a very god run and the shares have risen by some 40% in the last few months but I am convinced that the shares have a great deal of upside from here and will remain in pride of place in the upcoming Bucket List.