Auctus maintains 45 ($0.60cdn) pences targettrading 16.75 (26.66 cdn) right now on AIM.
Another well delivers flow rate above expectations
• The RCS-1 well was flow tested at oil rates of up 1,872 bbl/d (936 bbl/d net to Arrow) of 30 API crude from the C7B sands.
• The zone was tested for 33 hours at an average oil rate of 1,076 bbl/d (538 bbl/d net to Arrow) with no formation water. Production will start next week at ~1,000 bbl/d (500 bbl/d net) in order to minimize water cut. We understand that the zone has the potential to produce 2,000-3,000 bbl/d of oil. • This is again above our expectations (~800 bbl/d).
• The shallower C7A and C7 stringer sands were oil bearing but will be tested in a subsequent well. • The Gacheta B flowed only water (no reserves were associated with this sand pre-drill). The Gacheta C and D that were tested in the RCE2 wells also encountered oil in the RCS-1 well. The company had enough certainty that they would be producible at RCS-1 that they were not tested (recall that each completion costs US$0.3 mm). • The Ubaque was tested at up to 184 bbl/d of heavy oil (12-13 API crude) with average rate of 33 bbl/d.
• No reserves were allocated to the Ubaque, C7 and one of the Gacheta sands and the results of the RCS-1 well are expected to be materially accretive to reserves.
• Pending a reserves update expected in July, we re-iterate our target price of £0.45 per share.