Very strong support from Auctus AdvisorsNo flow from the Gacheta but overall reserves addition from CN-1 larger than initially expected
• The Gacheta zones proved unproductive at the CN-1 well location. Management is investigating potential reasons for the lack of productivity and plans to re-evaluate these Gacheta zones in future wells.
• The Gacheta zones were located above the Ubaque that flowed at rates >1,100 bbl/d. • Arrow will put in production the C7A and C7 zones during the course of next week. These are the primary zones at Carrizales Norte.
• Overall, the company’s preliminary interpretation of the CN-1 discovery suggests aggregate reserve capture materially exceeds initial expectations. Larger oil accumulations than expected were encountered at both the Ubaque and the C7 reservoirs. The development of Carrizales Norte could now be expanded beyond the three wells initially envisaged.
• We currently carry 1.8 mmbbl net resources for Carrizales Norte. A 2.7 mmbbl field (+50%) would add £0.05 per share to our Core NAV.
• Pending further visibility on the discovered volumes at Carrizales Norte, we re-iterate our target price of £0.50 per share (~our ReNAV).